Share transfer refusal must be exercised within a reasonable time, or the directors' power to reject the transfer lapses.

A shareholder has a prima facie right to transfer shares unless the articles validly restrict that right. Where the articles give directors a discretion to refuse registration, that power must be exercised promptly and within a reasonable time. The statutory notification period for refusal was treated as indicating that a four-month delay without any decision was unreasonable. If no valid refusal is made within that reasonable time, the contractual power to reject the transfer lapses and cannot later be exercised effectively, with the transferor's right to registration becoming absolute.

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Issues: Whether directors' power to refuse registration of a share transfer had to be exercised within a reasonable time, and whether delay beyond that time caused the power to lapse so that a later refusal was ineffective.

Analysis: A shareholder has a prima facie right to transfer shares unless the articles validly restrict that right. Where the articles confer a discretion to refuse registration, that discretion must be exercised promptly and within a reasonable time. The statutory scheme, including the requirement to notify refusal within two months, indicated that a delay of four months without any decision was unreasonable. Once that reasonable time expired without a refusal, the contractual power to reject the transfer could no longer be validly exercised.

Conclusion: The later refusal was ineffective, the right to register the transfer had become absolute, and the appeal failed.

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