TaxTMI 
TaxTMI 
1942 (1) TMI 8
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....ous transactions whereby the V.G.M. Holding, Ltd., purported to make a payment of £15,980 to another company, and the money came back into the hands of the directors of V.G.M. Holdings, Ltd., who thereupon used in to pay calls on the shares issued to them by the latter company, the result being that the company was defrauded of its right to the calls on the shares. The Judge, however, gave no relief in consequence of his finding of fraud, for he found that the transaction whereby the company had advanced money to enable the directors to pay calls on its shares was invalid under the provisions of section 45 of the Companies Act, 1929, which provides that it shall not be lawful for a company to give, whether directly or indirectly, and ....
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....tance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the company." Then there is a penalty of £100 in case of contravention. Those whose memories enable them to recall what had been happening after the last war for several years will remember that a very common form of transaction in connection with companies was one by which persons--call them financiers, speculators, or what you will--finding a company with a substantial cash balance or easily realisable assets such as War Loan, bought up the whole or the greater part of the shares of the company for cash and so arranged matters that the purchase money which they then became bound to provide was advanced to them by the company ....
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....s at a fraudulent undervalue, all those transactions, it seems to me, would fall within the phrase "financial assistance". I therefore feel no difficulty about that; but, with all respect to Bennett, J., I am unable to agree with the view that he took that the subscription by these three directors for shares in V.G.M, was, within the meaning of the section, a "purchase" of those shares. In the first place, throughout the whole of the Companies Act the language that is used with regard to the issue of shares to subscribers is invariably confined to words like "issue", "subscription", "application", "allotment", and so forth. There is not a single passage in the Act to which we were referred, nor to which my fairly complete recollection of th....