SECOND READING. (Hansard, 18 March 1890)

§ *(7.35.) MR. WARMINGTON (Monmouth, W.)

In moving the Second Reading of this Bill I only wish, in the few observations I propose to make, to explain the particular matter at which it is aimed, and upon which there is a general concensus of opinion. It is certain that the amendment in the law which the Bill proposes has excited considerable attention. I have received notices from 50 or 60 different newspapers, and there has been in almost all of them—except in those commonly 1167 called financial papers—an agreement that the Amendment I desire to see introduced ought to form part of the law of the country. Speaking generally, the principle of the Bill is that every person who is responsible for the issue of a prospectus shall be bound by the statements therein contained, and upon this ground—that it is commonly considered that the persons who issue a prospectus have a knowledge of the subject it deals with. One knows that in ordinary life the motive which mainly induces persons to embark in joint-stock enterprises is that the statements contained in the prospectus are backed or warranted by respectable names. Whatever doubt may have been felt up to a few months ago, it is now certain that a person may make a false statement in a prospectus and yet not be civilly liable to persons who relied on him if only he can say, "I did not take any steps to see if the statement was or was not true, and you cannot prove that I fraudulently made it." I think that that is not a desirable position. I have reason to believe that the Government will not oppose the measure. But I am not in any way wedded to the particular form in which it appears, and shall be willing to accept any suggestion as to its remodelling which the experience of the Law Officers of the Crown and others may induce them to make, or I should be willing even to accept an assurance from the President of the Board of Trade that his Bill as to the winding-up of public companies will be so extended as to render unnecessary the measure before the House.

(7.40.) THE ATTORNEY GENERAL (Sir R. WEBSIER,) Isle of Wight

I do not deny that there is a good deal of force in the observations of 1168 my learned Friend as to the necessity of some amendment in the law, but I can only consent to the Second Reading with a good deal of reservation, because some expressions in it, and especially in the 3rd clause, are very wide indeed. For instance, it proposes that every person who is a director of a company at the time the prospectus is issued shall give to it a warranty, as it were, of the statements contained in it. I quite agree, after the recent case in the House of Lords, that very probably some amendment will be required. The Bill of my right hon. Friend the President of the Board of Trade no doubt contains proposals to some extent similar to those in this Bill, in the matter of attaching responsibility to directors, but even those proposals have excited much opposition, and the Government may have considerable difficulty in carrying out that amendment of the law. I would suggest that the hon. and learned Gentleman should let his Bill—the provisions of which go much further than that of my right lion. Friend the President of the Board of Trade—be read a second time, but should then not prcoeed with it till it is seen what is done with the other measure. I think it would be inadvisable to have one Bill dealt with in this House, and the other, which contains many cognate matters, by a Committee sitting upstairs. Under these circumstances the Government will not object to the Second Reading of the Bill.