LOOSE-LEAF MINUTES.

Pahiatua Herald, Volume XLIII, Issue 13175, 6 February 1936, Page 2

LOOSE-LEAF MINUTES.

IMPORTANT ENGLISH DECISION

’‘Legal Aspect of Loose-leaf Minute Books” is the subject of an important article in the New Zealand Accountants’ Journal. •'While Section 129 in the Companies Act, 1933, provides that every company shall cause minutes of all proceedings of general meetings, and, where there are directors or managers, of all proceedings at meetings of directors or of its managers, to be entered in books kept for that purpose, a practice has grown up of keeping minutes on the loose-leaf system,*' the writer remarks. "One advantage, of course, is that it enables the minutes to be typed so that several copies can be made simultaneously for circulation amongst the directors.

"It has been commonly supposed that if a loose-leaf system is adopted, and .proper precautions taken of numbering each sheet, each individual sheet to be afterwards initialled by the chairman, this would meet the requirements of the Act. Members of the accountancy profession, however, will be surprised at a recent decision given in Great Britain. It has just been held by Mr Justice Bennett in the Hearts of Oak Insurance case, that a looseleal minute book is not a minute book for the purpose of the Companies Act, and he rejected it as evidence.

"It would appear that the learned Judge holds that a loose-leaf book is not a ‘book’ at all since it is merely a collection of sheets fasten-

ed in such a way that one can he taken out and another substituted. He has held that a book, on the other hand, is something which is sewn or pasted together, and which cannot readily be tampered with by any dishonest person.

"For the purpose of the Companies Act there is no definition of the word ‘book,’ but one would have thought that the legislature must be presumed by now to have envisaged the modern loose-leaf system of keeping records, and the possibility that minute books as well might bo kept in this manner. If it had been intended to express disapproval of the practice ample opportunity was afforded when framing the Companies Act, 1929, in England, and in re-casting the law on the subject in this Dominion in 3 933.

“A practice in the case of some companies is to have the minutes typed on loose-sheets, and for the sheets to he pasted into a guard book, the pages of which are consecutively numbered. The system has much the same advantage as the loose-leaf method, but in order to safeguard the records it is suggested that each sheet should be signed or initialled by the chairman, and it is a. good plan to have the signatures partly on the minute sheet, and partly on the sheet on

which it is pasted. It is probable that the Courts would look more favourably. on the records being kept in a guard book on the lines suggested, than would bo the case if tfie sheets were simply in loose form.”