this section. (Cf. Reg. v. Bank of Upper Canada, 1849, 5 U.C. R. 338.) If a shareholder is in other respects entitled to vote, he is not disqualified from doing so because his stock is not paid up. Where there has been no default in paying a call, votes are to be computed upon the face value of the shares held and not upon the amount paid thereon. (Purdom v. Ontario Loan, 1892, 22 O.R. 597.) A shareholder is not debarred from voting or from using his voting power to carry a resolution by the fact of his having a personal interest in the subject-matter of the vote. (North-West v. Beatty, 1887, 12 App. Cas. 589; Burland v. Earle, [1902] A.C. at p. 94.) Sec. 32. Increase. By-law. Approval of Condition CHAPTER VII. CAPITAL STOCK. The sections included in this chapter do not apply to the Bank of British North America (sec. 6). 33. The capital stock of the bank may be increased, from time to time, by such percentage, or by such amount, as is determined upon by by-law passed by the shareholders, at the annual general meeting, or at any special general meeting called for the purpose. 2. No such by-law shall come into operation, or be of any force or effect, unless and until a certificate approving thereof has been issued by the Treasury Board. 3. No such certificate shall be issued by the Treasury Board for approva unless application therefor is made within three months from the time of the passing of the by-law, nor unless it appears to the satisfaction of the Treasury Board that a copy of the bylaw, together with notice of intention to apply for the certificate has been published for at least four weeks in the Canada Gazette, and in one or more newspapers published in the place where the chief office or place of business of the bank is situate. 4. Nothing herein contained shall be construed to prevent the Treasury Board from refusing to issue such certificate if it thinks best so to do. 53 V., c. 31, s. 26. Treasury refuse, The section dates in substance from 1890, when the provision requiring the certificate of the Treasury Board was added. The division into the present sub-sections was made in 1906. Cf. sec. 35, which provides for the reduction of capital stock. Prior to 1871 an increase of capital stock could be effected only by Act of Parliament. It is not intended that the Treasury Board, before issuing a certificate, should make a thorough inspection of the condition of the bank and estimate the value of its assets, or that the certificate should be taken as a representation to the public that the earnings and assets justify the increase of capital. But in exercising the discretion given it by this section the Board might take into consideration any special circumstances brought to its attention by a dissenting minority or in any other way. The granting of the certificate would not be merely a ministerial act. (Cf. In re Massey Manufacturing Co., 1886, 13 A. R. 466.) The benefit of a new issue of stock is an increment of the old shares, so that a contract by which a person is entitled to "the free annual dividends, interest and profits of 100 shares of the Bank of Montreal" gives him the right to the income of the new shares subscribed for under the privilege to subscribe attaching to the old shares. (Hargrave v. Clouston, 1874, 18 L.C.J. 290, 26 R.J.R.Q. 70.) The provisions of this and of the next section do not apply to any increase of stock made or provided for under the authority of secs. 103 and 104 (sec. 105). Sec. 33. 34. Any of the original unsubscribed capital stock, or of the Allotment. increased stock of the bank, shall, when the directors so deter- To present mine, be allotted to the then shareholders of the bank pro rata, shareholders and at such rate as is fixed by the directors: Provided that, (a) no fraction of a share shall be so allotted; and, (b) in no case shall a rate be fixed by the directors, which will make the premium, if any, paid or payable on the stock so allotted, exceed the percentage which the reserve fund of the bank then bears to the paid-up capital stock thereof. 2. Any of such allotted stock which is not taken up by the To the public. shareholder to whom the allotment has been made, within six months from the time when notice of the allotment was mailed to his address, or which he declines to accept, may be offered for subscription to the public, in such manner and on such terms as the directors prescribe. 53 V., c. 31, s. 27. The division into the present sub-sections was made in 1906. Sec. 34. increase. may determine the time of the allotment of so much of the origAllotment in inal capital as had not been subscribed as well as the increased case of capital. Before it is offered to the public, any of such stock must be allotted to the shareholders pro rata, either at par, or at a premium that shall not exceed the percentage which the reserve fund of the bank then bears to the paid-up capital. Any of the stock so allotted which is not taken up by a shareholder within six months, or which he declines to accept, may then be offered to the public at any rate the directors may determine. But the directors must not allot stock at a discount either to shareholders or to the public (Ooregum v. Roper, [1892] A.C. 125; North-West v. Walsh, 1898, 29 S.C.R. 33; Morris v. Union Bank, 1899, 31 S.C.R. 594; Mosely v. Koffyfontein, [1904] 2 Ch. 108). If, however, a certificate that shares are fully paid up is issued to an innocent holder, who changes his position upon the faith thereof, the bank will be estopped as against such holder from contending that there is an unpaid balance. (Bloomenthal v. Ford, [1897] A.C. 156; Dixon v. Kennaway, [1900] 1 Ch. 833.) Reduction. Approval of Conditions for approval. The act provides that no fraction of a share shall be allotted. Any pro rata division of shares will usually result in there being a number of fractions of shares unallotted. The shares made up of these fractions may be allotted in any way the directors think fit, and need not be allotted to shareholders before being offered for subscription to the public. 35. The capital stock of the bank may be reduced by by-law passed by the shareholders at the annual general meeting, or at a special general meeting called for the purpose. 2. No such by-law shall come into operation or be of force or effect until a certificate approving thereof has been issued by the Treasury Board. 3. No such certificate shall be issued by the Treasury Board unless application therefor is made within three months from the time of the passing of the by-law, nor unless it appears to the satisfaction of the Board that, (a) the shareholders voting for the by-law represent a majority in value of all the shares then issued by the bank; and, (b) a copy of the by-law, together with notice of intention to apply to the Treasury Board for the issue of a certificate approving thereof, has been published for at least four weeks in the Canada Gazette, and in one or more newspapers published in the place where the chief office or place of business of the bank is situate. Sec. 35. Board may refuse. 4. Nothing herein contained shall be construed to prevent Treasury the Treasury Board from refusing to issue the certificate if it thinks best so to do. to be sub 5. In addition to evidence of the passing of the by-law, and Statments of the publication thereof in the manner in this section pro- mitted. vided, statements showing, (a) the amount of stock issued; (b) the number of shareholders represented at the meeting at which the by-law passed; (c) the amount of stock held by each such shareholder; (d) the number of shareholders who voted for the by-law; (e) the amount of stock held by each of such last mentioned shareholders; (f) the assets and liabilities of the bank in full; and, (g) the reasons and causes why the reduction is sought; To Treasury shall be laid before the Treasury Board at the time of the appli- Board. cation for the issue of a certificate approving the by-law. 6. The passing of the by-law, and any reduction of the Not to affect capital stock of the bank thereunder, shall not in any way liability of diminish or interfere with the liability of the shareholders of shareholders. the bank to the creditors thereof at the time of the issue of the certificate approving the by-law. sanction re 7. If in any case legislation is sought to sanction any reduc- If legislation tion of the capital stock of any bank, a copy of the by-law or is asked to resolution passed by the shareholders in regard thereto, together duction. with statements similar to those by this section required to be laid before the Treasury Board, shall, at least one month prior to the introduction into Parliament of the Bill relating to such reduction, be filed with the Minister. |