COMPANIES BILL.

HC Deb 24 July 1900 vol 86 cc1065-160

As amended (by the Standing Committee) considered.

* MR. SPEAKER

The motion on the Paper in the name of the hon. Member for Northampton is not in order, as this is a Bill to amend the law relating to registered companies only, and does not relate to chartered companies.

A Clause (Application of the Act to Scotland)—(The Lord Advocate)—brought up, and read the first and second time, and added.

COLONEL WELBY (Taunton)

I beg to move that Clause 2 be omitted.

Question proposed, "That Clause 2 stand part of the Bill."

MR. RADCLIFFE COOKE (Hereford)

I suppose the right hon. Gentleman in charge of this Bill will also accept the omission of the following clause?

THE PRESIDENT OF THE BOARD OF TRADE (Mr. RITCHIE,) Croydon

I find myself unable to resist the Amendment of my hon. and gallant friend. As those who are acquainted with what took place in the Grand Committee will remember, I made a similar recommendation there, but it was not adopted by the Committee. I will state the reason why I now feel bound to accept the Amendment. I do not propose to enter into the merits of this clause or of the next one. I admit that there are evils which require to be remedied, but I do not desire to commit myself to the particular mode of amendment embodied in these clauses. My main reason for assenting to the Amendment of my hon. friend is that in my opinion these clauses are not germane to the Bill, and I think that to attempt to introduce definitions as to what businesses may or may not be carried on by a company would be to run counter to all precedent, and would cause excessive inconvenience. Therefore, as I desire to say nothing against the principle of the clauses, I suggest to the House that it would do well to accept the Amendment and omit these two clauses.

MR. BRYCE (Aberdeen, S.)

When this Bill was before the Grand Committee I expressed the opinion that it would be better to leave these clauses out of the Bill, as they had nothing whatever to do with its main object and scope. They relate to an extremely important subject, which I am inclined to think should be dealt with even more strongly than is proposed in these clauses. But I repeat that it would be better to omit this portion of the Bill altogether, as it raises an entirely different set of questions to that dealt with by the rest of the Bill.

MR. GIBSON BOWLES (Lynn Regis)

Considering that everybody connected with the Bill is under the belief that the clauses have nothing whatever to do with it, I think some explanation should be afforded us as to how they got into the Bill. Can the President of the Board of Trade explain how, in spite of the forms and orders of the House, clauses were inserted in a Bill with which they had nothing whatever to do?

MR. RITCHIE

The clauses were put in the Bill in the House of Lords, and I, of course, am not capable of explaining the reasons why. As, however, they were inserted, I deemed it only right and courteous to the House that the Bill should be introduced here in the form in which it was sent down last session.

MR. GIBSON BOWLES

That renders it more inexplicable than ever. The House of Lords sent the Bill to a Select Committee, which was charged with the duty of crossing the "t's" and dotting the "i's," and I therefore cannot comprehend how they came to pass clauses which the President of the Board of Trade and his predecessor are both agreed have been improperly inserted. Under the circumstances, of course the House will agree to their omission.

SIR WALTER FOSTER (Derbyshire, Ilkeston)

I hope that the House will not do anything of the kind. These clauses are the result of a great deal of consideration. They have been introduced into this Bill in two successive sessions, and they were also introduced in a separate Bill. The Lord Chancellor, in introducing the Bill, deliberately recommended these clauses as the best method of regulating certain dangers and difficulties to which the public are exposed under the existing state of the law. It was done after deliberate consultation with persons affected. I am perfectly aware that I cannot discuss the merits of Clause 3 at the present time, although the right hon. Gentleman has indicated that that clause will have to go if the one now under discussion is omitted. I feel bound in the public interest to support the retention of the clause. I feel that in yielding the right hon. Gentleman is yielding to the clamour of a class, because the clause interferes to a certain extent with large trading concerns. If the clauses are not retained I feel that an opportunity will have been lost of putting on the Statute-book provision likely to he of great good to the public by protecting them against many forms of illegal practice in pharmacy, medicine, and dentistry. I speak in the interest of the public, and I hope the House will consider carefully before it yields to a panic on the part of the right hon. Gentleman caused by the opposition of certain trade interests.

SIR JAMES HASLETT (Belfast, N.)

said the second clause proposed that a company should be entitled to assume a title which no individual might take unless he passed a certain examination. Surely that was a bad policy. He did not claim any special immunity so far as Ireland was concerned. They might start as many companies as they liked there. It was a poor country, its business was poor. If a man got a Sunday dinner, he lived on the recollection of it for two or three days, and then he lived on the anticipation of another Sunday dinner for the rest of the week. But he did ask the House to be true to itself. It had passed a Pharmaceutical Act which required a man to pass an examination before he was entitled to do certain things or to assume a certain title. Now it was proposed to absolutely wipe out that qualification, and to enable a company to carry on the business without examination; the only point in its favour being that it was possessed of pounds, shillings, and pence. He thought the Government had very wisely decided that these clauses had nothing whatever to do with a Companies Bill, and should therefore be omitted.

MR. LAWSON WALTON (Leeds, S.)

I should not have intervened in this discussion had it not been for the suggestion that the Government in agreeing to the omission of these clauses was yielding to clamour. I entirely share the views of the right hon. Gentleman the President of the Board of Trade that the clauses are alien to the Bill. I hold that our statutes should be so framed that they can be easily determined; they should not contain cross references which only lead to confusion, and therefore a Bill dealing with company law ought not to contain legislation affecting chemists, who are subject to a different Act of Parliament. I therefore hope the House will agree to the omission of these clauses.

* COLONEL LONG (Worcestershire, Evesham)

expressed the opinion that the reasons put forward by the President of the Board of Trade for the rejection of the clauses—namely, that they were not germane to the Bill— were not sufficiently strong to justify their omission. The object of the Bill was to do away with certain abuses in our system of trading by companies. Abuses were believed to exist by means of which people who were not qualified chemists and dentists carried on those businesses, to the danger of the public. The Lord Chancellor, who was supposed to understand evidence, had been convinced that such abuses did exist, and ought to be remedied, therefore he inserted the clauses, and they ought not to be thrown out on the weak grounds stated.

* SIR J. B. TUKE (Edinburgh and St. Andrews Universities)

also regretted that Clause 3 was to be dropped, as its operation would have put a stop to practices which served to paralyse the action of the Medical Acts in certain important particulars. Under the law as it now stood persons in no way connected with the medical profession were able to form companies, the object of which was to act as physicians, surgeons, and dentists. Over such companies the Medical Council could exercise no jurisdiction, and one of the main objects of the Medical Acts was inoperative. The public were the sufferers, as it was rendered impossible to distinguish between qualified and non-qualified practitioners. He recognised that the clause was not germane to the general terms of the Bill, but he felt so strongly on the subject that next session he would take an early opportunity to introduce a Bill dealing with it.

Question put, and negatived.

MR. MADDISON (Sheffield, Brightside)

I beg to move the omission of Clause 3. I can only express my satisfaction that the President of the Board of Trade has agreed to the omission of this clause.

Question, that Clause 3 stand part of the Bill, put and negatived.

MR. ATHERLEY-JONES (Durham, N.W.)

I have to move the omission from Clause 4 of the following words— (ii) either signed the Memorandum of Association for a number of shares not less than his qualification (if any) or signed and filed with the registrar a contract in writing to take from the company and pay for his qualification shares (if any). The law as it at present stands requires that a director of a company shall qualify for his position by taking up the number of shares defined in the Articles of Association. It is not unusual, I believe, for directors of companies to receive their qualifications from the promoters, and if I understand the object of the right hon. Gentleman aright, it is, by including this clause in the Bill, to prevent directors of companies from receiving their qualifications from the promoters. In other words, he desires to deal with that class of directors described as "guinea-pig" directors. But the Bill will not effect that object, because I observe that, by a later clause, on page 8, there is a provision that the director is to make a statement "of all sums paid or agreed to be paid to him in cash or shares by any person, either to qualify him as a director or otherwise, for services rendered by him in connection with the formation of the company." Therefore, I take it, the very evil which this clause is intended to defeat is countenanced and regulated by a subsequent clause. I agree that very considerable evil attaches to the provision of qualifications for directors. There are two grounds for resisting the inclusion of this clause in the Bill. The first is that it does not attain the object in view, because it is quite possible to have an elusive arrangement with intending directors to defeat the object aimed at by this provision. But the second is a far more important reason. Suppose a man is invited to serve on a board, and he is to receive a salary, by way of director's fees, of £200 a year. He may be a peer of the realm, a Member of Parliament, an ex-Governor General, or some other more or less distinguished personage. His qualification is to be £200, and it is obvious that he will have no difficulty in finding it, for he is not going to deprive himself of this opportunity of earning £200 a year. It will, therefore, be perfectly easy for him to enter into an arrangement of a nature which it will not be necessary to disclose. Another very forcible reason is that you are making a law which you cannot effectively enforce. It is most desirable that obvious acts of misconduct in connection with the formation and maintenance of companies should, as far as possible, be checked by legislation. But if you lay down a moral law which it is impossible effectively to enforce, you at once bring your legislation into contempt, and you defeat the very object which you have in view. On the ground that these words are calculated to produce further elusive acts of fraud, and to accentuate the evil which it is desired to suppress, I beg to move the omission of these words.

Amendment proposed— In page 2, line 19, to leave out paragraph (ii.), of Sub-section (1), of Clause 4."—(Mr. Atherley-Jones.)

Question proposed, "That the words proposed to be left out to the word 'for,' in line 19, stand part of the Bill."

MR. RITCHIE

The object of this sub-section is clear. It is to secure that under all circumstances, and in all cases, a director shall qualify himself, and shall not receive his qualification from anyone else. I imagine it is quite possible, if the qualification is £200, and he is to receive a salary of £200 a year, for a man to qualify himself by taking shares to the extent of £200. But I do think it a wise thing that gentlemen who put themselves forward as directors of companies should give some security that they have an interest in the company, and should provide themselves with the necessary shares and pay for them. If the hon. Gentleman's Amendment is accepted that security will be done away with.

MR. ATHERLEY - JONES

What about Clause 12?

