311 / 336
reef upon which the shareholders' democracy envisaged
by Mr. Temp le La ng finally founders. Ma ny business
decisions at first sight within the ambit of an article 80
clircr'.ion would in fact fall outside it by reason of the
operation of other articles. Say for example the general
meeting wants to d'rect the directors to do something
involving the expenditure of the company's resources,
e.g to diversify its operations or spend more on adver-
tising or whatever. Money for the pet project has to
come from somewhere, and whether the source be allo-
cation of reserves of profit, borrowing, or the raising of
fresh share capital, one finds that control is given by
other articles to the directors with the result that the
direction will necessarily interfere with the discretions
so given.
Perhaps the general meeting may direct the directors
in some areas without trespassing upon their preserves.
Directing the destination of newly raised capital and
its product might be a case in point. But any distinc-
tions between valid and invalid directions is, as Ta b le
A stands, merely arbitrary, not being based on any
consistent principle. This is undesirable and was ob-
viously unforseen by the draftsman.
In view of the doubts surrounding the present article
80 and the possibility that such doubts might in an
appropriate case have to be expensively resolved by
litigation, it would be advisable for persons concerned
with the formation of companies who desire both
relative certainty and the merits of the bulk of Table
A to avoid it. Th ey can adopt either the old form
which notwithstanding inelegancies in its d r a f t sma n-
ship has the advantage of the Courts having clearly
worked out the division of functions under it, or, better
still, the present form with the latter part covering
"directions" excised. Anyone who wants a shareholder
democracy had better devise a whole new Table A.
Insurance
problem
/olver/
M COYLE HAMILTON
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