New volumes of the Encyclopædia Britannica > Volume 30, K-MOR

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official receiver, the liquidator (where the official receiver is
not the liquidator), and any creditor or contributory of the
company may take part either personally or by solicitor or
counsel. But it was decided in the House of Lords (ex
parte Barnes, 1896, A.C. 146) that an order could not be
made for the public examination of any person against
whom a prirnd facie case of fraud had not been found by
the report of the official receiver. The general effect of
the Act is thus summed up by Mr Justice Buckley in his
work on the Companies Act (7th ed. p. 671) : “ The first
section and the whole Act which follows are addressed
solely to administration. There is to be found in the Act
no alteration of rights, but only an alteration of the courts
and officers and mode of selection of officers who are to
administer those rights, with detailed provisions as to
financial control and subsidiary matters.” The reader may
be reminded that there were three modes of winding up
provided by the Companies Act, 1862 :—(1) Voluntary
winding up by resolution of the members ; (2) voluntary
winding up under the supervision of the court; and (3)
compulsory winding up by the court on the petition of a
creditor or contributory in case of insolvency, and in certain
other cases specified in sec. 79 of the Act of 1862. The
effect of a supervision order is to leave the liquidators to
exercise their powers without the sanction or intervention
of the court in the same manner as if the company were
being wound up altogether voluntarily, but to enable the
court, when called upon, to exercise all the coercive jurisdic¬
tion which it might exercise if it were a winding up by the
court (sec. 151 of the Act of 1862), and the order usually
contains a power for creditors to apply to the court as well
as the liquidator and contributories. The Act of 1890,
speaking generally, deals only with winding up by the
court, but some sections (notably sec. 10) apply to volun¬
tary liquidations also. The winding up business is no
longer the exclusive property of the Chancery Division,
and one incidental benefit conferred by the Act is the
relief thus afforded to the over-burdened chambers of that
division. It was provided (sec. 1) that where the capital
of the company paid up or credited as paid up exceeded
£10,000, a petition for a winding up or supervision order
should be presented to the High Court, with concurrent
jurisdiction to the two Palatine courts of Lancaster and
Durham as regards companies within their jurisdiction.
When the capital did not exceed £10,000, and its
registered office was within the jurisdiction of a County
Court having jurisdiction, the petition was to be presented to
that County Court. The County Courts having jurisdiction
were those having jurisdiction in bankruptcy, with power to
the Lord Chancellor to exclude any court from winding up
jurisdiction. The jurisdiction of the High Court was
exercised by a judge of the Chancery Division assigned
by the Lord Chancellor, or by the judge exercising
the bankruptcy jurisdiction of the court (sec. 2). In
practice the winding up business has hitherto been assigned
to the bankruptcy judge, who has been made a judge of
the Chancery Division for that purpose. The official receiver
is the provisional liquidator, and the definitive liquidator
of the company, unless another person is appointed official
liquidator by the court on the application of creditors or
contributories (secs. 4-6). But whether the official receiver
be appointed liquidator or not, he exercises a large control
over the course of the winding up under secs. 7 and 8,
which require a statement of affairs to be submitted to
him, and require him to make certain reports to the
court, including a report whether in his opinion any fraud
has been committed by any person in the formation of the
company, or by any director or other officer since its for¬
mation. Upon such last-mentioned report the court may
order the public examination of the person whose conduct
[united kingdom
is impugned (see ex parte Barnes, referred to above).
The Board of Trade also takes cognizance of the conduct
of liquidators of companies which are being wound up by
order of the court, and either mero motu, or on the applica¬
tion of any creditor or contributory, may inquire into his
conduct and take action thereon (sec. 25). Secs. 15 and
20 contain what are perhaps the most useful provisions in
the Act. By sec. 15 (which applies to voluntary liquida¬
tions as well as windings up by the court) every liquidator
after the expiration of the first year is required at stated
intervals (by the rules twice in every year) to send to the
Registrar of Joint-Stock Companies a full statement and
account with respect to the proceedings in and position of
the liquidation, and monies in his hands representing
assets unclaimed or undistributed for six months are
required to be paid into the Bank of England. And sec.
20 provides for an audit by the Board of Trade twice a
year of the accounts of every liquidator of a company
which is being wound up by the court. This provision
might with advantage have been applied with some
modification to voluntary liquidations.
There is no doubt more notoriety about winding up
proceedings under the new system of procedure. The
Inspector-General in Bankruptcy makes his yearly report
to Parliament on Companies in Liquidation. The pro¬
vision for the rendering of accounts and audits of accounts
are admirable as far as they go, and have done much to
mitigate frequent abuses in the liquidation of companies.
But in the actual administration of the estate and recovery
of monies recoverable from promoters and officers of the
company on the ground of fraud, breach of trust, or negli¬
gence, it may be doubted whether any great improvement
or change can be discerned. Probably (as in bankruptcy)
in the larger estates things remains pretty much as they
were, but in the smaller estates, where there is very little
for either creditors or contributories, the winding up is
effected with greater despatch. In his report for the year
ending 31st March 1901 the Inspector-General stated that
there were during that year 1687 voluntary liquidations,
of which 38 were subject to supervision and 117 com¬
pulsory liquidations by order of the court. Some of the
voluntary liquidations (estimated by the Inspector-General
in a previous report at one-fourth of the number) were for
the purpose of reconstruction or amalgamation with other
companies. On this basis the number of bankrupt com¬
panies for the year would be 1372. In the estates, the
winding up of which was completed in the years 1898,
1899, and 1900, the percentage of costs on gross assets
was decidedly least in the purely voluntary liquidations,
and remarkably so in the larger estates, and less in the
companies wound up under supervision than in the com¬
pulsory liquidations under order of the court, whether by
the official receiver or by non-official liquidators, but the
percentage in companies wound up by official receivers is
less than in those wound up by non-official liquidators. It
must, however, be remembered that in the voluntary liqui¬
dations some (say one-fourth) were formal liquidations for
the purpose of reconstruction or amalgamation, and also
that the amount of the costs depends very much upon the
circumstances of the particular company and the amount
of litigation involved, and where the percentage is based
on an average of a few companies only, as in the larger
estates, one unusually expensive liquidation unduly affects
the result. Moreover, litigation is more likely to take
place in windings up under the order of the court. The
Inspector-General’s Comparative Table II. (p. 74 of the
Report) therefore does not afford much assistance in arriv¬
ing at a comparative estimate of the expenses of the two
modes of liquidation.
The Companies Act, 1862 (25 and 26 Yict. c. 89), has
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