THE LEGAL OPINION

Evening Post, Volume LXXXV, Issue 150, 26 June 1913, Page 8

THE LEGAL OPINION

Th» legal opinion which Mi*. SkerTett asked to be read governing the chairman's ruling was given by Findlay, Dalziell, and Co. The firm advised :— (1) The general object of the proposed meeting is to pass such resolutions as th& meeting may think fit, with a view a> • increasing the , capital of the Bank. (2) If the power to pass such resolutions is conferred upon the shareholders' by, the bank's charter, it is probable the notice is sufficiently definite and in compliance with tho terms, of clause 79 of 'sl6 Deed of Settlement (see Isle of .Wight Railway Co. v. Tahourden, 25 C.Div. 320). (3', Prior to the passing «f fchft Banks* Act of 1894, it would probably have been the duty of the board ■ to comply with the terms of'the requisition. M' The whole management of the business of the bank was, at the time of the passing of the Act of 1894, and has been •vpr since that date, vested in tho board of. directors 'subject only to the limitation* provided by- the D&ed of Settlement, and to the powers vested by 'thatDeed in general meetings of shareholders (clause 3, Deied of Settlement ; and express power was also given to the board to endeavour to obtain euch legislation as it may consider calculated *o advance . the interests of the ißank ' (clause 4, Deed of Settloment). (5) By the Banks Act of 1898 the number . of directors was fixed afc six, of .whom four are appbinted Tjy^the Qover-uor-in- Council and only two by the shareholders; and it' is provided by section 18 of the Act ©f 19K5 that no alteration shall be made as to th© constitution • of the board, or the method of appointing its members, except by Act of Parliament. (6) The State ia a shareholder in the bank, and any increase in the capital of the institution directly »ffecf)S its interests. It has, however, ■no voting rights in respect of its share interest, but has secured a voice in the government' of the bank by meftns of its power to appoint member* of the board. \T) It is clear that the board is not required to comply with any requisition tinder clause 79 of the Deed of Settlement if shareholders have no power to »Ms • the resolutions contemplated by the requisition. (8) It is equally dear that jthe> board has power, und«r clauses 3 and 4 of the Deed of Settlement, to apply to Parliament for legislation giving power to increase th« capital of the bank on such terms as it may think fit. (9) We think the Legislature cannot hav£ contemplated that the shareholders should have power by resolution to diwefc th* board as to how it '. shall conduct the business of the bank ; otherwise, what object could it have had in . conferring upon the Crown th« power to " appoint the majority of the members ot the board. (10) It would seem to follow that there ia no power in the shareholders under the bank's present charter to pass any operative resolution determining what is to be done by the board, as to increasing the capital of th<» bank. (11) In the circumstances the proper c|mTse for the directors would seem to bp to take up the attitude that, as no sdeh resolution of the shareholders as is proposed can' 1 have any operative effect, it is not desirable that the board shon'd comply with the. requisition of ths shareholders, and we have to advise accordingly. (12) It isonly necessary to add that the Court 1 .will not itt any efts* Order the board to comply with the requisition, but will leave it to the shareholders to exercise their powers (if any) under clause 79 (see Macdougall v. Gadiner, 10 Oh. 606); and further, that if th« shareholders convene a meeting, it would seem best that the board should not take part in it, but should, if any resolutions are passed at such meeting, take into consideration the question of determining if it should ' recommend the Governor in Council to exercise the power of veto conferred by sub-section (5) of section 14 Of the Act of 1898, whether such resolution be legally valid or not. • It was further advised, in another opinion, that, && r "6he shareholders have not had a notice that the matters set out in Mr. Bke*rett's resolutions are to be brought' before the meeting on the 26th inst., the resolutions, it passed, would b$ 'invalid, and it is therefore the duty of the chairman to refuse to put them to the meeting." Unices there can be found some provision in the Deed cf Settlement conferring upon the general meeting of proprietors the power to do the things proposed to be done by Mr. Skerrett's resolutions, it is plain that no such resolutions may be passed in manner pmpoeed by Mr. Skerrett's notice. " We have been unable to discover in the deed of settlement any power in a general meeting of proprietors to pass these resolutions. The only business apparently which the Deed of Settlement contemplates being 1 dealt with &l an ordinary or half-yearly general meeting is that specified m cuusea 78, 01, 103, and possibly !123. "It ia, we think, perfectly plain that ■ none m these clauses gives to a general ■ meeting of • shareholders any power to interfere with the management of thd business of the bank conferred upon the board by clause 3. "In our opinion, it would be necessary ' for the board or the shareholders, if they desire to carry out the purpose intended by Mr. Skerrett's resolutions, to convene special general meetings of propries tors under clauses 79 and 85 of the Deed .\of Settlement. \ "We have therefore to advise that ib is \ duty of the board to refuge to sub* the resolutions contained in Mr. Skerrett's notice to the proprietors at - the general meeting on tho 26th insfc." [Reports of the chairman's remarks and other phases of the bank'B affairs are published on pages 2 and 3.]