[BILL 102.] SECOND READING. (Hansard, 22 April 1879)

§ SIR JOHN LUBBOCK
, in rising to move that the Bill be now read a second time, said, that it proposed to make it lawful for the directors of any public company, with the consent of the shareholders, to return money available as dividends or bonus to the shareholders in reduction of the paid-up capital of the company. Under the existing Companies Acts it was impossible to do this, except by means of a very elaborate machinery, which took up a great deal of time and caused considerable expense. The Bill also proposed to deal with cases where it was desired to return undivided profits to the shareholders in reduction of the paid-up capital. It was clearly an advantage to the public to have any sum which might arise so applied in reduction of the paid-up capital, because the public would thus obtain an additional security to that amount. In other words, the unpaid-up capital of the company would be increased to the same amount as the sum returned to the shareholders. It was clear that if the money were only paid as dividend or bonus it would give no additional security to the creditors of the company. Supposing the unpaid capital of a company amounted to £10 per share, and a sum of £1 per share became available for distribution as dividend or bonus, and it was applied under the Bill in reduction of the paid-up capital of the company, the shareholders would obtain an unpaid capital of £11 instead of £10. As the proposal, therefore, gave the public an additional security, and, at the same time, was advantageous to the company as tending to check speculative operations, he hoped the House would agree to the second reading of the Bill.

§ MR. J. G. TALBOT
was of opinion that the provisions of the Bill would 922 be beneficial. It might, however, be necessary for the Government to propose some Amemdments; and in consenting to the second reading of the Bill, on behalf of the Board of Trade, he did so on the understanding, which he was sure would meet the views of his hon. Friend the Member for Maidstone, that he would be at liberty, if necessary, to propose Amendments in Committee.

§ MR. COURTNEY
said, that the Bill had been spoken of as if it applied only to limited liability companies; but it did apply to all companies. It was evident that the effect of the provisions on non-limited companies would be exactly the reverse of its effect on limited liability companies. He did not see anything in the Bill to confine its operation to limited liability companies.

§ SIR JOHN LUBBOCK
said, he did not think that the House would wish him to go into the details of the measure on the present occasion, and he would content himself by saying that in no case could the public be damaged by the provisions of the Bill. It would enable the directors, under certain conditions, to deal with money as a return of capital instead of treating it only as dividend or bonus. In no way could a non-limited liability company be damaged, and in every case of a limited liability company the result would be to give the public additional security to fall back upon proportionate to the capital returned.