MR. PERKS (Lincolnshire, Louth)

The object of the clause is a highly desirable one, seeing that it is to secure that the director shall not be a mere bogus creature, but that he shall have a substantial interest in the company. That is manifestly a good idea. But still it seems to me it is obvious that if a company which is a reprehensible company desires to have upon its directorate any particular class of person it will be able to secure its object by the simple expedient of reducing the qualification to a nominal amount. I do not think the clause will have the effect anticipated in the case of an unsubstantial or questionable company, but still it would be as well that the words should be retained as some protection against the impecunious or "guinea-pig" director.

MR. LABOUCHERE (Northampton)

said it did not appear to him that it was possible to secure that a director should pay for his own shares. He might borrow the necessary money on the understanding that it should be paid back out of his fees as director. In fact, he might get over the difficulty in a hundred different ways. But the object of the clause, as he understood it, was to secure that the public should know how many shares each director had. It seemed to him, although he very much doubted whether the clause would afford any real security against the directors obtaining their qualification from promoters, it would be an advantage to the public that they should know how many shares each particular director held.

MR. ATHERLEY - JONES

I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

MR. H. S. FOSTER (Suffolk, Lowestoft)

said he desired to move the omission from the same section of the words "for a number of shares not less than his qualification." He took it that the object of his right hon. friend was not to deter good men from coming forward as directors, but he feared that this particular provision might act as a deterrent unless his Amendment was accepted. A gentleman might be asked to join a board of directors, and this section required that he should take up his qualifying shares at a time when he did not know whether or not the company would go to allotment. The qualification might be £500, and he might be willing to subscribe that amount conditionally that the company went to allotment. But this clause required that he should pay it down, whether the company went to allotment or not. What would be the result? In the case of a company which was registered but did not go to allotment a wrecking solicitor might be tempted to petition for a winding-up order, as he would be sure of his costs, because he would have a number of directors to go against, each of whom would be liable to the amount of his qualifying shares. The effect must be to deter good men from taking any responsibility in the initial stages of a company, whereas he took it that one of the chief objects of the President of the Board of Trade was to secure that good men should become connected with a company at its very inception.

Amendment proposed— In page 2, line 10, to leave out the words from the word 'association,' to the word 'or,' in line 20"—(Mr. H. S. Foster.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

MR. RITCHIE

said he had no reason to find fault with his hon. friend for putting the Amendment on the Paper. What was wanted was that everybody should know what a director's qualification was. He was afraid that whatever risk a director had to run as to whether or not the company would float or not, the director must be left to bear it. He did not think that any inconvenience such as his hon. friend suggested had ensued from the present state of the law, which put directors in the same position in regard to qualifying shares. All that was wanted was that the directors should really take and pay for the necessary qualifying shares.

SIR ROBERT REID (Dumfries Burghs)

said he would agree with the hon. Gentleman if he thought that the Bill as it stood would produce the consequences the hon. Gentleman feared. But he would point out that it was not obligatory on the director to sign the Memorandum of Association; he might sign and file with the registrar a contract in writing to take and pay for the qualifying shares. If the proposed director was under any apprehension such as was referred to by the hon. Gentleman, he was at liberty to take the second alternative.

MR. TOMLINSON (Preston)

thought the clause as it stood might deter useful men from becoming directors.

Question put, and agreed to.

* MR. SYDNEY GEDGE (Walsall)

hoped that the President of the Board of Trade would accept the Amendment he now proposed. Suppose the prospectus was for the issue of debentures only, and all the shares had been already subscribed, it would be impossible for a large shareholder to become a director to have his name in the prospectus unless, in addition to the shares he had already got, he were to sign and register a contract to take the qualification shares from the company, though it had none to sell.

Amendment proposed— In page 2, line 22, at the end, to insert the words,' or a certificate signed by the secretary or acting secretary of the company that he is the registered holder of his qualification shares, if any."—(Mr. Sydney George.)

Question proposed, "That those words be there inserted."

MR. RITCHIE

said there was a very great difference between the alternative which his hon. friend asked the House to accept and Sub-section 2 of Clause 4. That subsection endeavoured to secure— whether it would be effective for the purpose or not time only would show—that the proposed director should enter into a contract to take and pay for his qualifying shares. If the Amendment were accepted, all that it would be necessary to do in order to comply with the provision would be for a qualified director or shareholder to transfer into the name of the proposed director certain qualifying shares. There was nothing in the Amendment to show that the qualifying shares should belong to the director, or that he had entered into a contract to buy them. He could not accept the Amendment.

Question put, and negatived.

MR. H. S. FOSTER,

in moving the next Amendment, said that the all- important thing was the issue of the prospectus. The directors might not be appointed at the time of the registration of the Memorandum and Articles of Association.

Amendment proposed— In page 2, line 24, after the word 'company,' to insert the words 'or of the prospectus,'"—(Mr. H. S. Foster.)

Question proposed, "That those words be there inserted."

SIR ROBERT FINLAY

submitted that the House ought not to accept the Amendment.

Amendment, by leave, withdrawn.

Amendment proposed— In page 2. line 30, to leave out the word 'passing,' and insert the word 'commencement.'"—[Mr. H. S. Foster.)

Question proposed, "That the word 'passing' stand part of the Bill."

MR. RITCHIE

could not see that there was any hardship in applying this portion of the Bill to a company registered before the passing into law instead of at 1st January, 1901.

Amendment, by leave, withdrawn.

* MR. SYDNEY GEDGE

said the Amendment he now moved would carry out what must be the intention of the Government in Clause 4. "Does" could only relate to the moment of registering, and an invitation given a few days later would defeat the object. He desired to secure it by exchanging something definite for what was vague.

Amendment proposed— In page 2, line 31, to leave out the words 'does not issue,' and insert the words 'is prohibited by its memorandum or articles of association from issuing.'"—(Mr. Sydney George.)

Question proposed, "That the words 'does not issue' stand part of the Bill."

THE ATTORNEY GENERAL (Sir ROBERT FINLAY, Inverness Burghs)

said the section way introduced for the protection of the public in cases whore a company went to the public asking subscriptions for shares. He did not see what the object of the Amendment was.

MR. PERKS

said this was a most important question to the investing public. They must not forget that they were dealing with £1,500,000,000 of money invested in this country, and it was very important that they should have some definition or explanation from the authors of the Bill as to what was meant by invitation to the public. Many hon. Members had not had the opportunity of listening to the discussions in the Grand Committee, and they were hopelessly ignorant of what was the meaning of the phrase.

* MR. MARKS (Tower Hamlets, St. George's)

said the portion of the Bill now under consideration dealt with certain things which were to be done before the registration of the articles, and the provision that this particular section should not apply to any company which did not issue an invitation to the public suggested three or four varying and conflicting possibilities. It was impossible to issue an invitation to the public before registration, and there was no period set at which the company was to issue an invitation, if an invitation was to be issued. The suggestion which the section conveyed to his mind was that these formalities were to be complied with before registration, when it was obviously impossible for the company, even if it intended to issue an invitation to the public, to do so, and there was no provision that they might go back to the registrar later on for the purpose of complying with the formalities. There was another point. There seemed to be an idea in the mind of the hon. Gentleman the Attorney General, that the shares which reached the public, and in respect of which there was a general desire that every care and precaution should be taken, were those taken by the public in response to a magical appeal called "invitation to the public." Nothing of the kind was the case. In a large number of cases where investors had lost heavily by abortive enterprises there had been no such thing as an invitation to the public to subscribe, nor had there been any necessity for it. What was done, and what this Bill did not prevent from being done, was this—a company was formed without even such safeguards as were provided by the publication of a prospectus. A company was formed in a hole and corner way by a promoter and a few others, and the shares were allotted to the promoter's nominees. A pool of these shares was then made, and the services of a few highly respectable jobbers were engaged in order to have the shares floated on the Stock Exchange—one lot at £1, the next at £2, and the next at £3. No prospectus was issued which could be produced in court, but perambulating prospectuses were employed in the form of joint stock promoters or jobbers who gave inspired tips that the shares were going to £4 or £5. Frequently they did go to £4 or £5. The prices were matters of public record. It was thus that great transactions were carried out. The very company which this Bill would exempt from every safeguard was the company in respect of which the public most required protection—the company whose directors floated the concern, which had no prospectus, because they issued no invitation to the public. So far as this clause was concerned it was rendered nugatory by the provision of Subsection 3. It was precisely that company to which the section should apply. It was precisely that company in respect of which the public wished to be protected, the company whose shares were bought by the public at a high premium. They could always trust the investor to invest unwisely, and to wish afterwards to wreak his vengeance on somebody. In the present state of the law the investor could still invest unwisely, and, having lost his money be was at a loss to discover the director responsible for the prospectus, or oven to ascertain the office of the company in which he had lost his money. If some limit were put to the period during which a company would have the option of deciding whether or not an invitation to the public should be issued, there might be something to be said for this sub-section; but as it stood it was useless. It was apparently senseless, but it would be less senseless if the Amendment of his hon. and learned friend were accepted; but he was by no means sure that it would be less useless.

SIR ROBERT REID

said his regret was that this Bill did not deal with the making of a market in company shares, and did not, therefore, deal with one of the greatest vices or frauds which were common in company promotion. As far as the particular Amendment under con- sideration was concerned, he did not think they need trouble to go into the question. But the question was, whether the clause was to have a wide or a comparatively restricted application. The Government proposed that the clause should not apply in the case of companies which did not issue an invitation to the public. That was rather wide. Though he did not attach very much importance to the clause, and though he did not think it would have so great a beneficial effect as the Government hoped, at the same time it was a good clause so far as it went. He wished to have it as widely applied as possible, and, therefore, for that reason he should support the Amendment proposed by the hon. Gentleman. He would ask the Government whether they might not accede to it.

MR. McLAREN (Leicestershire, Bosworth)

said he thought the intention was that the clause should not apply to private firms which were registered as limited liability companies, and which divided, the capital amongst the partners of the concerns, If that was the intention of the Bill, surely some form of words might be found which would clearly express that intention, so as to prevent inconvenience arising from the rather loose wording of the clause as it stood. All they had to do if they wished to evade the penal section was that somebody should say it was not intended to issue shares to the public. The directors might pass a resolution to that effect, and after an interval of eight or nine months a prospectus might be issued when it would be absolutely too late to apply Sub-section 1. The clause as it stood would open the door to every kind of evasion, and if it had any meaning at all would lead to endless litigation.

