MINING SCRIP CASE.

New Zealand Herald, Volume XLVII, Issue 14347, 18 April 1910, Page 6

MINING SCRIP CASE.

A SUCCESSFUL ACTION. NAME REMOVED FROM REGISTER. JUDGMENT was given by Mr. Justice Sim in Chambers on Saturday in respect of an application by John Dawson for the removal of his name from the register of-the Shortland Flat Gold Mining Company. Mr. E. W. Burton appeared for applicant and Dr. Bamford for the company. Tho action was brought in • respect of 1000 shares and the grounds set forth by tho plaintiff were: (1) That he was induced to apply for the shares by misrepresentation. (2) That tho requirements of section 95 of tho Companies Act, 1908, were not complied with before the allotment of the shares. Tho plaintiff sent in an application for 1000 shares in the newly-formed company in July, 1909. The document which he received from the promoters stated that tho company was to be registered when 40,000 shares were subscribed for, such terms having been approved by tho Auckland Stock Exchange: " I find it unnecessary," remarked His Honor, "to consider' the question of alleged misrepresentation, because in my opinion tho applicant is entitled to succeed on tho other grounds. The evidence made it clear that tho ■",-.;•<oters intended to offer 80,000 shares to the public for subscription." His Honor held that the document, issued by the promoters constituted a prospectus within the meaning of tho Act, and it was clear that the shares were being offered to the public for subscription.- "To deliver to any person a blank application for shares in a proposed company," said His Honor, " is an invitation to that person to subscribe, and is an offer of such shares.

Tho case, therefore, comes within tho operation of section 93 of tho Act." The directors proceeded to allotment when only 56,000 shares had been applied for. They allotted 55,000 shares, and did this before the sums payable on application had been paid in respect to anything like that number. There was this failure to comply with the requirements of section 95 of the Act, and under tho provisions of section 96, Dawson was entitled to avoid the allotment made to him providing ho did so within one month after the holding of (lie statutory, meeting of the company. Tho plaintiff at that meeting demanded the return of the £50 paid in respect of tlio shares allotted to him, and a similar demand was subsequently made on his behalf by his solicitor. His Honor said that the plaintiff had accordingly dono all that was necessary in compliance with section 95 of the Act, and an order would be made that the register of the company bo rectified by removing the applicant's namo therefrom in respect of the 1000 shares, and that tho company repay to the applicant tho amount paid by him in respect of the shares, with interest thereon at per cent, from September 6, 1909, until payment. The applicant would bo allowed the costs on the first summons, which His Honor fixed at £5 ss, with disbursements.