Scottish Court of Session Decisions

James Louttit & Company, Limited, was incorporated under the Companies Acts in 1873, with a capital of £6000 in 600 shares of £10 each. The memorandum of association was registered without articles of association, and consequently Table A of the Companies Act of 1862 formed the articles of association.

The present petition was presented by Mrs Henderson and others, shareholders of the company.

The petitioners stated that on 5th February 1894 an extraordinary general meeting of the shareholders had been held, when a resolution was unanimously adopted requiring the company to be wound up voluntarily, and that this resolution had been unanimously confirmed at a meeting called to confirm it on 20th February 1894.

The petitioners craved the Court to order the voluntarily winding-up to be continued subject to the supervision of the Court. Alternatively, they craved the Court to order the company to be wound up under the Companies Acts, and to appoint a

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liquidator, but this branch of the petition need not be further referred to, as no serious reasons were advanced in support of it.

Answers were lodged for the company and certain of the shareholders. The respondents stated and it was admitted that out of the 55 persons who had taken shares in the company “only twelve members entitled to vote” presented themselves at the meeting called to confirm the resolution in favour of a voluntary winding-up. They further stated—“Mr Georgeson, solicitor, Wick, who had acquired certain shares in the company on the day previous to the meeting, also presented himself, but under article 47 of Table A he was disqualified from voting, not having held his shares for three months prior to the meeting. There being thus no quorum present, no business was or could be transacted. In the view of ten of the twelve qualified members who assembled, Mr Georgeson could not be reckoned for the purpose of making up a quorum, and these ten members accordingly left the place of meeting. There remained, in addition to Mr Georgeson, only two members, the petitioners Mr Alexander Laing, S.S.C., and Mr James Sutherland. These gentlemen proceeded, notwithstanding the provision of the said 37th and 38th articles of the said Table A, to pass the pretended resolutions set forth in the petition. There having been no quorum present when the said two shareholders proceeded to business, the said pretended resolutions were wholly incompetent and inept. The resolution of 5th February in favour of liquidation remains unconfirmed, and the company is consequently not now in liquidation.” It was admitted that the majority of the shareholders who had come to the meeting left before the business of confirming the resolution in favour of a voluntary winding-up was entered upon.

Article 37 of Table A of the Companies Act of 1862 provides—“No business shall be transacted at any general meeting, except the declaration of a dividend, unless a quorum of members is present at the time when the meeting proceeds to business; and such quorum shall be ascertained as follows—that is to say, if the persons who have taken shares in the company at the time of the meeting do not exceed ten in number, the quorum shall be five; if they exceed ten there shall be added to the above quorum one for every five additional members up to 50, and one for every ten additional members after 50, with this limitation that no quorum shall in any case exceed 20.”

Argued for the petitioners—Although Georgeson was not qualified to vote he was a member of the company, and was therefore to be counted in considering whether a quorum was present or not. There was, therefore, a quorum present when the meeting proceeded to business, and that being so, the provision of article 37 was satisfied, as there was a quorum present when the business of the meeting was entered upon. It did not matter that some of those present afterwards left before the business was carried through.

Argued for the respondents—A quorum of members of course meant a quorum of members entitled to take part in the business of the meeting by voting— Cambrian Peat Company, ex parte Mott v. Turner, 1822, 31 L.J. 773; Buckley on the Companies Acts, Schedule I., Table A, Article 37. Further, the quorum must be present while the business was being proceeded with. Neither of these conditions having been satisfied in regard to the resolution for a voluntary winding-up, that resolution had never been validly confirmed.

At advising—