COMPANIES – INVALID ISSUE OF SHARES – MISTAKE – RECTIFICATON OF REGISTER
Fulcrum established a share incentive scheme to motivate its management team to achieve certain targets. However, an administrative error occurred when the incentive shares were issued. Fulcrum inadvertently purported to issue certain shares at less than par value, and did not follow the procedure set out in Section 35 of the Companies Law to lawfully issue the shares at a discount. Some time passed before the error was discovered. In order to ensure that its staff could not be considered liable for any perceived unpaid balance on the incentive scheme shares, Fulcrum sought a declaration that the issue of the shares was void for illegality as well as under the doctrine of mistake. Fulcrum was solvent at the time of the application and its creditors consented to the application.