* SIR ALBERT ROLLIT (Islington, S.)

said he very much doubted whether it was possible to draw a logical or legal distinction between the two classes of companies—namely, public and private companies. This subject was, however, very much discussed in the Departmental Committee, and he thought the general feeling was that a distinction should be drawn if possible. He reminded the House of the concluding words of the Report of the Committee bearing on that subject. They said— It must, however, be admitted that the distinction between the two classes is rather dangerous ground, and affords a possible loop hole for evasion. Whatever the law might provide, the real difficulty of the position was that described by the hon. Member for St. George's. He agreed with him that there was a great deal more danger in a private undertaking where a memorandum or circular was issued than there was in connection with a concern which was made public and became the subject of public criticism in the press and elsewhere. For his own part, he thought the section was one which would not be found to serve a practical purpose. The danger foreshadowed by the Committee would probably take place. They had a choice between two forms of words, and the ex-Attorney General preferred the wider form of words. For himself, however, the wider form of words, he concluded, was the one which said that the thing should not be done. Although he agreed to a large extent with the hon. Member who moved the Amendment, he thought after all, the attempt at definition should be based on the words of the Bill rather than the words of the Amendment.

MR. HALDANE (Haddingtonshire)

said he did not think the evil which would be incurred by widening the words was at all to be compared with the evil of keeping them narrow. What did it matter whether this clause was made applicable to a private company or not? All those who had to do with the evils of joint stock company promotion knew that every year developed a new kind of evil. There was the evil connected with the prospectus, and this Bill seemed a little inadequate to deal with that matter. It was a common practice for a dozen persons to promote a company, to form it, to take shares in it, to enter into a pooling agreement, and to appoint half a dozen brokers. The intention was that such a company should become a public company, though the prospectus did not contemplate this form at all. To such a company as that the provisions of this clause should apply, and he saw no reason to think that any serious injury or inconvenience would be caused to anyone. If they got a simple and plain provision which would cover all such cases, he hoped it would prove more efficacious than provisions with similar benevolent objects had proved in the past.

THE SOLICITOR GENERAL (Sir EDWARD CARSON, Dublin University)

said he did not think the matter under discussion was really of first-rate importance. This clause had been inserted in the Bill at the suggestion of a number of hon. Members on the Committee who desired as far as possible not to interfere with bonu fide private companies. Those who spoke on behalf of private companies urged that in these cases the public had no concern, and that it was not necessary to know what the qualifications of the directors were, or whether they had subscribed or not. If the Amendment of the hon. and learned Gentlemen were carried it would put an end to the subsection altogether. As the Government were anxious to interfere as little as possible with bona fide private companies, he hoped the House would reject the Amendment.

MR. LABOUCHERE

said there were many private companies wholly respectable, but we had to deal with a great many companies that were turned into public companies, and which were frauds from the beginning. An arrangement was made with a large number of brokers who received £1 shares at 10s. or 12s. They had the option of taking them at that price and selling them to the public at £1 or more. It really seemed to him preposterous where they were dealing with public companies that they should make the proposal in the clause. Though it might be annoying to certain gentlemen who wished to turn their business into companies to face this publicity, it was a smaller evil than to allow the public to be swindled in these matters with impunity. It would do very little harm to allow these documents to go before Somerset House; but if the Committee left these quasi-private companies to carry out their arrangements this measure would do no good. We should have a greater number of quasi-private companies, and it was most difficult for the public to know anything of these private companies. There was more swindling in these than in the companies brought out by prospectuses.

MR. WALLACE (Perth)

said he objected to the words as they stood in the Bill, and still more to the Amendment which the hon. Member for Walsall proposed to insert. There was no reason whatever why private companies should not come under the section as it stood. There was no hardship inflicted on a private company in requiring that the directors should have their names registered at the time of the formation of the company.

SIR THOMAS LEA (Londonderry, S.)

said a very large proportion of the manufacturing trade of this country was done by private limited companies who did not appeal to the public at all. The hon. Member who had just spoken asked why private companies should not come under a section of this sort. Where were they to draw the line? The result would be that private limited companies would come under the whole of the provisions of the Bill, and it would be against the trade of the country and detrimental to the manufacturing and industrial interests.

MR. BRYCE

said he hoped the Government would make up its mind to accept the Amendment moved by the hon. Member for Walsall. It was not intended that any hardship should be inflicted on private companies by subjecting them to the provisions of Clause 4. It had not been denied that the evils of bringing out these companies without a prospectus were very grave and serious, and under the circumstances he thought the best course would be to omit the words.

MR. BOND (Nottingham, E.)

I think the point might be met by a device with which all people who are cognisant of company law are perfectly familiar. The reason private companies object to being brought under the clause is that the object of the clause is to make directors pay for their shares in cash. They might enter into a contract to take these shares or file with the registrar an undertaking that they are willing to take these shares. That would be obviously inconvenient in the case of a private company, because probably the whole of the capital of the company would be divided, if not amongst the directors themselves, amongst the directors and a few other people. The directors have a very large number of shares, and probably, if any qualification is mentioned in the Articles of Association, it is a very large qualification. But they do not get these shares by purchase; they get them as part-proprietors of the business. The object, I take it, is to pre-vent gentlemen in that position from being saddled with the obligation to buy shares, there being none in the market. That difficulty would be got over if each of the directors signed the Memorandum for one share only, and if one share was made in the Articles the qualification of a director. That would not in any way injure the business, be cause we are assuming the business to be a private one, confined to a small number of people, the shares in which are put forward before the public for subscription. I think, therefore, the best plan is to leave out the words and put nothing in their place.

SIR JAMES JOICEY (Durham, Chester le-Street)

knew of many companies in the north of England which had prohibitions upon the sale of their shares outside the particular family interested in the business, and he was afraid that many Members did not realise that there were numbers of companies in regard to which no cash payment whatever took place. The shares were simply divided amongst the family interested in the concern, and it was unreasonable to expect those people

to make all their affairs public. At the same time, the clause was not at all clear. There were words which nobody could really explain, and the only way in which they would be explained would be by litigation, whereas it was the duty of the House, whenever possible, to avoid causes of litigation. Attention had been called to the particular words "issuing any invitation to the public." It was impossible to construe those words, and there were many others of the same character. There had not been a Bill passed for some years likely to give rise to so much litigation as the present Bill. Every clause would have to be construed by the courts. The Government in pressing the measure in its present form were not acting wisely either in their own interests or in the interests of the country. It would really be better, after the discussion which had taken place, that the Government should withdraw the Bill and bring forward another measure dealing with the matter in a much better way.

Question pat.

The House divided:—Ayes, 168; Noes, 109. (Division List No. 234.

