Objections to Transfer of Shares

Manawatu Times, Volume 62, Issue 123, 26 May 1937, Page 5

Objections to Transfer of Shares

UNUSUAL SUPREME COURT ACTION Per Press Association. INVERCARGILL, Last Night. In the Supreme Court to-day before Mr. Justice Kennedy an order declaring invalid certain resolutions passed by and shares transferred in the drapery company of Millers (Invercargill), Ltd., was sought by George Maddams, of Rangiora, one of the shareholders of the company. Defendants in the action were Millers (Invercargill) Ltd., with James Thomas Sharp, of Invercargill, manager, Alice Sharp, of Invercargill, Walter Gurwood Winnocott, of Christchurch, draper, Thomas Loftus Jones, of Christchurch, engineer, Charles Laidlaw Purdie, of Christchurch, retired, William Alfred Thomas, of Christchurch, tailor, and William Josiah Love, of Christchurch, retired. Mr. H. D. Macalister appeared for plaintiff and Mr. L. J. Hensley, of Christchurch, for the defendants.

Plaintiff was a shareholder in. the company known as Millers (Invercargill) Ltd., an incorporated company carrying on business as drapers in Invercargill. Mr. Macalister, is opening the case, said the company was registered in 1933 with a capital of £IOOO. Plaintiff held 300 shares in the company, Sharp 350 and a Mr. Hanchard 350. The company took its name as the result of its association with a Mr. Miller, a wholesale draper, of Christchurch, who supplied a number of shops bearing his name throughout the Dominion. Apart from that he had no connection with the firm. The company started in Invercargill in June, 1933, and became increasingly successful. Sharp was appointed manager at £5 a week and in September this was increased to £7 a week. At the expiry of the period ending September, 1934, there was a profit of £2318. The directors were then tho three shareholders Hanchard, Sharp a/id Maddams, and in dealing with the surplus the directors were able to declare a dividend of 150 per cent., £ISOO being paid out as a dividend and £750 in addition as directors’ fees. Plaintiff would say that in recognition of Sharp’s services during the strenuous first year he was allocated £655 of the directors’ fees, the balance of £95 going to plaintiff and Hanchard. Immediately after the meeting on October 1 Hanchard resigned and Mrs. Alice Sharp was appointed in his stead, acquiring 50 shares. It would be proved that defendant acquired the shares from Hanchard and as the result of a protest from Maddams it was agreed that the latter receive 33 of those sharos. That was the position in October, 1934, and tho business was carried on by defendant as managing director until the expiry of tho year. In March, 1935, when the company showed a profit of £IBB6 after allowing for income tax. No meeting was held to deal with this balance.-sheet until after September, 1935. Prior to any action being taken a series of minutes was prepared by Sharp in Invercargill signed by himself and Mrs. Sharp a 3 directors and sent to Maddams for his signature. Counsel then dealt with various negotiations between plaintiff and defendant and said the claim was based on the well-established principle of company law that a majority could not obtain au unfair advantage at the expense of a minority. Defendant had over-ridden plaintiff in conducting the business.

After evidence for plaintiff had been given, Mr Hensley said he did not intend to call any evidence. The broad position was that the company was part of Millers’ organisation in Christchurch. All Miller got out of it was the business from the stores. The supply of stocks provided a source of outlet and nothing more. The trouble between Sharp and Maddams seemed to have arisen at the time of tho disposal of Hanchard’s shares. Hanchard was at liberty to sell his shares as he pleased and counsel submitted that the company would have to accept the transfer. Maddams actually signed for the shares and also signed the resolution appointing Mrs Sharp a director. Maddams got an idea that he had been unfairly treated and from that lime he began his bargaining. His signing of the transfer of shares showed that he must have been satisfied ut tho time and his latest statements were apparently an afterthought. As for the alleged “dummy” shareholders, defendants acted upon advice and accepted the shares. The proceedings were perfectly valid and legal “dummy” shareholders were appointed to avoid a, deadlock over the hold-up of the annual meeting and were not used in any other way. There was no desire to oppress Maddams or take away his rights. Mr Mac Alister was replying when the Court rose till to-morrow morning.