Page:Harvard Law Review Volume 32.djvu/527

UPSET PRICES IN CORPORATE REORGANIZATION 491 "Hitherto such companies, if they desired to raise further capital to meet their engagements, have been forced to go to Parliament for a special Act, enabling them to offer such advantages by way of prefer- ence or priority to persons furnishing new capital as would lead to its being obtained. And Parliament, in dealing with such applications, has been in the habit of considering how far the arrangements proposed as to such new capital were assented to or dissented from by those who might be considered as the proprietors of the existing capital of the company, either as shareholders or bondholders. The object of the present Act . . . appears to be to dispense with a special application to Parliament of the kind I have described, and to give a Parliamentary sanction to a scheme filed in the Court of Chancery, and confirmed by that Court, and assented to by certain majorities of shareholders and of holders of debentures and securities ejusdem generis." ^ Under the English Act, the directors of a corporation in diffi- culty file a scheme of arrangement with the Chancery Division of the High Court. The filing of the scheme gives the court juris- diction to enjoin actions against the Company. The assent in writing of three-fourths in value of any class of security holders, other than common stockholders, binds the minority members of each class; in the case of common stockholders the assent of the corporation at a special meeting is sufficient. The court ascer- tains whether a majority in each class has assented, and whether the scheme is fair and just to all concerned; if the court approves, the scheme is enrolled and becomes effective as an Act of Parlia- ment.® After enrollment no appeal is possible, although the court may in its discretion delay enrollment to allow an appeal.^ Similar procedure is provided for in the case of most private corporations under the Companies Acts.^ An English debenture upon a railroad's properties, or upon the property of any public utility, differs, it is true, from the ordinary American bond issue in that the rights of the security holders are limited solely to the returns ^ from the property after the fashion ■* Cambrian Railways Company's Scheme, L. R. 3 Ch. App. 278, 294 (1868). • Railway Companies Act, 1867, 30 & 31, Vict. c. 127, §§ 6-22. See also 2 Lnro- LEY ON Companies, 6 ed., 1261; Hamilton's Company Law, 3 ed., 525. ' Devon & Somerset Ry. Co., L. R. 6 Eq. Cas. 615 (1868). ' Companies Act, § 120, 8 Edw. 7, c. 69. See also Hamilton's Company Law, 3ed., 527. • Bowen v. Brecon, etc. Ry., L. R. 3 Eq. Cas. 541, 547 (1867).