AYES.
Acland-Hood, Capt. Sir Alex. F.	Chelsea, Viscount	Gull, Sir Cameron
Allsopp, Hon. George	Coddington, Sir William	Halsey, Thomas Frederick
Atkinson, Rt. Hon. John	Coghill, Douglas Harry	Hamilton, Rt. Hon. Lord George
Baillie, James E. B. (Inverness)	Collings, Rt. Hon. Jesse	Hanbury, Rt. Hon. Robert Wm.
Balcarres, Lord	Cooke, C. W. Radcliffe (Herefd)	Haslett, Sir James Homer
Balfour, Rt. Hon. A. J. (Manch'r	Cross, H. Shepherd (Bolton)	Healy, Maurice (Cork)
Balfour, Rt. Hn. Gerald W (Leeds	Cubitt, Hon. Henry	Helder, Augustus
Banbury, Frederick George	Curzon, Viscount	Hernon-Hodge, R. Trotter
Barnes, Frederic Gorell	Dalrymple, Sir Charles	Hickman, Sir Alfred
Bartley, George C. T.	Douglas. Rt. Hon. A. Akers-	Hoare, Sir Samuel (Norwich)
Beach, Rt. Hn. Sir M. H (Bristol)	Doxford, Sir William Theodore	Holland, William Henry
Begg, Ferdinand Faithfull	Elliot, Hon. A. Ralph Douglas	Hornby, Sir William Henry
Bethell, Commander	Faber, George Denison	Howard, Joseph
Bhownaggree, Sir M. M.	Fardell, Sir T. George	Howell, William Tudor
Bigwood, James	Fellowes, Hon. Ailwyn Edwd. b	Hozier, Hon. Jas. Henry Cecil
Bill, Charles	Finch, George H.	Johnstone, Heywood (Sussex)
Blundell, Colonel Henry	Finlay, Sir Robert Bannatyne	Lafone, Alfred
Boulnois, Edmund	Fisher, William Hayes	Laurie, Lieut.-General
Bowles, Capt. H. F. (Middlesex)	FitzGerald, Sir Robt. Penrose-	Lawrence, Sir E. Durning-(Corn)
Bowles, T Gibson (King's Lynn)	Fitz Wygram, General Sir F.	Lawson, John Grant (Yorks.)
Brodrick, Rt. Hon. St. John	Flannery, Sir Fortescue	Lea, Sir Thomas (Londonderry)
Brown, Alexander H.	Fletcher, Sir Henry	Llewelyn, Sir Dillwyn-(Swans.)
Burdett-Coutts, W.	Flower, Ernest	Loder, Gerald Walter Erskine
Butcher, John George	Fry, Lewis	Lonsdale, John Brownlee
Campbell, Rt. Hn. J. A. (Glasgw)	Garfit, William	Lopes, Henry Yarde Buller
Carson, Rt. Hon. Sir. Edw. H.	Gibbons, J. Lloyd	Lowe, Francis William
Cavendish, V. C. W. (Derbys.	Gibbs, Hn. A. G. H (City of Lond.)	Lowles, John
Cayzer, Sir Charles William	Giles, Charles Tyrrell	Loyd, Archie Kirkman
Cecil, Evelyn (Hertford, East)	Gorst, Rt. Hon. Sir J. Eldon	Lucas-Shadwell, William
Cecil, Lord Hugh (Greenwich)	Goschen, Rt. Hn. G. J. (St George's)	Macartney, W. G. Ellison
Chamberlain, Rt. Hon. J. (Birm)	Goschen, George J. (Sussex)	Macdona, John Cumming
Chamberlain, J Austen (Wore'r)	Goulding, Edward Alfred	Maclure, Sir John William
Chaplin, Rt. Hon. Henry	Gray, Ernest (West, Ham)	M' Arthur Charles (Liverpool)
M' Iver, Sir L. (Edinburgh, W.)	Plunkett, Rt. Hon. Horace C	Stirling-Maxwell, Sir John M.
Malcolm, Ian	Powell, Sir Francis Sharp	Stone, Sir Benjamin
Maxwell, Rt. Hn. Sir Herbert E	Purvis, Robert	Sturt, Hon. Humphry Napier
Mellor, Colonel (Lancashire)	Pym, C. Guy	Sutherland, Sir Thomas
Melville, Beresford Valentine	Rankin, Sir James	Thornton, Percy M.
Meysey-Thompson, Sir H M.	Rasch, Major Frederic Carne	Tritton, Charles Ernest
Middlemore, J. Throgmorton	Rentoul, James Alexander	Tuke, Sir John Batty
Milward, Colonel Victor	Richardson, Sir T. (Hartlep'l)	Vincent, Sir Edgar (Exeter)
Monk, Charles James	Ridley, Rt. Hon. Sir M. W.	Warr, Augustus Frederick
Moon, Edward Robert Pacy	Ritchie, Rt. Hon. C. Thomson	Welby, Lt-Col. A. C. E. (Tauntn
More, Robt. Jasper (Shropshire)	Rothschild, Hon. Lionel W.	Wharton, Rt. Hn. John Lloyd
Morrison, Jas. A. (Wilts, S.)	Russell, T. W. (Tyrone)	Whiteley, H. (Ashton-under-L.)
Morton, A. H. A. (Deptford)	Sandon, Viscount	Williams, Jos. Powell- (Birm.
Muntz, Philip A.	Savory, Sir Joseph	Wilson, John (Falkirk)
Murray, Rt. Hon. A. G. (Bute)	Seely, Charles Hilton	Wilson-Todd, W. H. (Yorks.)
Murray, Charles J. (Coventry)	Sharpe, William Edward T.	Wodehouse, Rt. Hn. E. R. (Bath
Murray, Col. Wyndham (Bath)	Shaw-Stewart, M. H. (Renfrew)	Wortley, Rt. Hn. C. B. Stuart-
Myers, William Henry	Sinclair, Louis (Romford)	Wylie, Alexander
Nicol, Donal Ninian	Smith, James Parker (Lanarks.)	Wyndham George
O'Connor, Arthur (Donegal)	Smith, Hon. W. F. D. (Strand)	Young, Commander (Berks, E.)
Pease, Herb. Pike (Darlington)	Spencer, Ernest	Young, Samuel (Cavan, East)
Percy, Earl	Stanley, Hn. Arthur (Ormskirk)	TELLERS FOR THE AYES—
Phillpotts, Captain Arthur	Stanley, Edw. Jas. (Somerset)	Sir William Walrond and
Platt-Higgins, Frederick	Stanley, Sir H. M. (Lambeth)	Mr. Anstruther.
NOES.
Allison, Robert Andrew	Gladstone, Rt. Hon. Herb. J.	Palmer, Sir Charles M. (Durham)
Ashton, Thomas Gair	Gourley, Sir E. Temperley	Perks, Robert William
Asquith, Rt. Hn. Herbert Henry	Greene, Henry D. (Shrewsbury)	Pickersgill, Edward Hare
Atherley-Jones, L.	Grey, Sir Edward (Berwick)	Pilkington, Sir G. A. (Lancs SW.)
Austin, M. (Limerick, W.)	Haldane, Richard Burdon	Power, Patrick Joseph
Baker, Sir John	Hayden, John Patrick	Price, Robert John
Bayley, Thomas (Derbyshire)	Hayne, Rt. Hon. Charles Seale-	Reid, Sir Robert Threshie
Beaumont, Wentworth C. B.	Healy, Timothy M. (N. Louth)	Rollit, Sir Albert Kaye
Billson, Alfred	Hedderwick, Thomas Chas. H.	Samuel, J. (Stockton-on-Tees)
Birrell, Augustine	Hogan, James Francis	Scott, Chas. Prestwich (Leigh
Blake, Edward	Horniman, Frederick John	Sinclair, Capt. J. (Forfarshire)
Bond, Edward	Joicey, Sir James	Spicer, Albert
Bramsdon, Thomas Arthur	Jones, William (Carnarvonsh.)	Stanhope, Hon. Philip J.
Bryce, Rt. Hon. James	Labouchere, Henry	Stevenson, Francis S.
Buchanan, Thomas Ryburn	Langley, Ratty	Strachey, Edward
Burt, Thomas	Lawson, Sir Wilfrid (Cumberl'd.)	Sullivan, Donal (Westmeath)
Buxton, Sydney Charles	Lough, Thomas	Sullivan, T. D. (Donegal, W.)
Caldwell, James	Luttrell, Hugh Fownes	Tanner, Charles Kearns
Campbell-Bannerman, Sir H.	Macaleese, Daniel	Tennant, Harold John
Carvill, Patrick G. Hamilton	MacDonnell, Dr M A (Queen'sC)	Tomlinson, Wm. Edw. Murray
Channing, Francis Allston	MacNeill, John Gordon Swift	Trevelyan, Charles Philips
Clark, Dr. G. B	M' Arthur, William (Cornwall)	Ure, Alexander
Courtney, Rt. Hon. L. H.	M' Dermott, Patrick	Walton, J. Lawson (Leeds, S.)
Crilly, Daniel	M' Ghee, Richard	Walton, Joseph (Barnsley)
Crombie, John William	M' Hugh, Patrick A. (Leitrim)	Wedderburn, Sir William
Dilke, Rt. Hon. Sir Charles	M' Laren, Charles Benjamin	Whiteley, George (Stockport)
Donelan, Captain A.	M' Leod, John	Whittaker, Thomas Palmer
Doogan, P. C.	Maddison, Fred.	Wills, Sir William Henry
Duckworth, James	Mappin, Sir Frederick Thorpe	Wilson, Charles Henry (Hull)
Dunn, Sir William	Marks, Henry Hananel	Wilson, Hy. J. (York, W. R.)
Emmott, Alfred	Mather, William	Wilson, John (Durham, Mid)
Esmonde, Sir Thomas	Mendl, Sigismund Ferdinand	Wilson, John (Govan)
Evans, Sir F. H. (Southampton)	Morgan, W. Pritchard (Merthyr)	Yoxall, James Henry
Fenwick, Charles	O' Brien, James F. X. (Cork)
Fitzmaurice, Lord Edmond	O' Brien, Patrick (Kilkenny)	TELLERS FOR THE NOES—
Foster, Sir Walter (Derby Co.)	O' Connor, T. P. (Liverpool)	Mr. Robert Wallace and
Fox, Dr. Joseph Francis	Oldroyd, Mark	Mr. Hazell.
Gedge, Sydney	O' Malley, William

Question put, and agreed to.

* Mr. SYDNEY GEDGE

said that Sub-section 6, to which his Amendment referred, was not in the Bill, but on the white paper under his name. As the Bill stood no allotment of any share capital could be made unless certain conditions were complied with. The provision was intended to prevent a company starting with a totally insufficient capital, and to prevent people having shares allotted to them when the capital was entirely insufficient. Suppose a company asked for a capital of £500,000 and they only obtained £400,000 or £450,000, while by throwing over some part of their undertaking they might proceed to carry on business with £450,000. Applicants might have applied for shares on the understanding that £500,000 would be subscribed, but if all of them were willing to take their shares and go on he saw no reason why they should be prohibited from doing so. If they liked to commence business with £450,000, why should they not do so? As the Bill stood they would have to wind up that company and go through the whole process again, and they would be put to great expense. With the object of leaving them free to do what they liked with their own, and proceed with a diminished capital if they thought fit, he proposed later on to move to insert at the end of Clause 6 the following words, which, with the permission of the Speaker, he would read— Provided always, that nothing herein contained shall prevent the allotment of shares to any applicant who, after Slaving received notice in writing from the company that the minimum subscription has not been obtained, shall have consented in writing to take allotment of the shares subscribed by him or any less number, and whenever any allotment shall have been so made by consent, notice thereof shall be given forthwith to the registrar, and the total number of shares comprised in such allotments and notice shall be the minimum subscription for the purposes of section eight of this Act. There would be very full notice given, and everybody would know exactly what he was doing. He submitted to the Government and to the House that there could be no reason why, because the subscriptions had fallen short, that the whole thing should come to an end, all the expense be thrown away, and the parties sent home without being able to join in the undertaking which they desired to promote. He begged to move the Amendment standing in his name.

Amendment proposed— In page 3, line 16, after the word 'allotment,' to insert the words 'save as provided by sub-section six of this section.'"—(Mr. Sydney Gedge.)

Question proposed, "That those words be there inserted."

MR. RITCHIE

I hope the House will not consent to the Amendment of my hon. friend. The House has already given its assent to a proposition that at the formation of these companies the public should be informed as to what is the minimum amount which the directors consider they require to proceed with. Whatever may be the amount of the capital, the directors have to say what, in their opinion, is the smallest amount they can go to allotment upon, which means that they have decided that that amount of capital is required for carrying on the business. My hon. friend desires to drive a coach and four through the provision which has already been assented to by the House, and say that, in the case of this minimum subscription not being reached, the company may proceed to business on a lesser sum than the minimum provided. I do not think we ought to proceed in that way. I think we should not allow this minimum to be set aside simply because the shareholders desire to proceed on a smaller capital than what the directors say is necessary. The hon. Member has argued as if it was a question for shareholders only, but it is nothing of the kind, for it is a question for the creditors as well, and a company proceeding to allotment on a smaller capital is calculated, though not intentionally, to deceive the public. I trust the House will adhere to the clause as it stands.

