Precedent No. 10 CAPITAL CLAUSE IN A MEMORANDUM OF A LIMITED COMPANY
into preference shares of
each ordinary shares of each,
and deferred shares of each.
sharesinterse subject as hereinafter provided:
(a) The said preference shares shall confer the right to fixcumulative
preferential dividend at the rate
of per cent, per annum on the capital for the
time being paid up thereon respectively, and shall rank both as regards
such dividend and as to capital in priority to all other shares in the
original capital, but shall not confer any further right to participate
in profits or assets.
(b) Subject as aforesaid, the ordinary shares shall confer on
theholders the right to a fixed cumulative dividend at the rate
of per cent, per annum on the capital for the time
being paid up thereon respectively, and shall rank both as regards such
dividend and as to capital next after the said preference shares.
(c) Subject as aforesaid the said deferred shares shall confer the
right to a fixed cumulative dividend at the rate of per
cent per annum on the capital for the time being paid up thereon
respectively, and shall rank both as regards such dividend and capital
next after the ordinary shares.
(d) Subject as aforesaid, any profits which it may at any time be
determined to distribute amongst the members and in a winding-up any
surplus assets after repayment of capital, shall be divided as to
one-half between the holders of the ordinary shares held by them
respectively and as to the other half amongst the holders of the
deferred shares aforesaid in proportion to the deferred shares held by
them respectively.
(e) The rights for the time being attached to the said several
classes of shares respectively may be modified or dealt with in
the manner mentioned in clause No of the
accompanying Articles of Association, but not otherwise.
Note.—The above clause is taken from the case of Walsback Incandescent
Gas Light Company, Limited, 1 Ch (1904) p. 87. It was held in this case
that inasmuch as section 8 of the English Companies Act, 1862
(corresponding to section 6 of the Indian Companies Act, 1913) did not
require that the rights of different classes of shareholders should be
stated in the Memorandum of a Limited Company, the power of modification
of these rights was valid and the Company could modify those rights by
following the procedure laid down in clause (e) above. Walsback's case
was followed in this country In re: British India Corporation, Ltd. v.
Shanti Narayan, (1935) Com Cas 161.