7719. Restricted Disposal.-The power to dispose of property in shares depends upon the rules laid down by the company for dealings in shares (7384); for,

7720. No Invariable Rule.-The Joint Stock Companies Acts make no unalterable rule concerning the sale and transfer of shares; therefore,

7721. Varying Facility.-The facility or otherwise with which shares can be sold or bought depends, for the most part, upon the rules of the particular company to which they refer (7384).

7722. Rights and Liabilities.—When the rules of a company prohibit the transfer of shares (7380) or make transfer subject to approval of the directors (7736), of course the rights and liabilities cannot be transferred any more readily than the shares themselves.

7723. Absence of Provisions.—Should the articles of association of a company be so carelessly drawn as to omit any reference to the right and mode of transferring shares, very considerable difficulty would arise; but,

7724. Safe Assumption.—It may be safely assumed that no company exists, or is likely to come into existence, without a provision of rules with regard to the transfer of its shares; therefore,

EXAMINATION OF ARTICLES.

7725. When a shareholder of a company wishes to sell his shares he should carefully consult the articles of association on the subject, before he proceeds to a bargain; because,

7726. Risk of Vendors.-If a shareholder undertakes to sell shares, which he is really unable to sell, he is liable upon his contract for any loss sustained by the party who has agreed to purchase should there be any loss; on the other hand,

7727. Risk of Purchasers.-When a person agrees to purchase shares in a company, upon the mere transfer of certificates, he should carefully consult the articles of association on the subject, before he parts with his money, or he may find it impossible to secure the shares, and difficult to get his money back.

STATUTORY FORM.

7728. Almost Universal.-The form of transfer of shares, provided in statutory articles of association (7196) is almost universally adopted by all modern companies.

7729. Joint Action Necessary.-In order to effect a transfer of shares in a company, it is essential that both the transferor and the transferee should sign the form of transfer; for,

7730. Single Acts Inoperative.-Neither of the parties, singly, can effect the object.

7731. Formal Transfer.-When a form for the transfer of shares is duly filled up and signed, application must be made by either or both of the parties to register the transferee's name in the register of the company, in place of that of the transferor; for,

7732. Incomplete Transfers.-A transfer of shares is not complete, as a general rule, till the register is altered accordingly.

7733. Compulsory Transfers.-If there be no article of the company in restraint or control of the transfer of shares, the officers of the company are bound to register the transfer on application and exhibition of the form duly executed; only that,

7734. Closed Registers.-By the 33rd section of the Act of 1862 it is provided that :

'Any company may, upon giving notice by advertisement in some news paper circulating in the district in which the registered office of the company is situated, close the register of members, for any time or times not exceeding in the whole thirty days in each year," whether provided in the articles or not (7198); but,

7735. Before General Meetings. It is usual for the directors of a company to secure their right of closing the register of members under the articles (7198).

CONTROL OF DIRECTORS.

7736. Necessary Notice.-If the articles of a company give a power to directors to control the transfer of shares, notice of the proposed transfer must be given at the office of the company; and

7737. Deferred Transfer.-The transfer must stand over, at any rate, till the next board meeting; when,

7738. Refusal Without Cause.-Should a meeting of directors of a company take place, after a notice of intended transfer of shares has been duly given, and the directors at that meeting neglect or refuse to sanction the transfer without cause assigned;

7739. Corporate Liability.-The company is forthwith liable to the transferee for all calls subsequently paid by him, and to the transferor for all losses which he may suffer in consequence of such neglect or refusal; and

7740. Retrospective Transfers.-If directors, in whom is vested the power to sanction the transfer of shares, refuse their sanction

without reasonable and sufficient cause, a court of equity will compel the transfer retrospectively, with all its consequences.

INTEREST OF PARTIES.

7741. When a sale of shares is effected, and the form of transfer is duly executed, it is the interest of one or other of the parties to effect the transfer in the register of the company as early as possible, for,

7742. Purchasers.-The purchaser of shares in a company by transfer is not entitled to subsequent dividends until his name is fully registered in the register of the company as the owner of such shares; and

7743. Vendors.-The seller of shares is not exempt in any degree from the future liabilities of the company until his name is removed from the register of the company.

EFFECT OF TRANSFERS.

7744. Immediate.—The moment the name of a purchaser of shares by transfer is entered upon the register of a company, he becomes entitled to all the profits arising upon the shares so transferred, and liable for all the calls which may be made in respect of such shares, whether the company continue or whether it fail; but,

PAST SHAREHOLDERS.

