28 October 2010
In case of incresing the share qualification amount in the articles, whether the director holding qualification shares at the time of alteration of articles is liable for the increased amount of share qualification or the increased amount applies only to new directors. The reason for this doubt is the judgement cited at the end according to which if at the time of alteration of articles, a director already holds qualification shares, a subsequent increase in amount of share qualification shall not be binding on the director. It seems to be illogical for me as i think that the altered articles apply to the existing directors also. Further, i tried to find the full content of this judgement but failed in that attempt. Kindly, guide me in that respect. Judgement:- Molineaux v London Birmingham and Manchester Insurance Co. (1902) 2 KB 589 (CA). Hoping for the earlieast reply. Thanking u. Sabir Bavani.
03 November 2010
In my opinion, if the Articles of Association provide for a Director to hold the qulaification shares, then when the person was appointed as a Director of the Company he is required to obtain the prescribed number of qualification shares within 2 months from the date of his appointment. In case the Articles are altered and Qualification shares are increased, then this alteration will apply only in case of Directors appointed pursuant to the alteration and not to the Directors appointed prior to alteration because he has obatined the requisite qualification shares prescribed in the Articles of Association at the time of his appointment.
In my opinion the alteration in the Articles pertaining to Qualification shares will be applicable only to the Persons appointed as Directors of the Company pursuant to such alteration:-)
However, this is purely my opinion and based on my understanding of the subject. Views of eminent experts are always welcome.........
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