Sec. 13. Business thereat. Tenure of directors. Provisional directors cease. Minimum of capital. 2. The subscribers shall at such meeting,— (b) elect such number of directors, duly qualified under this 3. Such directors shall hold office until the annual general meeting in the year next succeeding their election. 4. Upon the election of directors as aforesaid the functions of the provisional directors shall cease. 53 V., c. 31, s. 13; 4-5 E. VII., c. 4, s. 2. The bona fide subscription of $500,000 of capital and the payment of $250,000 thereof to the Minister of Finance are two of the conditions precedent to a new bank's commencing business. The amounts do not vary with the authorized capital of the bank because the object of the provision is to secure a safe minimum of subscribed capital and paid-up capital as evidence of good faith and stability. From this point of view there is no reason for requiring a larger minimum in the case of a bank with an authorized capital of $2,000,000 than in the case of a bank whose authorized capital is only $500,000 (the smallest amount allowed by the act). The provision operates of course as a discouragement of small local banks. The section dates from 1890, except that in 1906 it was divided into its present sub-sections. Prior to 1890 the amount of capital required to be bonâ fide subscribed before commencing business was the same as at present, but only $100,000 was required to be paid up. This last amount was required to be bonâ fide paid up, and the fact that the necessary amount had been subscribed and paid up had to be proved to the satisfaction of the Treasury Board, and its certificate obtained, before the bank commenced business. There was a further provision that at least $200,000 in all should be paid up within two years after the commencement of business. The provision of the present act that the minimum of paid-up capital shall be paid to the Minister of Finance was first enacted in 1890. It is designed to ensure the bonâ fide paying up of the necessary amount, and is aimed particularly against the practice of discounting paper of subscribers and crediting them with payment on stock subscribed. The requirements to be satisfied before a new bank com- Sec. 13. mences business as provided by this and the next following three Prerequisites sections are, briefly, the following: to commencement 1. Bonâ fide subscriptions of $500,000 and payment on ac- of business. count thereof to the Minister of Finance of $250,000 (Sec. 13). 2. Calling of meeting of subscribers by the provisional directors, and election of directors (Sec. 13). 3. Obtaining of certificate from the Treasury Board within one year from the passing of the act of incorporation (Secs. 14 and 16). Upon the issue of the Treasury Board's certificate the Minister of Finance is required to pay to the bank without interest the amount deposited with him, after deducting therefrom $5,000 for the purposes of the Bank Circulation Redemption Fund under section 64. In the event of no certificate being issued within the year, the Minister is required to repay the amount deposited to the person depositing the same, and the charter of the bank lapses. The "public notice" required is prescribed by sec. 2, subsec. 2. Inasmuch as the directors are authorized to call a meeting "by public notice," individual notices to subscribers are unnecessary. Cf. notes to secs. 21 and 31. It is doubtful whether a minority of the subscribers can make a valid election of directors. (In re London & Southern, etc., Land Co., 1885, 31 Ch. D. 223; York Tramways v. Willows, 1882, 8 Q.B.D. 685 at p. 697). All subscribers appear to be entitled to vote whether they have made any payments on account of stock subscribed or not. The form of subscription ought to be drawn so as to give the provisional directors power to enforce payment by suit or forfeiture. 14. The bank shall not issue notes or commence the business of banking until it has obtained from the Treasury Board a certificate permitting it to do so. Permission of Treasury Board to mence busi ness. 2. No application for such certificate shall be made until No certifidirectors have been elected by the subscribers to the stock in cate until the manner hereinbefore provided. 53 V., c. 31, s. 14. directors elected. Sec 14. When cer See notes to section 13. Sec 132 makes it an offence against this act to issue notes or commence business before the obtaining of the certificate. Sec. 15 prescribes the conditions to be performed before the certificate of the Treasury Board may be given. "Commence the business of banking," refers to the transaction of business with the public as distinguished from dealings connected with subscriptions for stock. (Cf. North Sydney v. Greener, referred to in the notes to sec. 12.) This section was divided into its present sub-sections in 1906. 