7745. Continuing Responsibility.-The responsibility of a seller of shares in a company does not necessarily end with the removal of his name from the register; it is true that,

LONG INTERVALS.

7746. Rare Liability.-When shares in a company are held as investments, and only change hands at long intervals, the liability of past members is rarely to be taken into account; but,

SHORT INTERVALS.

7747. Complicated Liability.-If shares in a company are much used for speculation, and are successively held at short intervals by several persons, the liability of past members may survive, under conditions of delay, complication, and perplexity beyond measure.

LAPSE OF TIME.

7748. Working Companies.-So long as a company can carry on and avoid winding up, none but the members on the register for the time being are liable for calls:

7749. Complete Exoneration.-Past members, in that case, are all exonerated from liability the moment their names are expunged from the register; and

7750. Full Payment.-If a company is wound up, and a holder of shares by transfer is able to pay, and does pay all calls due upon his shares, then his liability, as well as that of any previous holder or holders, ceases.

7751. Liability Extinguished.-The liability upon those shares is then extinguished, as against all parties, if it is a limited company ; but,

7752. Reviving Liability.—If a company is wound up, and a holder of shares by transfer becomes insolvent, and unable to pay the proportion of calls which may be then due upon his shares, and the creditors of the company are not paid, then the person from whom he purchased his shares becomes liable for his default, and any previous holder for his default, and so on to the original holder, who is finally responsible; thus,

7753. Example.—A gets an allotment of shares, and sells them to B, B sells them to C, and C to D, each transfer being effectually made and registered ; then,

7754. If the company is wound up, and D is proved to be incapable of paying calls, C becomes liable; and

7755. If C is incapable of paying, B is liable; and

7756. If B is incapable of paying, then A is liable for any residue which the total or partial incapacity of the other three may have left unpaid; so that,

7757. Successive Bankruptcies.-The possible liabilities of successive shareholders may be thus illustrated: a limited company proceeds to wind up, and D is a holder of a £100 share, with only £20 paid up; D immediately becomes bankrupt, and pays a dividend which only amounts to £10. C then becomes liable for £70, and he in his turn becomes bankrupt, and pays £10 more. B then becomes liable for £60, and in like manner his estate pays only £10. Finally, then, A is liable for £50, and, unless he also becomes bankrupt, he must pay the money; provided always that,

7758. Winding Up Essential.-No past shareholder of a company can be called upon to contribute to the assets of a company, until after it proceeds to winding up; and

7759. Compulsion of Transferees.-No past shareholder can be called upon to contribute to the assets of a company which is in course of winding up, until the last extremity of legal compulsion has been brought to bear in vain upon every subsequent holder; and

7760. Limited Liability.-No past shareholder of a company can be called upon to contribute towards the payment of any debt or engagement incurred or entered into after his name was removed from the register, except costs of winding up; and

7761. Twelve Months Exonerates.-No past shareholder can be called upon to contribute to the assets of a company in course of winding up, if, at the date of the commencement of such winding up, he has ceased to be a shareholder for a period of twelve months.

WORKING LIMITS.

7762. According to Law.--As soon as a company has got into working order, it again becomes necessary to observe that the official and practical business must be carried on in accordance with the Acts, and with the memorandum and articles of association.

7763. Private Members Powerless.-No member of an incorporated company, not being a director or servant thereof, is entitled to do any act, or to enter into any contract, on behalf of the company; for

7764. Directors or Agents.-No act can be effectually done, or contract entered into, for or on behalf of an incorporated company, except by the directors, or persons duly authorized by them, as their servants or agents.

CONTRACTS.

7765. Necessary Authority.-Every person who does business with a company should act with scrupulous care as to the authority upon which he receives orders; for,

7766. Excess of Objects.-No company is bound by contracts entered into by its directors in respect of matters outside and beyond the registered objects of the company (7446); and

7767. Individual Acts.-No company can be bound by acts done by an individual, without authority of the company; thus,

7768. Void Orders.-The junior and other subordinate servants of a company, though generally empowered to receive money and give receipts, are seldom qualified to give orders for goods, or to enter into any contract, however simple, unless acting under express instructions of a superior officer; and

7769. Limited Power of Directors.-The directors and superior officers of a company may sometimes be disqualified for entering