Company lien and share transfer rules limit refusal to register; no set-off against fully paid shares without article-based security.

Under the company's articles, a lien existed only on partly paid shares, and the clause allowing refusal to register a transfer did not create an independent right to defeat a transferee's claim by set-off. A transferee under an equitable mortgage was not recognised as owner until registration, but the company could not rely on the transferor's indebtedness to refuse registration of fully paid shares where no lien attached to that class. The court distinguished authorities based on different articles or the existence of a lien. The transferee was therefore entitled to registration and recognition of its claim, and the company's attempted set-off failed.

---

---

Issues: Whether, under the articles of association of the company, the company could refuse to register the transfer of fully paid shares to the equitable mortgagee and rely on the transferor's indebtedness to the company to defeat the transferee's claim in winding-up.

Analysis: The articles gave the company a lien on partly paid shares, while the provision permitting refusal to register a transfer referred only to shares generally. The transferee of shares under an equitable mortgage could not be recognised as owner until registration, but the power to refuse registration was not intended to create an independent right of set-off where no lien existed on the class of shares concerned. The authorities on refusal to register transfers were distinguished on the footing that they turned on the company's lien or on articles materially different from those in issue. On the proper construction of the articles, the company could not set off the transferor's debt against fully paid shares so as to defeat the transferee's claim.

Conclusion: The transferee was entitled to registration and recognition of its claim to the shares, and the company could not rely on the transferor's debt as against that claim.

Final Conclusion: The appeal failed because the equitable mortgagee's rights in the shares were held to prevail over the company's attempted set-off, and the order in favour of the transferee was affirmed.

Ratio Decidendi: A company may refuse registration of a transfer only to the extent that its articles confer a lien or equivalent security over the relevant class of shares; a refusal clause does not by itself create a transferable set-off against fully paid shares.

---