15. No certificate shall be given by the Treasury Board tificate may until it has been shewn to the satisfaction of the Board, by be granted affidavit or otherwise, that all the requirements of this Act and of the special Act of incorporation of the bank, as to the payment required to be made to the Minister, the election of directors, deposit for security for note issue, or other preliminaries, have been complied with, and that the sum so paid is then held by the Minister. Within one year. If certificate not granted. Powers to cease. 2. No such certificate shall be given except within one year from the passing of the Act of incorporation of the bank applying for the said certificate. 53 V., c. 31, s. 15. This section was divided into its present sub-sections in 1906. 16. If the bank does not obtain a certificate from the Treasury Board within one year from the time of the passing of its Act of incorporation, all the rights, powers and privileges conferred on the bank by its Act of incorporation shall thereupon cease and determine, and be of no force or effect whatever. 53 V., c. 31, s. 16. See notes to sec. 13. This and the two next preceding sections date from 1890. Prior to that date there was no time limit for the commencement of business other than the time set for the expiration in due course of the charter of the bank. 17. Upon the issue of the certificate in manner hereinbefore Sec. 17. provided, the Minister shall forthwith pay to the bank the Deposit, how disposed of amount of money so deposited with him as aforesaid, without if certificate interest, after deducting therefrom the sum of five thousand granted. dollars required to be deposited under the provisions of this Act for the securing of the notes issued by the bank. 2. In case no certificate is issued by the Treasury Board If certificate within the time limited for the issue thereof, the amount so not granted. deposited shall be returned to the person depositing the same. bound. 3. In no case shall the Minister be under any obligation to Minister not see to the proper application in any way of the amount so returned. 53 V., c. 31, s. 17. See notes to sec. 13. Sec. 64 requires the Minister of Finance to retain the sum of $5,000 for the purposes of the Bank Circulation Redemption Fund. This section was divided into its present sub-sections in 1906. Sec. 18. (p. 52.) Ultra vires acts. CHAPTER VI. INTERNAL REGULATIONS. The sections included in this chapter do not apply to the Bank of British North America (sec. 6). A company is not bound by those acts of the directors, which as regards the company are ultra vires, and the subsequent approval of the whole body of shareholders cannot make such acts binding. Ashbury v. Riche, 1875, L.R. 7 H.L. 653; cf. Irvine v. Union Bank, 1877, 2 App. Cas. 366.) But if the acts in question are intra vires of the company, Informality of internal the mere want of formality in the Company's proceedings will proceedings. not affect a third party with whom it is dealing, even though such party is himself a director and has notice of all that is done. (Neelon v. Thorold, 1893, 22 S.C.R. 390, 396; Adams v. Bank of Montreal, 1899, 8 B.C. 314, and 1 Com. L.R. 248, and cases cited.) There is no necessity on the part of persons dealing with companies to see that de facto directors are properly appointed. (Mahoney v. East Holyford, 1875, L.R. 7 H.L. 869.) In any case where a person holds himself out as an agent or official of a company, and the circumstances are such that in law the company could repudiate such person or take proceedings to restrain him, but has not done so, then his acts within his apparent authority will bind the company as regards persons ignorant of his true position, even though his assumption of authority is entirely unwarranted. (Allen v. Ontario & Rainy River Railway, 1898, 29 O.R. 510, 513, and cases cited.) In Ruben v. Great Fingall, [1906] A.C. 439, the appellants advanced in good faith a sum of money to the secretary of the respondent company for his own purposes on the security of a share certificate of the company issued to them by the secretary certifying that the appellants were registered in the company's register of shareholders as transferees of shares. This certificate was, in point of form, in accordance with the company's articles of association, inasmuch as it bore the seal of the company, and appeared to be signed by two of the directors and countersigned by the secretary. The seal of the company was, |