Salomon vs A Salomon & Co Ltd (1987) Summary?

Blue_Dabadee

Can give me a summary of this case? (not from wikipedia€

Cody Pomeray

from lexis

Company - Private Company - One Man Company - Limited Liability - Winding-up - Fraud upon Creditors - Liability to indemnify Company in respect of Debts - Rescission - Companies Act 1862 (25 & 26 Vict. c. 89) ss. 6, 8, 30, 43.

It is not contrary to the true intent and meaning of the Companies Act 1862 for a trader, in order to limit his liability and obtain the preference of a debenture-holder over other creditors, to sell his business to a limited company consisting only of himself and six members of his own family, the business being then solvent, all the terms of sale being known to and approved by the shareholders, and all the requirements of the Act being complied with.

A trader sold a solvent business to a limited company with a nomina capital of 40,000 shares of 1l. each, the company consisting only of the vendor, his wife, a daughter and four sons, who subscribed for one share each, all the terms of sale being known to and approved by the shareholders.
[1897] A.C. 22 Page 23

In part payment of the purchase-money debentures forming a floating security were issued to the vendor. Twenty thousand shares were also issued to him and were paid for out of the purchase-money. These shares gave the vendor the power of outvoting the six other shareholders. No shares other than these 20,007 were ever issued. All the requirements of the Companies Act 1862 were complied with. The vendor was appointed managing director, bad times came, the company was wound up, and after satisfying the debentures there was not enough to pay the ordinary creditors: -

Held, that the proceedings were not contrary to the true intent and meaning of the Companies Act 1862; that the company was duly formed and registered and was not the mere "alias" or agent of or trustee for the vendor; that he was not liable to indemnify the company against the creditors' claims; that there was no fraud upon creditors or shareholders; and that the company (or the liquidator suing in the name of the company) was not entitled to rescission of the contract for purchase.

The decisions of Vaughan Williams J. and the Court of Appeal ([1895] 2 Ch. 323) reversed.

Hey Cody that's almost definitely copyright infringement right there.

Marcusm

Deleted User wrote: »

Hey Cody that's almost definitely copyright infringement right there.

I don't think LexisNexis holds copyright in the head notes of reported judgements from 1897!

Marcusm

Marcusm wrote: »

I don't think LexisNexis holds copyright in the head notes of reported judgements from 1897!

Ah of course.

Sunday brain.

NoQuarter

Marcusm wrote: »

I don't think LexisNexis holds copyright in the head notes of reported judgements from 1897!

Somebody does.

Marcusm

NoQuarter wrote: »

Somebody does.

Not necessarily; copyright over Crown copyright material expires 50 years after publication. The head note was possibly not part of the judgement in 1897 but will likely have been generated by an employee of HMSO as part of official duties so is likely under this heading. I remember early versions of LexisNexs in the 1980s and they were providing extant material in electronic form rather than recreating it (which would in any event be very limited for law reports) so I doubt they ever had copyright. Even for later cases they woud have been licenced to reproduce rather than holding copyright.

Cody Pomeray

The headnotes were printed in The Lords' Journals in 1897, reproduced on lexis, and everywhere else.

I think we're safe.

NoQuarter

I had actually read that as 1987. Didn't realise Saloman was so old actually!

On a slightly related note, the Companies Bill is set to do away with the memorandum and articles of association and thus, the objects clause and therefore adios ultra vires rule.