MR. PERKS

This Amendment shows how delusive this provision is. First of all you are dealing, in the majority of cases, with perfectly capable and solvent companies which would not dream of going to allotment unless they had a sufficient amount of subscribed capital. It is not unfrequently the case that they state in the prospectus that that is the intention of the directors. I think the Board of Trade have been wisely advised in adopting some such provision as this. As I pointed out on Clause 4 in regard to the qualifications of directors, it is capable of being set aside by fixing in the Articles that the qualification should only be one share or a very nominal sum. Therefore, in connection with this supposed protection to the public of a minimum subscription, all that is necessary is for a joint stock company to state that the minimum subscription is to be a mere nominal figure. I know the answer will be that at all events the public will have notice, and I admit that that is a very good answer to a certain point. I wish, however, to point out the danger of grafting upon joint stock company laws a number of harassing and futile conditions, when it is perfectly well known that the cases of fraud which you are trying to protect the public against are only an infinitesimal proportion. There are a number of companies who do not need those harassing restrictions placed upon them, and I think that point ought be well borne in mind by the right hon. Gentleman. There is also another restriction about the amount of money which each shareholder has to pay on application; but there again, it is merely a nominal amount, which will not bring any substantial sum into the coffers of the company for the purpose of protecting the creditors, and this particular clause we are now considering is the passing of a minimum which will be perfectly fair.

SIR ALFRED HICKMAN (Wolverhampton, W.)

The explanation is very simple. No man in his senses would sub scribe to a company, the minimum subscription of which was placed at a merely nominal figure. We can never protect persons so silly as to do that, but that is no reason why we should not protect others.

SIR ALBERT ROLLIT

The evil which this clause strike? at is probably the very worst which has occurred in company administration, namely, proceeding to allotment on insufficient capital. The vendors and others receive their money, and then the company is left without sufficient assets to conduct its business. The clause is required, and I cannot concur with my hon. friend that it might be eluded by stating the nominal amount at which allotment would take place. What would the public think of a company with a nominal capital of £100,000, the directors of which proposed to proceed to allotment on £10? I should like the House, nevertheless, to consider whether my hon. friend the Member for Walsall has not introduced an Amendment which may have an advantageous effect. I admit at once the evil, and I think this clause provides a remedy. What form does the evil take? Why this, that the directors of a com- pany at a meeting of the Board proceed to allotment without consulting the shareholders at all. They act independently of the shareholders, and that is a very great evil indeed. My hon. friend's Amendment provides that the directors shall take the shareholders into their confidence, and if the shareholders deliberately advise the directors to proceed to allotment on the capital subscribed, that is a fair and reasonable corollary to the clause. Suppose it was provided that £100,000 was the minimum, and that the subscription fell short of that amount by only £100, that would be an embarrassing situation, and a great deal of money would be lost, although it might be found quite practicable to deal with the company, with the assent of the shareholders. If a company in such a position had to be dissolved, the stamp duty and all the preliminary expenses would be lost. It may be said that this Amendment opens the door to abuse. I admit there may be cases in which it may be abused, but I think the principle of the Amendment is right—insufficient subscription by a small amount, the practical performance of every object by the company, and the directors acting, not of their own accord, but with the consent of the shareholders. I think it is a very strong proposal.

SIR ROBERT REID

said he agreed with the President of the Board of Trade, and also with the observations which had been made with regard to the abuses which had arisen in proceeding to allotment on insufficient capital. He thought this clause would not produce very good results, partly for the reasons which had been already stated, and also because there was nothing to prevent collusive applications. That was a very common form of clause, but he thought a coach and six might be run through it by an ingenious company promoter. He felt that the clause would very likely prove of very small value.

SIR JAMES JOICEY

said that if what he would call fraudulent promoters wore allowed to go to allotment with a very small capital, they would probably make a market of the shares, as was done in eases where no prospectus was issued. He thought it would be unwise to accept the Amendment. After all, people did not go into a company because of the amount of qualification which the directors held. They went into the company on the character of the directors.

Question put and negatived.

Amendment proposed, In Clause 6, page 3, line 17, to leave out 'for public,' and insert 'to the public for.' "— (Mr. Ritchie.)

Amendment agreed to.

MR. BOND, in moving the next Amendment, said it was not desirable to multiply formalities beyond what was necessary. He did not understand why the minimum subscription should be inserted both in the Memorandum or Articles of Association and in the prospectus. If the minimum subscription before preceding to allotment was stated in the prospectus, that was all that was necessary to protect the shareholders. People did not generally propose to take shares in a company unless they had the prospectus before them. The provision of the section was entirely new, and had never hitherto been seen in any Articles of Association.

Amendment proposed, In page 3, line 19, to leave out the words 'by the Memorandum or Articles of Association.' "—(Mr. Bond.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

MR. RITCHIE

said the question of capital was one of so important and vital a character in connection with the formation of a company that he thought it ought to be entered in something more than the prospectus. That was why it was thought that it ought to be definitely laid down that the minimum subscription which would entitle a company to go to allotment should be named in the Articles of Association as well as the prospectus.

MR. PERKS

said the effect of putting it in the Articles of Association would be that it could be altered by special resolution. The effect of putting it in the Memorandum would be that it would be unalterable. The point was this—whether they should now agree that the amount of the minimum subscription should not only be in the Memorandum and Articles of Association as well as in the prospectus— three documents.

MR. RITCHIE

In the prospectus, and one or other of the other two.

MR. PERKS

Then, do I understand that it could only be in the prospectus?

MR. RITCHIE

It must be in the prospectus, and it must be incorporated in one of the other two—either in the Memorandum or the Articles of Association, not in both.

MR. PERKS

Very often in the incorporation of a company in the first instance it was impossible to say what was the amount of the minimum capital it would be wise to go to allotment on. Very often when the Articles of Association and the Memorandum were registered for the purchase of a large number of companies—in many cases in the incorporation of banks, and particularly in the case of the Amalgamation of large industrial concerns—it was almost impossible to say how much it would be wise to fix the minimum subscription at.

Other Amendments made.

MR. RITCHIE

said the Amendment he now moved was to redeem a pledge he gave to the Grand Committee to amend Clause 6 so as to meet the case of the failure of any bank in which money received from applicants for shares was deposited.

Amendment proposed— In Clause 6, page 4, line 4, at end to insert 'from the expiration of the forty-eight days, provided that a director shall not be liable if he proves that the loss of the money was not due to any misconduct or negligence on his part.' "—(Mr. Ritchie.)

Question proposed, "That those words be there inserted."

SIR ROBERT REID

said he was not a member of the Grand Committee, and was not acquainted with any arrange- merit come to in regard to this matter. It was a small matter, and therefore it was not worth while saying many words about it. Still he must say that the Amendment did not commend itself to his sense of equity. If directors took from subscribers sums of money which they were pledged to return if the minimum allotment was not subscribed, it seemed to him that they should be under such obligation to restore it that they would be quite certain that it was in custody where it would be absolutely safe. He would not waste the time of the Committee in pressing the matter, for loss in this way was very unlikely to occur often.

* MR. MARKS

said there were provisions in Sub-section 6 which it would not be desirable to limit to the first allotment of shares. His object in moving the omission of the sub-section was for the purpose of calling attention to a grave defect in the Bill which was discussed in the Committee upstairs, and in respect of which he at least understood that it was to be dealt with at a later stage. By Sub-section 3 of the clause the amount payable on each share on application was 5 per cent. of the nominal amount of the share. The whole of the section did not apply to the allotment of shares subsequent to the first allotment. If there was a point on which the public and others familiar with joint stock companies had been unanimous since this Bill had been before the public it was that companies should not proceed to allotment with insufficient capital. The stock exchanges, the chambers of commerce, the Institute of Secretaries, the Registrar of Joint Stock Companies, and the Inspector-General in Bankruptcy were unanimous as to the extreme importance of not permitting companies, as far as the law could prevent them, to go to allotment with insufficient capital. The first condition of allotment on a sufficient capital was that there should be some guarantee that the applications were made in good faith, that they were not bogus applications, that they were not made for the purpose of carrying on stock market deals, and for the purpose of entrapping the unwary. Five per cent. was the smallest possible amount that should be paid on subscription. Small as it was, it was some guarantee of the good faith of the applicant. It created the impression at least that he was not altogether a man of straw. But if it was important in respect of the first allotment of shares that there should be some payment in cash on application, surely it was equally important that on the subsequent allotment of shares there should be some payment in cash. What was the situation created by Sub-section 6? It was this. There was an invitation to the promoter who desired to conduct his business dishonestly—and he assumed that, to a certain extent, this Bill was aimed at dishonest promoters—there was a direct invitation to make the first issue of shares a formal issue. In connection with that issue he had to obey the injunction laid down in the section, but in respect of that first issue only. It might be an issue of 10,000 shares, and it might be worth while to provide 5 per cent. on application, and therefore, so far as the 10,000 shares were concerned, there was a genuine subscription. Having once complied with the law in connection with that purely formal first issue, he was at liberty to ignore all the safeguards contained in that clause. He was at liberty a month or three months after, or at any time, to issue 190,000 shares to the public, and he was not obliged to observe any of the obligations laid down. What was more significant in respect of that subsequent issue was that he was not required to make any amount payable in cash on application. It was infinitely more important that there should be a payment on application in the case of the subsequent issues than in the case of the first issue. He begged to move the omission of the clause.

Another Amendment proposed— In page 4, line 8, to leave out Sub-section 6 of Clause 6."—(Mr. Marks.)

Question proposed, "That the words proposed to be left out to the word 'for,' in line 9, stand part of the Bill."

SIR ROBERT FINLAY

said his hon. friend admitted that the greater part of this provision would be quite inapplicable except to the first allotment. With regard to subsequent applications to the public to take shares, a certain protection was given in Clause 6, Sub-section 6, which dealt with the starting of companies. He did not undervalue what his hon. friend had said with regard to subsequent issues to the public, but surely the greater part of the fraud which they had to deal with had been connected with what was termed "proceeding to allotment." He asked his hon. friend not to press his Amendment, but rest content with the fact that they had dealt with the case which was most prevalent.

