§ Amendment reported (according to Order.)
LORD CAMPBELLsaid, he would again implore the Government to reconsider its determination not to insert a minimum of capital. He firmly believed that unless some minimum of capital was fixed, the greatest possible injury would be inflicted on the operation of this Bill. There was nothing in the Bill at present to prevent Joint-stock Companies being formed and actually carried out with a capital of 50l. The Act required only that there should be twenty-five shareholders, and that the shares should not be less than 10l. each, the sum of 21. only being required 2102 to be paid up; so that each of the twenty-five shareholders, holding one share; on which he paid 21., would be able to avail himself of the privileges of this Act. He confidently believed that bubble Companies without number would be formed, if this Act were passed, and he trusted that Government would consent to adopt the principle of a minimum in the Bill.
§ EARL GRANVILLEcould not conceive upon what grounds the noble Lord's apprehensions of evil from the want of limitation which he sought to introduce were founded. He (Earl Granville) was at a loss, even supposing Companies should be formed with a capital of 501., which he much doubted, to know what harm would result. How could Companies formed with a paid-up capital of 50l., and a nominal capital of 250l., inspire persons with confidence in the shareholders collectively, which was not felt for those shareholders individually.
§ EARL GREYthought it extremely ridiculous to provide that under this Bill, which incorporated the whole machinery of the Joint-stock Companies Act, Companies might be formed with directors, auditors, and secretary—and all for the I purpose of managing the affairs of a Company with a capital of 250l. It was a most absurd thing. If it were desirable to form such Companies, an alteration of the law of partnership would be the best mode of bringing about such a result.
§ LORD STANLEY OF ALDERLEYperfectly agreed with the remarks which had just fallen from the noble Earl opposite, as to the absurdity of setting in operation the machinery of the Joint-stock Companies Act for such small capitals; but in his opinion that very absurdity was the best security against the establishment of such Companies. The expense would be too great to admit of their being formed. Her Majesty's Government had introduced a Partnership Bill, but they had not been able to proceed with it through the other House. It was, however, their intention to reintroduce it in the next Session.
§ LORD REDESDALEwished to know what would be the nature of the liability incurred by Companies formed under the Bill, carrying on manufactures from which revenue had to be collected? Would each shareholder in the Company be severally liable for the payment of excise duties?
§ LORD STANLEY OF ALDERLEYdid not see that in the event of Companies being formed for such purposes any greater 2103 difficulties would arise than those which existed in the case of individual manufacturers.
LORD. CAMPBELLwas understood to say that if any offence against the revenue laws were committed, the managers would be liable to any pecuniary penalties in solido.
§ THE EARL OF HARROWBYthought the plant or other property of the Company would be a sufficient security to the revenue.
§ EARL GREYagain brought forward his clause providing for an independent audit of formed accounts of all Companies to be formed under this Bill; which he said he Considered so very important, that he thought it his duty to renew his Motion of the previous night. His object was that the auditors should not be appointed by the directors of the Company, which would make the audit delusive, but by the Commissioners for Auditing the Public Accounts. There could not be any objection to this, unless it was intended that the audit should be a sham; but Parliament meant that it should be real and effective; and all he desired was to secure that it should be so. In his belief, it depended upon an independent audit whether the measure should be, or should not be, made the means of wide-spread fraud.
§ LORD STANLEY OF ALDERLEYopposed the Amendment. The publicity which was the essence of the Bill, had no reference to making public the mode in which the Companies transacted their business, but to giving the shareholders the security Which was derivable from proper accounts. Moreover, it would be very objectionable to make the Government indirectly responsible for the audit by giving to a Government Department the appointment of auditors. Added to this, the effect would be to increase the expense.
LORD CAMPBELLwas astonished that the Government should object to this Amendment Which he believed was most important. The Joint-stock Companies Act required the audit which was now proposed, except as to the mode of appointment. Every enactment in that Act must be applied to the Companies under the present measure; and, among others, the provisions as to credit. The Joint-stock Companies Act (8th and 9th Vict.) required an audit and the publication of the accounts; yet the noble Lord actually said he deemed it undesirable that the condition of a Company should be made known. 2104 Why, as the law stood, it must be made known. Before there could be a registration there must be an audit by the Board of Trade. The audit by auditors appointed by the directors would be a delusion and a snare; and if there were any fraudulent intention this delusive audit would be the best means of promoting it.
THE LORD CHANCELLORobjected to the proposal. If they were considering, as they might have to do general measure for regulating Joint-stock Companies, it might be proper subject of consideration whether their accounts should be audited by public functionaries. But the clause now proposed did not say how many, or when, or in what way the auditors should be appointed.
§ EARL GREYcould see no difficulty in the case. All that would be necessary to be done would be for a company to send a letter to the Commissioners of Audit requesting them to send some person to audit the accounts. If the words as they stood were not sufficiently clear, he was willing to adopt others which might be suggested as more appropriate.
§ EARL GRANVILLEwas of opinion that there would be great difficulty in the way of the practical application of the proposed power.
§ LORD MONTEAGLEthought the difficulties were not insuperable. If the matter was deferred until next Session, an objection would be raised to any such provision, that it was contrary to the contract under which the Companies were formed.
§ EARL GRANVILLEpromised to consider the clause, and see if it was practicable to introduce it into the Bill.
§ Clause withdrawn.
LORD CAMPBELLproposed a clause to allow costs against shareholders when the Company had no assets against which execution could be levied.
§ Clause agreed to. Further Amendments made.
§ Bill to be read 3a to-morrow.
§ House adjourned till To-morrow.