1939 (7) TMI 6

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.... 1936. The prospectus states that the minimum subscription upon which the Directors may proceed to allotment is Rs. 25,000 and that applications already received by the company for shares far exceed that amount. The preliminary expenses are estimated not to exceed Rs. 5,000 (exclusive of commission on the sale of shares), which will be borne by the company. The first meeting of the Board of Directors was held on 13th January 1937, and at it 688 shares were allotted to various applicants. The Registrar's certificate entitling the company to commence under Section 103 of the Act, was obtained on 14th January 1937. On 9th March 1939, the applicant signed an application form for 100 shares in the company. The form states that the applicant auth....

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....petitioner at that time to be appointed Secretary of the company. This fact however is irrelevant, and the sole question is whether the allotment is in contravention of the provisions of Section 101, Companies Act, within the meaning of Section 102 of that Act and therefore voidable at the instance of the applicant under the latter Section. Under Section 101(1) as it stood before 1st January 1937, no allotment can be made of any share capital offered to the public for subscription unless (a) the amount (if any) fixed by the Memorandum and Articles and named in the prospectus as the minimum subscription on which the directors may proceed to allotment; or (b) if no amount is so fixed and named, then the whole amount offered for subscription, ....

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....tion for the amount so stated has been paid to and received by the company. The provisions of sub-sections (3), (5) and (6) are retained in the Section. In 1936 Section 101(1), Companies Act 1913, was amended, and it materially differs from Section 39(1) of the English Act. It lays down that no allotment shall be made unless the amount stated in the prospectus as the minimum amount which in the opinion of the directors must be raised by the issue of share capital in order to provide the sums or, if any part thereof is to be defrayed in any other manner, the balance of the sum required to be provided in respect of the matters specified in sub-s. (2) has been subscribed, and the sum of at least five per cent thereof has been paid to and recei....