Commons Sitting of 11 August 1855

LIMITED LIABILITY BILL.
VISCOUNT PALMERSTON VISCOUNT PALMERSTON moved, that the Lords' Amendments to the Bill be taken into consideration.
On the first Amendment, fixing a minimum of twenty-five shareholders in Companies to be formed under the Act,
MR. W. WILLIAMSsaid, the Amendment, he considered, was fatal to one of the chief objects of the Bill, and hoped the House would not adopt it.
MR. J. G. PHILLIMOREsaid, he concurred in objecting to the Amendment as injuring the value of the measure, but thought it would be better to take the Bill n its present shape than run the risk of losing it by dissenting from the changes made in it.
MR. MALINSsaid, he regretted the insertion of the Amendment, the only effect of which would be pro tanto to favour the formation of bubble Companies. Ten persons possessing an adequate amount of substantial capital would not be able to unite in any undertaking, but they might do so by associating themselves with fifteen others, who might be men of straw, in order to make up the required number of twenty-five shareholders.
MR. APSLEY PELLATTsaid, he thought at one time that the effect of passing the Bill would have been to have called forth a large amount of dormant capital; but he feared that, if passed in its present shape, its effect would be decidedly the reverse of that which he had anticipated.
Amendment agreed to.
Amendment requiring that, in order to admit existing Companies to the privileges of limited liability, a certificate of solvency must be given by an auditor appointed by the Board of Trade, after a full examination of the accounts of the Company.
MR. WILKINSONsaid, he thought that there would be a great deal of difficulty connected with the issue of such certificates, as it would be impossible for the Board of Trade to appoint efficient auditors for examining the affairs of every Company.
MR. BRAMLEY-MOOREsaid, he considered that it would be perfectly impracticable to carry out the proposed plan. If the shareholders of a Company were disposed to be dishonest, they could be so in spite of all the diligence exercised by the auditor to prevent it. He, therefore, hoped the House would not assent to the Amendment.
VISCOUNT PALMERSTONsaid, it was his opinion that many of the Amendments introduced by the other House were very objectionable, and regretted that they had been inserted in the Bill. At the same time it was necessary to make some allowances for them. It had been found impossible

2129
to send up the Bill to the other House until a very late period, and that House, without being very unreasonable, had taken objection to discuss the Bill upon the ground of want of sufficient time. The objection, though raised, was, however, overruled, but there were still in the other House, as in that House, some sincere objections against some parts of the Bill. There was no disposition on the part of the Members of the Government in that House to give way unnecessarily to the Amendments which they thought objectionable. All matters of great difficulty, must, however, be carried by some amount of compromise of opinion; and, in his opinion, although some of the Amendments introduced were undesirable, it did not appear to him that any of them would essentially mar the operations of the Bill. If it should be found in practice that any of the Amendments did interfere with the operation of the principle of the Bill, it would be very easy in the next Session to bring in an amended Bill, and there would be no difficulty in removing any obstacle which might stand in the way of such legislation.
Mr. MALINSsaid, he thought that if the Members of the Government in the other House had been more firm, those Amendments, which would greatly impede the operations of the Bill, need not have been inserted.
MR. W. WILLIAMSsaid, he must again express his confident opinion that it would be much better to give up the Bill altogether than to agree to it in its present shape; for, if passed, it would produce nothing but the greatest disappointment throughout the country.
THE ATTORNEY GENERALsaid, he thought that it would be far better for the House to agree to the Bill in its present shape, than endanger it by refusing to agree to the Amendments. By passing the Bill they would have obtained the sanction of the Legislature to the great principle of limited liability in matters of partnership. He fully concurred in the opinions expressed with respect to the mischievous tendency of the Amendments introduced by the other House; but they had, however, obtained the great advantage of having the principle of limited liability in commercial transactions fully admitted. It was absolutely impossible, if the Bill were passed, that a long time should elapse, without reconsidering the whole subject.
SIR WILLIAM J0LLIFFEsaid, he thought that there was no necessity for passing the Bill for the purpose of obtaining the sanction of Parliament to its principle, inasmuch as the principle had been fully admitted by both Houses in the discussions which had taken place. It was far better that the Bill should be thrown out altogether than that the Legislature should pass a Bill which could not possibly work.
Amendment agreed to.
Amendment, making any Director who should declare a dividend, knowing the Company to be in a state of insolvency, liable for the whole debts of the Company to the extent of the dividend.
MR. BRAMLEY-MOOREsaid, that if any person was foolish enough to become a Director of a Company with limited liability, subject to such a condition, he would well deserve all that might befall him in the loss of his money. In fact, be did not believe that any person would be found sufficiently foolish to become a Director of such a Company.
MR. WILKINSONsaid, he did not consider that the Amendment would really do any harm; it merely declared in effect that the Directors should not declare a dividend when they knew the Company to be insolvent.
MR. MALINSsaid, he would admit that the words "knowing" the company to be insolvent removed much of the harm which would otherwise attend the Amendment; but even as it stood its effect would be to prevent many timid men from becoming connected with Companies of that nature, their proceedings would be hampered, and no possible good could result from the clause.
Amendment agreed to.
Amendment, Providing that any Company formed under the Act should be compelled to wind up its affairs after it had lost three parts of its capital
MR. BRAMLEY-MOOREsaid, he thought, that as they advanced in the Bill the Amendments introduced became worse. Nothing could be more absurd than such an Amendment, and he would suggest that the House ought not to agree to it.
MR. MALINSsaid, he deprecated the exceedingly narrow spirit upon Which the Bill appeared to have been discussed in the other House. Their Lordships appeared to have thought that all persons engaged in commercial transactions were either knaves or idiots—knaves who were

2131
anxious only to see how far they could impose upon the public, knaves who were unable to understand the nature of any contract into which they might enter. Why should a Company of twenty-five persons be compelled to wind up its affairs after it had lost three parts of its capital, when the same restrictions were not imposed upon private individuals. Many of the most flourishing concerns in the country had at one time or other lost even more than three-fourths of their capital, but when the depression which had led to that loss had ceased, the Companies returned to their wonted prosperity. In the case of undertakings connected with the coal and iron trade that was particularly the case, very large portions of the capital were frequently lost, but the Proprietor never thought of giving up while there was a prospect of ultimate success.
MR. J. FORSTERsaid, that every one of those clauses which had met with so many objections from both sides of the House, were precisely those to which he and several other hon. Members who had been charged with a desire to obstruct the Bill, had so strongly objected when it was first brought forward in that House.
VISCOUNT PALMERSTONsaid, that if the Bill were not passed during the present Session, they would have next year to go over the whole ground again, whereas, by passing the measure now, its principle would be definitively adopted; and all that would have to be done hereafter would be merely to pass such Amendments as were found to be necessary to give effect to the proper working out of the principles which had been adopted, if such should be required.
Amendment agreed to; as were the remaining Amendments.
The House adjourned at Four o'clock, till Tuesday next.