SIR ROBERT REID

I think the hon. Member has shown by his criticism the weakness of the whole case. Let mo give an illustration from the Report of the Board of Trade. A company named Vimbos had a prospectus with most excellent names for directors and solicitors. The sum of £165,000 was offered for subscription, and the public subscribed £535. There was £44,500 underwritten by bogus subscribers. The company went into liquidation, and it was a downright swindle from beginning to end, and this was only one of many of the land. In this case it was the original application for shares; but as the hon. Member has pointed out, there might have been an original application of a perfectly formal character; and I will undertake to say that this formal application, when this Bill is passed, will become a matter of course, and this swindle might still be perpetrated. What the learned Attorney General has said is quite true, as the hon. Member himself admits—that a considerable part of this clause is not applicable in its terms and forms to anything but the first application for shares; but Sub-section 3 and Sub-section 5 might be left out, and instead of omitting the whole of Sub-section 6 there might be inserted after the word "section" the words "except Sub-sections 3 and 5." That would at least preserve for second applications some of the very small benefits which are conferred by this section. I have nothing more to say in regard to this point; but it is quite clear from the way the clause is drawn that you cannot retain the benefit of the whole of the clause for every application for shares. That is, to my mind, one of the great defects of this Bill, because it does not make any provision for that at all; but by moving the Amendment in the form I suggest it might do some good, and make the exception a little wider.

SIR JAMES JOICEY

This only shows the difficulty which arises in every part of this Bill. Supposing this Amendment is accepted, where are you placing yourself in the case of a company which was incorporated twenty years ago, and finds it necessary to issue more capital? Possibly the minimum amount upon which to go to allotment would have to be stated in the Articles of Association or the Memorandum. If it was stated in the Memorandum it could not be altered. I do not see, if this Amendment were accepted, how you could issue other shares and still comply with the Memorandum fixing the minimum on which you should go to allotment. So far as I know, I think it would alter altogether the working of this clause if the Amendment were accepted. I know a most prosperous company in the north of England which has just issued £750,000. It was incorporated twenty years ago, and if this Bill had bean in operation without the section to which the hon. Gentleman opposite objects, then I do not see how they could have complied with the Act at all in their second allotment of shares.

* MR. LAWSON WALTON

I hope the House will adopt the Amendment of my hon. friend the Member for St. George's. Some restriction is sought to be put upon the lodging of bogus capital, but a limit of 5 per cent. upon application money is a very small amount. A concrete case will show what it means. Supposing it is desired by a small syndicate to get a capital of £100,000. It will be necessary to subscribe £5,000, and by providing this sum amongst themselves they may got into their hands the whole of the shares, and by a judicious pooling arrangement and sales on the Stock Exchange they may put the shares on the market at a very large premium. This abuse is inadequately dealt with by the machinery of the Bill. You will have, in every case of speculative and fraudulent companies, two issues. You will have a formal issue and allotment, and you will have an effective issue and allotment. The formal issue will necessarily be a small one, because 5 per cent. of it must be subscribed by the persons who take the shares. Suppose it is said in the prospectus that the company is to have a capital of £500,000 in shares. The first and formal allotment under the machinery of this Act will probably be an allotment of £25,000. In this case the provision of the clause will have been most scrupulously observed. The first issue on allotment having been made, and the company duly registered, the second and effective allotment will then proceed to be made, and the persons who subscribed for the shares with hands entirely free from all the fetters which this Act imposes will proceed to practise the arts of speculative company promoters. I hope that the right hon. Gentleman will look upon this Amendment with a little more favour.

MR. RITCHIE

It has been admitted on all hands that the clause as it stands would be inapplicable in many respects to second issues. I think my hon. and, learned friend has failed to notice the effect of Sub-section D in Clause 12, which provides— The minimum subscription on which the directors may proceed to allotment, and the amount payable on application and allotment on each shave; and in the case of a second or subsequent offer of shares, the amount offered for subscription on each previous allotment, and the amount actually allotted; and the amount, if any, paid on such shares. Surely that would entirely meet the case which the hop. and learned Member suggests.

MR. BOUSFIELD (Hackney, N.)

I hope the Government will give further consideration to the modified form of the Amendment suggested by the hon. and learned Member opposite. The five per cent. payable on application is a very small matter, and I have no doubt that the hop. Member who has moved this Amendment would be quite willing to accept the suggestion which has been made if the Government could see their way to except Sub-sections 3 and 5. I think this small concession would meet the views of the House.

MR. RITCHIE

I will agree to that.

Amendment, by leave, withdrawn.

Other Amendments made.

* MR. LAWSON WALTON

I hope the right hon. Gentleman will see his way to allow some little modification of Sub-clause 2, Section 7. The section runs— If any director of a company knowingly contravenes or permits or authorises the contravention of any of the foregoing provisions of this Act with respect to allotment he shall be liable to compensate the company and the allottee respectively for any loss, damages, or costs which the company or the allottee may have sustained or incurred thereby. So that the liability of the director is to compensate any person who has sustained a loss in consequence of that contravention. Now, the proviso is— Provided that proceedings to recover such loss, damages, or costs shall not be commenced after the expiration of one year from the date of the allotment. I think I shall be supported by the House if I say so brief a limitation attached to a civil liability is almost unknown to our law. The House will see that the director sought to be affected is one who has knowingly contravened the provisions of the Act. The remedy is not given against a neglectful or indifferent director, but a director who knowingly contravenes the Act of Parliament. Now, I submit to the House that this director-is far too leniently treated, because after the expiration of one year from the date of allotment, however flagrant his contravention may be, he escapes scot free. That is far too indulgent to the director who knowingly contravenes the statute. Again, the period within which the remedy is to be enforced is far too short for the person suffering loss. He has only twelve months in which to discover the loss and the breach of duty which caused the loss, and to institute proceedings for the recovery occasioned by the loss. All this is to be done in twelve mouths. If one looks at the analogous periods in this and other statutes it will be found a very much longer limit is allowed. Under Section 6, Subsection 4, there is no period fixed; therefore, I take it, the directors may be compelled to repay the allotment money within six years, inasmuch as in similar circumstances, under the Directors Liability Act of 1890, the Court of Appeal recently decided that an action may be brought any time within six years. In both these cases you have to deal with a defendant whose liability arises from carelessness or indifference. In that case a director who causes the prospectus to be issued without having reasonable ground for believing it is true, is liable for six years; but in this case we have a favoured director, who escapes all liability after the expiration of one year from the date of allotment. I fail to see any ground for that exceptional treatment, and, therefore, I say if a limitation is to be allowed at ail, that period should not commence until the person complaining has found out that the breach of duty has been committed. If my Amendment is accepted the section will run— provided that proceedings to recover such loss, damages, or costs shall not be commenced after the expiration of one year from the date at which the fault complained of may, by reasonable diligence, have been discovered. The person complaining then will have to use the utmost diligence, because he has only a year to do it in. These derelictions of duty are never discovered for some time, because those who contravene the Statute always take very good care to cover up their traces.

Amendment proposed— In page 4, line 24, to leave out the words 'of the allotment,' and insert the words 'at which the default complained of might by reasonable diligence have been discovered by the persons seeking compensation.' "—(Mr. Lawson Walton.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

SIR ROBERT FINLAY

I hope the House will not accept this Amendment, for this reason. It is very desirable, so far as we can, to make the period of limitation definite. I am quite aware that in certain eases it is necessary to have the statutory period dependent upon knowledge of the fraud. Still, as a general principle, it is desirable to have a definite time from which the statutory liability is to run, and not to say "from the time when the plaintiff might have reasonably discovered the fraud," which would open the door to a great many things which would not be desirable. There are other objections, if one looks at the section, to She form of this Amendment. In the ordinary course of things these irregularities would be found out at the statutory meeting of the company, if not sooner; but if the period of limitation is considered too short, and if it will be accepted, to save discussion we would consent to its being made two years instead of one.

MR. HALDANE

pointed out that the arguments of the Attorney General would have been of great force had they been introducing a period of limitation of liability in the case of the indifference or neglect of a director, but in this case their limitation was directed against directors who ''knowingly" contravened the Statute. He was not sure as to these irregularities being discovered at the date of the statutory meeting. Some things would not be discovered until the company had gone some way in its history. This clause was for the purpose of protecting innocent persons against directors who knowingly deceived them, and in limiting the period in this form, the Bill went a good deal further than the courts, which laid down the principle that the period of limitation should run from the date when the fraud was discovered.

MR. RITCHIE

thought that the director had some claim to consideration, because all directors were not fraudulent. All contraventions of the Statute were not fraudulent. Nor had sufficient weight been given to the argument that an innocent director might have to undergo pains and penalties extending over an indefinite period if the Amendment was accepted. Although a man who was guilty of fraud deserved no consideration, the man who was charged only with fraud, did deserve consideration. The hon. and learned Gentleman looked at this question from a different standpoint from his. He could understand the ardour with which the hon. and learned Gentleman liked the shooting operation, but the person shot at did not like it, especially if the time during which he might be shot at was an indefinite period. For what might happen? The person who thought he was injured, and might subsequently come with an action against the director, might be content to lie quiet so long as the company was prosperous, but if there came a prospect of winding up, this same gentleman, who was quite prepared to submit to all these intolerable grievances while he was receiving his 5 or 10 per cent. dividend, [would come forward and say, "Good gracious, here is a prospect of my getting out of my liability; I will raise an action at once against the directors." There was no reason to make the period an indefinite one, but the Government was prepared to accept the extension to two years, and if that was accepted by hon. Members opposite, a step would have been taken towards settling one of the difficult points of this Bill.

MR. BRYCE

said, as hon. Members were anxious to save time, and what was offered by the right hon. Gentleman opposite would be a substantial improvement in the Bill, he hoped the House would accept it.

SIR JAMES JOICEY

expressed surprise that the Government should have accepted the extension of the limit of the two years. It appeared to him that anyone reading the clause must come to the conclusion that every director was expected to know the law in every detail, and that he was brought under the penalty of having to refund the capital of the company if he contravened the Act. From his experience, he could say that every board of directors that he was acquainted with had had to have their solicitors at their elbows in order that they might be told when they were contravening the Act or not. When one considered the liability which directors would take upon themselves when this Bill became an Act, he would be greatly surprised if any honest man, unless he was a fool, would submit to come under such provisions as these.

