Tesco v Constain - Thomson Reuters

[1912] 2 Ch. 125 Page 91912 WL 17392 (Ch D)(Cite as: [1912] 2 Ch. 125)International Co. of Mexico. [FN20]FN16 (1840) 3 Beav. 334.FN17 H[1898] 1 Ch. 263.FN18 H[1905] 2 Ch. 78.FN19 (1889) 5 Times L. R. 460.FN20 [1893] 1 Ch. 484, n.Stewart-Smith, K.C., and Whinney, for the defendant company.W. H. Cozens-Hardy, for the defendant trustee.EVE J. At or about the time the company was incorporated in the month ofJanuary, 1898, it proceeded to raise a sum of 225,000l. by the issue of 4 percent. debenture stock secured by a trust deed, in a form well known in theprofession now, by which the company purported to charge, and did in fact charge,its assets with repayment of the principal moneys and interest in accordance withthe terms of the deed. The terms upon which the stock was issued and held by thestockholders were contained partly in the body of the deed and partly in theschedules attached to the deed.Under the deed, by virtue of a clause contained in the first schedule, thecompany had the option of paying off the principal moneys secured by the deed atany time prior to October 1, 1907, provided it gave six months' notice of itsintention and paid in addition to the principal moneys a premium of 5l. inrespect of each 100l. paid off. Further, if the company went into liquidation, orif any of the events happened which, according to the tenor of the deed, wouldmake the principal moneys immediately repayable, the company was bound, on thehappening of any one of those contingencies, to repay the principal moneys, andfinally the company bound itself in any event to pay off the whole of theprincipal moneys on October 1, 1907. These observations express the obligationsof the company and the rights of the stockholders so far as is material for thepurposes of this case.To those rights and obligations were added certain provisions, and by theprovision to which I am about to refer power was given to a majority of thestockholders to enter into compromises or arrangements with the company, which,if entered into strictly in accordance with the power conferred upon themajority, were to have the effect of binding the minority and the whole of thedebenture stock holders.The powers conferred upon the majority of the stockholders are to be *138found, so far as they are material to-day, in clause 15 of the third schedule tothe deed, and by that clause a general meeting of the stockholders shall have thefollowing powers exercisable by extraordinary resolution, namely,--I need notread No. (1.), because that is not suggested as having any relevancy in thepresent discussion--Nos. (2.), (3.), and (4.) are in these words:(2.) "Power to sanction any compromise or arrangement proposed to be madebetween the company and the stockholders provided that it is one which the Courtwould have jurisdiction to sanction under the Joint Stock Companies ArrangementAct, 1870, or any statutory modification thereof for the time being subsisting ifthe company were being wound up and the requisite majority at a meeting of thestockholders summoned pursuant to that Act or modification thereof aforesaid hadagreed thereto. (3.) Power generally to sanction any modification or compromiseof the rights of the stockholders against the company or against its propertywhether such rights shall arise under these presents or otherwise. (4.) Power toassent to any modification of the provisions contained in these presents whichCopr. © West 2004 No Claim to Orig. Govt. Works