The act and section in contention are: "Company Act s.585 (1) A public company must not accept at any time, in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any other person."
The case which is said to bypass this section is Gardner v Iredale (1912). It was held, " there is no objection to an agreement by a limited company that a debt which it presently owes shall be satisfied by the allotment of fully-paid shares of the same nominal amount; and' the contract of March 15, 1911, could and should be read as a contract to build a theatre in consideration of 9000£. payable upon the sealing of the agreement, with a provision that the 9000Z. should be satisfied by the issue of fully paid shares to that amount, and, so read, was valid".
Was the reason for the services being rendered valid as a consideration in exchange for shares because this provision did not exist at the time, or did the case somehow bypass the rule?