SIR ALFRED HICKMAN, supposing the case of a director dying, asked how his executors would ever be able to wind up his estate if it were to be subject to a liability of this kind for an indefinite period.

MR. HEDDERWICK (Wick Burghs)

said that he did not understand the tenderness of the right hon. Gentleman towards a director who knowingly contravened the Statute.

MR. RITCHIE

I said distinctly I had no compassion for a director who did that, but that I had compassion for a director who was shot at who had not done so.

MR. HEDDERWICK

said the clause showed undue tenderness towards these persons by limiting the liability to twelve months. There was no such limitation in Clause 6, under which an action at law would lie for six years, and the same principle ought to be applied to this clause. There was no reason for limiting the liability of a director who, in the words of the Bill, "knowingly contravenes or permits or authorises the contravention of any of the foregoing provisions of this Act with respect to allotment."

MR. LABOUCHERE

said the President of the Board of Trade and those who supported him seemed to have a very curious idea as to what constituted honesty in a director. It was supposed to be something entirely different to that of any other human being, and laws were to be made to allow them to do things which other persons would not be allowed to do, in order to induce them to become directors. The clause said that if a director knowingly contravened the law, or permitted anybody else to do so, he was subject to certain penalties; but if his criminality remained undiscovered for twelve months, he was to be allowed to go scot free. They might as well say that if a director knowingly stole a watch, and the owner did not discover his loss in twelve months, the director should be allowed to go free. He protested against this doctrine of putting a premium on dishonesty, and against the idea that honest men would not become directors unless they were allowed to act dishonestly. He had no desire to treat a director worse than anybody else, but, on the other hand, he had no inclination to treat him better. Possibly a director might have an action brought against him after the expiration of a year, and the individual who brought it might not be able to prove his case; but everyone was liable to that, especially newspaper proprietors, and if this concession was to be made to company directors then newspaper proprietors should be included in it. As to the point raised by the hon. Member opposite as to a director dying, and whether there is any liability upon his executors, he could only say that if a director died he might be let off, because in all probability he would be punished in another world; but so long as he was in this world let him remain liable to be punished if necessity arose.

MR. LAWSON WALTON

begged leave to withdraw his Amendment in favour of that of the Attorney General.

Amendment, by leave, withdrawn.

Another Amendment made.

MR. PERKS

begged leave to move the Amendment standing in the name of the hon. Member for North-west Durham. His object in doing so was to call attention to the clause, and to elicit from the Government some explanation with regard to it. The clause seemed to deprive the public of a protection which they had hitherto possessed, and the shareholders of the company of important rights which they had been accustomed to endow themselves with under their Articles of Association. The clause provided certain conditions under which the company might commence business. They had to satisfy the Joint Stock Registrar that they had complied with all the requisite conditions laid down for that purpose. The conditions were that the secretary of the company or one of the directors should make a statutory declaration on two points, and two points only. In the first place, he was to declare—and this was a condition precedent not merely to the commencement of the business, but also to the exercise of any borrowing powers of the company—that the minimum subscription had been provided by the applicants for the shares of the company, and that shares had been allotted to an amount not less in the whole than the minimum subscription. That was the first thing the secretary had to do before the company was launched to the world and commenced business. What was the other condition? It was that the director whose qualification had been specified in the preceding clause must pay to the company on each of the shares taken, or contracted to be taken by him, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription. Say that the limit on application would be something like 5 per cent., the director would have to subscribe 1s. per share on application and 1s. on allotment. Thereupon the secretary went to the Registrar of Joint Stock Companies, and made a statutory declaration and came out with a certificate—without, he presumed, any note or comment in it— that the company, which might be a perfectly bogus company, was entitled to commence business. But there was another condition in Sub-section 3 which was very extraordinary, and to his mind totally at variance with what was the ordinary course in limited companies. It was the usage that contracts made by a company before they were entitled to commence business were subject to confirmation by the shareholders.

MR. RITCHIE

That has nothing to do with the Amendment moved by the hon. Member, which is for the omission of Sub-section (b).

MR. PERKS

said he would put himself in order by moving—as he was entitled to do—the omission of all the words from line 29, page 4, to line 9 on the next page. What he wanted to point out was that this clause was a direct premium given to launching bogus companies on the world with the imprimatur of a Government Department upon them. Directly this certificate was issued by this functionary on these illusory conditions, every contract which had been made before the company commenced business became absolutely binding, and not subject to the confirmation of the shareholders, however absurd or ruinous it might be. He did not think that was according to public policy. He moved the Amendment standing on the Paper.

Another Amendment proposed— In page 4, line 30, to leave out paragraph (b), of Sub-section (1), of Clause 8."—(Mr. Perks.)

Question proposed, "That paragraph (b) of Sub-section (1) of Clause 8 stand part of the Bill."

SIR ROBERT FINLAY

said when the hon. Member found he could not reconcile the Amendment he originally moved with his speech he moved another, but finally ended by moving the Amendment standing in the name of the hon. Member for North-west Durham, who was present, but did not himself move it. The 8th Clause, which the hon. Member proposed to deal with in this summary fashion, provided very wholesome restrictions on commencing business. A company was not to commence business, or exercise any borrowing powers, until the shares had been allotted to an amount not less in the whole than the minimum subscription, and until every director had paid to the company on each of the shares taken, or contracted to be taken by him, and for which he was liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription, and further until there had been filed with the registrar a statutory declaration by the secretary or one of the directors that the aforesaid conditions had been complied with. And then there was the provision that any contracts made by the company before the date at which it was entitled to commence business should be provisional only, and should not be binding on the company until that date. Surely these were most wholesome provisions, and their effect would not unduly restrict the operations of a company. He really totally failed to see how the hon. Gentleman could contend that the imposition of these wholesome restrictions would promote the formation of bogus companies, and he hoped the Amendment would not be adopted.

SIR ROBERT REID

said that by Subsection 3 contracts made by a company before the date at which it was entitled to commence business would be provisional only, but on that date they were to become binding. Now, the Attorney General was perfectly aware that there were certain classes of contracts entered into antecedent to the formation of the company which were in a suspended state until the directors and shareholders had had full opportunity of considering whether they were light and proper for the company to enter into. Would the Attorney General take steps to insert words to prevent these contracts being made binding by statute on the date the company commenced business?

SIR ROBERT FINLAY

said the subsection applied only to contracts made by the company, and not by other persons as trustees for the company previous to the formation of the company. Of course, if there was any other objection to the contracts the effect of the subsection would not be to make them binding.

MR. PERKS

said that after the satisfactory explanation of the Attorney General he would withdraw his Amendment.

Amendment, by leave, withdrawn.

MR. H. S. FOSTER

moved, "In Clause 8, page 5, line 17, to omit the words 'which has commenced business,' in order to insert 'registered.' "The effect of the Amendment would be to exclude the application of the provisions of the section to companies which had been registered before the passing of the Act. There were many companies which during the last few days had been formed with many millions of capital, and they might proceed to allotment without having stated in their prospectus the minimum amount of subscription.

MR. RITCHIE

said he was inclined to accept the Amendment.

Amendment agreed to.

* MR. MARKS

moved to omit Sub-section 7 of Clause 8. The clause itself, he said, contained some very wholesome provisions with reference to the conditions under which a company was to be allowed to commence business. No company was to commence business until it had obtained a certificate from the registrar, and until that event no contract was binding on the company. But by Sub-section 7 this clause was not to apply to a company where there was no intention to ask the public to subscribe for its shares. But if, after registration, and at a later stage, that company issued an invitation to the public to subscribe for its shares, would the section then become operative for the first time; and if so, would the contracts which had been already made absolute cease to be absolute? And must the company cease to carry on business until it had obtained another certificate from the registrar under the provisions of this clause? According to the clause no company could commence business unless it issued a prospectus on the same day that it applied for registration.

Amendment proposed— In page 5, line 19, to leave out Sub-section 7."—(Mr. Marks.)

Question proposed, "That Sub-section (7) stand part of the Bill."

SIR ROBERT FINLAY

said that he could not agree with his hon. friend, although he admitted there might be some ambiguity in the sub-section. He did not think that the words, "Where there is no invitation to the public to subscribe for its shares," could be taken in the sense which the hon. Member sought to impute to them. In the case of a private company the clause would not apply; but where shares were put upon the market the restrictions of the clause ought to apply.

MR. FAITHFULL BEGG (Glasgow, St. Rollox)

asked whether there was any definition of the phrase, "invitation to the public to subscribe." Unless there was such definition they would never know whether a company had applied to the public for subscriptions. Advertisement was a well-known means of invitation, but would the printing of a prospectus and sending it out marked "private and confidential"—which was quite a common case—be an invitation to the public to subscribe? That would be practically an appeal to the public, although technically it might not.

MR. RITCHIE

said that the question had already been answered. Of course the clause did not give an absolute and final definition of what was "an invitation to the public to subscribe." He should say that it meant generally when the public were asked to subscribe for shares. He agreed with the Attorney General that his hon. friend's fears were groundless, but suggested that the following words might meet the objection raised:— "This section shall not apply to any company where the shares of the company are not already offered to the public for subscription."

MR. BILLSON (Halifax)

said that the shares might be held by the promoters for a month or two and then offered to the public. He did not think the Attorney General had disposed of the difficulty which the hon. Member had raised.

MR. BRYCE

hoped the House would see how serious the difficulty was. The Attorney General was obliged to admit that the construction put upon the clause by the hon. Member for St. George's was a possible construction. The suggested Amendment of the President of the Board of Trade did not carry them much further. Moreover it was an admission that there was considerable uncertainty about the clause. They did not want to give more work to the lawyers. As it was the Bill would give plenty. Therefore he hoped that, in one way or another, the Government would see their way to have the clause redrafted.

MR. RITCHIE

said that after the criticisms that had been made he would undertake to confer upon the matter with the Lord Chancellor.

