Peters' American Delicacy Company Limited v Heath [1939] HCA 2

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(HIGH COURT OF AUSTRALIA.]

PETERS' AMERICAN DELICACY COMPANY

LIMITED - : : . dj P . APPELLANT ; DEFENDANT, AND HEATH AND OTHERS. 5 é F . ResponDENTs. PLAINTIFFS,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Company—Capitalization of profits—Validity of alteration of articles—Prejudice of H.C. or A. holders of parlly paid-up shares—Benefit of company—Statements in circular 1938-1939,

explaining proposed alteration—Statements at meeting—Accuracy and com- Sag + pleteness. : Sypyey, a4 1938, The share capital of a company consisted of a large number of fully paid yoy, 11, 14, shares and a smaller number of shares paid up to one-third, The articles of 17. association contained @ provision that cash dividends should be distributed yy. Some, in proportion to the amount of capital paid up on shares and a provision that "939 "notwithstanding anything in any other article contained " under the authority 5, <A

of a general meeting profits might be distributed in the form of fully paid or partly paid shares in proportion to the number of shares held by the respective esas CS. members. At a general meeting a special resolution was passed altering the Dixon and article dealing with the capitalization of profits to the effect that when a capitalization took place the distribution of shares should be in accordance with the amount paid up on the respective shares of the members participating. This alteration formed part of a scheme for the formation of a subsidiary

operating company and a transfer of the assets to it in exchange for shares.