A company raised capital upon pounds 10 bonds which were declared to be repayable, together with pounds 25 bonus, out of future net profits of the company. No profits were obtained. It was afterwards agreed with the bondholders that the claim to the bonus should be extinguished by the allotment of twenty pounds 1 shares, considered to be fully paid up, in respect of each bond. Held that, the charge being exclusively upon income, the issue of shares was ultra vires as being an issue of capital without payment in money’s worth.
Judges:
Lord Chancellor (Loreburn), Lords Macnaghten, Ashbourne, Collins, and Shaw
Citations:
[1910] UKHL 696, 48 SLR 696
Links:
Jurisdiction:
England and Wales
Company
Updated: 25 April 2022; Ref: scu.619792