ANGOSTURA BITTERS, LTD Vs. ALBERT KERR

JUDGEMENT

(1.) This appeal arises out of an originating summons taken out in the Supreme Court of Trinidad and Tobago for the friendly determination of certain questions affecting the rights of holders of preference shares in the appellant company.

(2.) When it first came on for hearing be fore the Board, only the company appeared, and it was adjourned in order that the preference share-holders might be represented, as is now the case. It will be convenient to refer to them in this judgment as the respondents. The interests of the ordinary share-holders, whose special representative does not appear, are identical with those of the appellants. Three questions were submitted for the determination of the Court, of which the third is alone the subject of the appeal. It is in the following terms: "(3)-(a) Is it intra vires of the Directors of the Company to use and dispose of the said Re-serve Fund of ?50,000 for all or any of the purposes set out in sub-S. 14, Cl. 119 of the articles of association of the Company ? (b) If yes, is the company under any obligation to make up any deficiency arising from such user and disposal ?" The reserve fund in question was constituted under Cl. 5 of the memorandum of association which is set out below : " The share capital of the company is ?170,000 divided into 85,000 Participating Preference shares of ?1 each, and 85,000 ordinary shares of ?1 each. Subject as hereinafter provided, the rights following shall be attached to the Participating Preference shares aforesaid : (1) The holders of the said Participating Preference shares shall be entitled to a fixed cumulative preferential dividend at the rate of eight per cent. per annum on the capital for the time being paid up thereon, and after payment of such dividend 10 per cent. of the profits of each year shall be set aside and accumulated as a reserve fund until it amounts to ?50,000, and after setting aside such 10 per cent. and after the holders of the ordinary shares shall have received a non-cumulative dividend of eight pet cent. per annum on the amount for the time being paid up on their original shares the holders of the Preference Shares shall be entitled to participate equally with the holders of the ordinary shares in any surplus divisible profits of the year until the dividend on the Preference Shares for such year amounts to ten per cent, per annum and the holders of the ordinary shares shall then be entitled to the remainder of such profits. (2) The holders of the said Participating Preference Shares shall in a winding up have priority as to return of capital over all other shares in the capital for the time being of the company but shall not have any further right to participate in profits or assets. (3) Any reserve fund formed under the provisions hereinbefore contained shall be invested outside the company's business. (4) The right hereby attached to the said Participating Preference shares (including the provisions hereinbefore contained as to the reserve fund) may be modified in accordance with Cl. 54 of the accompanying articles of association, but not otherwise and that clause and also Cl. 155 of the said articles shall be deemed to be incorporated herein and have effect accordingly. (5) Subject as aforesaid shares created upon an increase of capital may be divided into different classes and may have attached thereto respectively such preferential and qualified deferred or special rights, privileges and conditions as may be determined."

(3.) The company is incorporated under the Companies Ordinance, 1913-1914 of Trinidad and Tobago, but it is agreed that nothing turns on the precise terms of this ordinance, and that the question before the Board falls to be determined in accordance with the principles of the English company law.