Re london and general bank, Business Law and Ethics

RE LONDON AND GENERAL BANK:

          An auditor represented a confidential report to the directors calling their attention to the insufficiency of the securities in which the capital of the company was invested, and the difficulty of realizing them, but in his report to the shareholders merely stated that the value of the assets was dependent on realization, and in the result the shareholders were deceived as to the condition of the company, and a dividend was declared out of capital and not out of income.

HELD:

          The auditors had been guilty of misfeasance under S.10 of the Companies like winding-up, Act, 1890 of, and was liable to make good the amount of dividend paid as amounting here to $14,433.3s.

                        LINDLEY, LJ.: "....... it is the duty of the directors, and not of the auditors, to recommend to the shareholders the amounts to be appropriated for dividends and it is the duty of the directors to have proper accounts kept, so as to show the true state and condition of the company........ it is for the shareholders, but only on the recommendation of the directors, to declare a dividend.  It is impossible to read the section of the Companies Act without being struck with the importance of the enactment that the auditors are to be appointed by the shareholders and not to or regards to the directors, are to report to them directly. Therefore the object of this enactment is obvious.  It evidently is to secure to the shareholders independent and reliable information respecting the true financial position of the company at the time of the audit.....  It is no part of an auditor's duty to give advice there, either to shareholders or to directors, so as to what they ought to do.  However an auditor has nothing to do with the prudence or imprudence of making loans including or without security.  It is nothing to him whereas the business of a company is being conducted prudently or imprudently or unprofitably or profitably.

Posted Date: 1/15/2013 2:36:39 AM | Location : United States







Related Discussions:- Re london and general bank, Assignment Help, Ask Question on Re london and general bank, Get Answer, Expert's Help, Re london and general bank Discussions

Write discussion on Re london and general bank
Your posts are moderated
Related Questions
Define the Conceptual strength of stages model The stages model has a number of conceptual strengths. First, it emphasizes a process of policy making that cuts across and bridg

Question 1 Describe the term banking. What are the acceptable businesses for a banking company as per BR Act 1949 Question 2 When is a negotiable apparatus considered as dish

What is the neighbour rule? Duty of care: There is a duty of care by anyone to other where this can be reasonably foreseen which one’s action may injure another (negligen

Question1 Clayton's case is considered to be one of the most essential legal decisions in banking laws that established the principle of the order of application of credits agains

Suppose your employer wanted to include a restraint of trade clause in your employment agreement. Prepare and set out an instance of this clause that would be applicable to you in

What is Recessionary Bias To illustrate the possibility of recessionary bias we assume that both countries have two policy objectives but only one policy instrument. The policy

Liabilities In Respect Of Prospectuses:                             1. CRIMINAL LIABILITIES i) Issuing a form of application unaccompanied by a full prospectus: a fine not

State about the Security Council of United Nations? The Security Council: The Security Council has main responsibility for the preservation of international peace and sec

Question : (a) Who is a ‘whistle blower'? Explain the main disadvantage a ‘whistle blower' may face. (b) Name two engineering disasters (c) What do yo

writhe some stetment about morality of international context