Salomon
Page 1
ICLR: Appeal Cases/1897/ARON SALOMON (PAUPER) APPELLANT; AND A. SALOMON
AND COMPANY, LIMITED RESPONDENTS. BY ORIGINAL APPEAL. AND A. SALOMON
AND COMPANY, LIMITED APPELLANTS; AND ARON SALOMON RESPONDENT. BY
CROSS APPEAL. - [1897] A.C. 22
[1897] A.C. 22
[HOUSE OF LORDS.]
ARON SALOMON (PAUPER) APPELLANT; AND A. SALOMON AND COMPANY,
LIMITED RESPONDENTS. BY ORIGINAL APPEAL. AND A. SALOMON AND
COMPANY, LIMITED APPELLANTS; AND ARON SALOMON RESPONDENT. BY
CROSS APPEAL.
1896 Nov. 16.
LORD HALSBURY L.C., LORD WATSON., LORD HERSCHELL., LORD
MACNAGHTEN., LORD MORRIS., LORD DAVEY.
Company - Private Company - One Man Company - Limited Liability - Winding-up - Fraud upon
Creditors - Liability to indemnify Company in respect of Debts - Rescission - Companies Act 1862
(25 & 26 Vict. c. 89) ss. 6, 8, 30, 43.
It is not contrary to the true intent and meaning of the Companies Act 1862 for a trader, in order to limit his liability and obtain the preference of a debenture-holder over other creditors, to sell his business to a limited company consisting only of himself and six members of his own family, the business being then solvent, all the terms of sale being known to and approved by the shareholders, and all the requirements of the Act being complied with.
A trader sold a solvent business to a limited company with a nomina capital of 40,000 shares of 1l. each, the company consisting only of the vendor, his wife, a daughter and four sons, who subscribed for one share each, all the terms of sale being known to and approved by the shareholders.
[1897] A.C. 22 Page 23
In part payment of the purchase-money debentures forming a floating security were issued to the vendor. Twenty thousand shares were also issued to him and were paid for out of the purchase-money. These shares gave the vendor the power of outvoting the six other shareholders.
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No shares other than these 20,007 were ever issued. All the requirements of the Companies Act
ICLR: Appeal Cases/1897/ARON SALOMON (PAUPER) APPELLANT; AND A. SALOMON
AND COMPANY, LIMITED RESPONDENTS. BY ORIGINAL APPEAL. AND A. SALOMON
AND COMPANY, LIMITED APPELLANTS; AND ARON SALOMON RESPONDENT. BY
CROSS APPEAL. - [1897] A.C. 22
[1897] A.C. 22
[HOUSE OF LORDS.]
ARON SALOMON (PAUPER) APPELLANT; AND A. SALOMON AND COMPANY,
LIMITED RESPONDENTS. BY ORIGINAL APPEAL. AND A. SALOMON AND
COMPANY, LIMITED APPELLANTS; AND ARON SALOMON RESPONDENT. BY
CROSS APPEAL.
1896 Nov. 16.
LORD HALSBURY L.C., LORD WATSON., LORD HERSCHELL., LORD
MACNAGHTEN., LORD MORRIS., LORD DAVEY.
Company - Private Company - One Man Company - Limited Liability - Winding-up - Fraud upon
Creditors - Liability to indemnify Company in respect of Debts - Rescission - Companies Act 1862
(25 & 26 Vict. c. 89) ss. 6, 8, 30, 43.
It is not contrary to the true intent and meaning of the Companies Act 1862 for a trader, in order to limit his liability and obtain the preference of a debenture-holder over other creditors, to sell his business to a limited company consisting only of himself and six members of his own family, the business being then solvent, all the terms of sale being known to and approved by the shareholders, and all the requirements of the Act being complied with.
A trader sold a solvent business to a limited company with a nomina capital of 40,000 shares of 1l. each, the company consisting only of the vendor, his wife, a daughter and four sons, who subscribed for one share each, all the terms of sale being known to and approved by the shareholders.
[1897] A.C. 22 Page 23
In part payment of the purchase-money debentures forming a floating security were issued to the vendor. Twenty thousand shares were also issued to him and were paid for out of the purchase-money. These shares gave the vendor the power of outvoting the six other shareholders.
Page 2
No shares other than these 20,007 were ever issued. All the requirements of the Companies Act