The procedure on the making of a winding-up order is now governed by ss.
7, 8, 9 of the Winding-up Act 1890. The official receiver, as
liquidator pro tem., requires a statement of the affairs of the company
verified by the directors, and on it reports to the court as to the
causes of the company's failure and whether further inquiry is
desirable. If he further reports that in his opinion fraud has been
committed in the promotion or formation of the company by a particular
person, the court may order such person to be publicly examined.
A liquidator's duty is to protect, collect, realize and distribute the
company's assets in due course of administration; and for this purpose
he advertises for creditors, makes calls on contributories, sues
debtors, takes misfeasance proceedings, if necessary, against directors
or promoters, and carries on the company's business--supposing the
goodwill to be an asset of value--with a view to selling it as a going
concern. He may be assisted, like a trustee in bankruptcy, by a
committee of inspection, composed of creditors and contributories.
When the affairs of the company have been completely wound up the court
is, by s. 111 of the Companies Act 1862 (s. 127 of the act of 1908), to
make an order that the company be dissolved from the date of such order,
and the company is dissolved accordingly. A company which has been
dissolved may, where necessary, on petition to the court be reinstated
on the register (Companies Act 1880, s. 1).
Reconstruction.
A large number of companies now wind up only to reconstruct. The reasons
for a reconstruction are generally either to raise fresh capital, or to
get rid of onerous preference shares, or to enlarge the scope of the
company's objects, which is otherwise impracticable owing to the
unalterability of the Memorandum of Association. Reconstructions are
carried out in one of three ways: (1) by sale and transfer of the
company's undertaking and assets to a new company, under a power to sell
contained in the company's memorandum of association, or (2) by sale and
transfer under s. 161 of the Companies Act 1862; or (3) by a scheme of
arrangement, sanctioned by the court, under the Joint Stock Companies
Arrangements Act 1870, as amended by the Companies Act 1907, s. 38 (C.A.
1908, s. 192).
The first of these modes is now the most in favour.
Wrongs by a company.
A company, though a mere legal abstraction, without mind or will, may,
it is now well settled, be liable in damages for malicious prosecution,
for nuisance, for fraud, for negligence, for trespass. The sense of the
thing is that the "company" is a _nomen collectivum_ for the members. It
is they who have put the directors there to carry on their business and
they must be answerable, collectively, for what is done negligently,
fraudulently or maliciously by their agents.
_2. Public Companies._
Besides trading companies there is another large class, exceeding in
their number even trading companies, which for shortness may be called
public companies, that is to say, companies constituted by special act
of parliament for the purpose of constructing and carrying on
undertakings of public utility, such as railways, canals, harbours,
docks, waterworks, gasworks, bridges, ferries, tramways, drainage,
fisheries or hospitals. The objects of such companies nearly always
involve an interference with the rights of private persons, often
necessitate the commission of a public nuisance, and require therefore
the sanction of the legislature. For this purpose a special act has to
be obtained. A private bill to authorize the undertaking is introduced
before one or other of the Houses of Parliament, considered in
committee, and either passed or rejected like a public bill. These
parliamentary (private bill) committees are tribunals acknowledging
certain rules of policy, taking evidence from witnesses and hearing
arguments from professional advocates. In many of these special acts,
dealing as they do with a similar subject matter, similar provisions are
required, and to avoid repetition and secure uniformity the legislature
has passed certain general acts--codes of law for particular subject
matters frequently recurring--which can be incorporated by reference in
any special act with the necessary modifications. Thus the Companies
Clauses Acts 1845, 1863 and 1869 supply the general powers and
provisions which are commonly inserted in the constitution of such
public company, regulating the distribution of capital, the transfer of
shares, payment of calls, borrowing and general meetings. The Lands
Clauses Consolidation Act 1845 supplies the machinery for the compulsory
taking of land incident to most undertakings of a public character. The
Railway Clauses Consolidation Act, the Waterworks Clauses Acts 1847 and
1863, the Gasworks Clauses Act 1847, and the Electric Lighting (Clauses)