* MR. MARKS

said that after the undertaking of his right hon. friend he was willing to withdraw his Amendment.

MR. H. S. FOSTER

said there was a certain class of companies which would not have to go to the registrar for a certificate to commence business, so long as they could say of themselves that they were a private company. But that private company might find it necessary to make an appeal to the public afterwards, and would the provisions of the clause come into operation then, or would they have a retrospective effect? He trusted his right hon. friend would direct attention to the point so that it could be considered in another place.

SIR JAMES JOICEY

quite recognised the importance of having this matter thoroughly reconsidered, as, unless there was some provision of the kind now proposed, the whole clause would be useless. The more he saw of these clauses the more satisfied was he that the Bill was not understood by even its framers.

MR. PERKS

asked whether all the existing rights of registration were reserved in the case of private companies.

MR. RITCHIE

That is the intention.

MR. PERKS

instanced the case of a company which, registered for private and family purposes with a large amount of capital, was about to make a public issue. When such a company had adopted, or would in future adopt as a private company, the existing proceedure, and then later on made a public issue, would it have to go to the Joint Stock Registry for a certificate to enable it to commence business, and comply with the different conditions laid down in this clause?

SIR EDWARD CARSON

pointed out that in such a case the company would have already commenced business. The clause would apply only to new companies. A great deal of the difficulty which had been raised by hon. Members would have been disposed of if they had read the section already passed, providing that allotments should not be made until the minimum subscription of capital was forthcoming. The whole question hinged upon that, and the two clauses must be read together.

* MR. TOMLINSON

said that the difficulty was occasioned by trying to make one set of words fit two quite distinct states of circumstances. The cases of issues before and after the company had commenced business had better have been dealt with separately.

Amendment, by leave, withdrawn.

MR. H. S. FOSTER

moved to insert in Clause 9, line 22, after the word "shares," the words "as the result of a public issue." This clause required a return within a limited period after allotment. Manifestly the allotment was the general allotment of shares; but it frequently happened that a small number were allotted at various times, and there clearly could be no object in enacting that in such cases the return should be made under pain of heavy penalties.

Amendment proposed— In page 5, line 22, after the word 'shares,' to insert the words 'as the result of a public issue.'"—(Mr. Harry Foster.)

Question proposed, "That those words be there inserted."

* MR. SYDNEY GEDGE

pointed out that the issue of shares took place after the allotment, and therefore an allotment, while it might be the result of an invitation to the public, could not possibly be the result of an issue.

* MR. MARKS

I hope the Amendment will not be adopted, as it will take all the value from the provision. It is of the utmost importance that records of allotments, and the other matters set forth in this section, should be open to public inspection, and should be filed more particularly in the case of those companies which do not make public issues. The House will remember that there are other ways of selling shares than by means of public issues, and it is particularly desirable that an eye should be kept on the companies which do not make public issues, but do make allotments.

Amendment, by leave, withdrawn.

MR. RITCHIE

stated that the series of Amendments standing next in his name were with reference to a clause interpolated in Committee at the instance of the right hon. Gentleman the Member for South Aberdeen. The Government had consented to the repeal of Section 25 of the Companies Act, which imposed a very onerous fine upon any person holding shares other than shares paid for in cash, and which had not been registered. The result of non-registration in the case of an innocent holder might years afterwards be very serious, and the Government accepted the Amendment with the general consent of the Committee, but these slight Amendments were necessary.

MR. BRYCE

agreed with the statements of the right hon. Gentleman as to the proceedings in the Standing Committee. The Amendment to repeal Section 25 of the Companies Act was accepted by the Government, but the Chancellor of the Exchequer made the condition that certain words should be introduced to safeguard the Treasury and provide against the diminution of revenue which might arise. That was understood by the Committee, and therefore there was no objection to these Amendments.

Amendments agreed to.

Amendment proposed— In page 5, line 31, to leave out the word 'number.' and insert the word 'numbers.'"— (Mr. Sydney Gedge.)

Question proposed, "That the word 'number' stand part of the Bill."

MR. FAITHFULL BEGG

said there was more in this Amendment than appeared on the surface. The alteration might be a very serious matter. The "number" of shares would be taken to mean the gross quantity, but to call upon a company to decide what particular numbers should be attached to particular shares was imposing a very serious obligation; and he failed to see what good could possibly be obtained thereby.

MR. RITCHIE

remarked that the Amendments he was moving were Treasury Amendments, which he had consented to ask the House to insert, and it would be rather dangerous to depart from the arrangement he had made. He therefore could not accept the Amendment.

Amendment, by leave, withdrawn.

Other Amendments made.

MR. ATHERLEY - JONES

moved the omission of Clause 10. It was difficult to understand why the clause, if it was useful with regard to companies which invited public subscriptions, should not be equally applicable to companies of a private character. He objected to the clause on two grounds. The clause aimed at the prevention of payments of commissions or bonuses to persons for underwriting. The clause enabled that to be done providing there were disclosed on the prospectus the amount and other particulars; but it was totally illegal to do it otherwise. Such a provision would be altogether fatuous in its operation, and would simply multiply the opportunities for fraud. One of the results contemplated was that the purchase-money would be enhanced, that the promoter would receive something more than the real purchase money, and that that "something more" should be given by the promoter to the underwriter. How in the name of common sense did the right, hon. Gentle man suppose he was going to follow a transaction of that kind? Unless a punitive law could be made effective it was far better not to attempt to apply such a law. Another objection was that by the clause a considerable amount of mischief would be done to legitimate company enterprise. Underwriting was an exceedingly common form of putting a company on the market, and it was not only a perfectly legitimate process, but a perfectly proper one. When the public knew that astute business men were willing to underwrite shares, it was a certain assurance that the enterprise was of considerable value. This clause would not only stop the fraudulent and improper company-mongers, but it would materially injure perfectly legitimate ventures. The amount paid for underwriting was regulated not by the fraudulent character of the company, but by the character of the enterprise and the risk inherent thereto. He trusted the public would not be given the idea that by a prospectus having to pass through these various methods of Government discipline they were thereby relieved of the necessity of inquiring into the nature of concerns to which they were invited to subscribe. This was a piece of vicious legislation, and it was being forced upon the House at a most improper rate of speed. He ventured respectfully to press upon the right hon. Gentleman the President of the Board of Trade that he should seriously consider the desirability of pressing this clause, which, in the view of a very large number of people interested in public companies, was contrary to the interests not merely of companies, but of the public generally.

Amendment proposed— In page 5, line 38, to leave out Clause 10." —(Mr. Atherley-Jones.)

Question proposed, "That the words 'Upon any offer of shares' stand part of the Bill."

MR. PHILLIPS (Pembroke)

said that if this clause applied to companies already in existence, as he believed it did, it would have the effect practically of enabling companies to issue shares at a discount. Except in the case of railway companies and companies incorporated under special Acts, shares could not be issued at a discount. He instanced the case of a company with £10 shares quoted at £9. Until those shares came up to or above par, it was absolutely impossible for that company to issue more shares. If the clause under discussion became law it would be perfectly easy for a company with £10 shares quoted at £2, providing there was a clause in the Articles authorising it to be done, to issue shares at par and pay £9 per share for having it done. With the shares quoted at £2 it would be perfectly easy to get people to underwrite the shares on such conditions, as they would really be buying £2 shares for £1. The shares could be taken up in big lots, and afterwards sold little by little to the public. The real effect would thus be to issue shares at a discount. He did not say whether or not this was an advantage, but it absolutely changed the whole of the present company law, and the House should not take such a serious step without further consideration.

MR. RITCHIE

did not think any clause in the Bill had attracted more public attention than the clause under consideration, nor was there any part of the proceedings connected with company promoting in regard to which more fraudulent practices had been carried out than that of under writing shares. Although the law at present did not permit any commission to be paid for underwriting, it was notorious that underwriting did take place. Instead, however, of being paid for by the company it was paid for by the promoter, who took care to get his money out of the company. In many cases it was alleged that almost fraudulent companies wore started by means of large amounts being paid for underwriting, and subsequently, by means of circulars and otherwise, shares which had been taken at 50 per cent. discount were foisted upon the unwary public at practically their full price. The Committee of the Board of Trade in connection with this Bill carefully considered whether or not the practice of underwriting—which, might be perfectly legitimate — should be recognised on proper lines, and it was thought that the best means of dealing with the subject was by legalising that which at present was illegal, with the proviso that everything done in this respect should be fully disclosed. Hon. Gentlemen could not have it both ways. He quite admitted that an underwriting commission of 5 per cent. in some companies might be just as necessary as a commission of 1 per cent. in others. It was quite apparent that no men in their senses would take a large block of shares in a now company at a discount of 5 per cent. if they did not believe it was a good company and likely to do well. So far as he was concerned, he did not think there was the least fear of any company being injured by having to disclose the fact that a certain proportion of the capital had been underwritten; whereas if a company came forward which had been reduced to such straits as to offer to a syndicate or body of persons a discount of 50 per cent. in order to take a certain number of shares, then he thought that the public generally would draw from that the conclusion that the shares of that company were not genuine. Whether it was looked at from the one side or the other, he thought it would be wise for the House to accept this proposal. The transaction provided was a perfectly legitimate one. The disclosure to be made would have no ill effect upon a good company, but it would have an ill effect upon a bad company, and it was bad companies that they desired to strike at.

SIR ROBERT REID

said that the great mischief arose because promoters made underwriting contracts of a most scandalous character. If they wore prepared to regulate the action of promoters in regard to underwriting contracts he should be very glad to see it done. But what they did in this clause dealt with the company itself, and he wished to point out this fact to the right hon. Gentleman: whereas hitherto the practice of paying money for underwriting had been unlawful for a company, this clause now authorised a company to do that very dangerous thing which up to now they were not allowed to do at all by the law. That was authorised by the sub-section of Section 10. The right hon. Gentleman said they might nullify the effect of that by providing for adequate disclosure, but he did not think the right hon. Gentleman had effected that in his clause, because the proposal was that money might be paid for this wretched business of underwriting. The words were— If the payment of the commission and the amount or rate per cent. of the commission paid or agreed to be paid are respectively authorised by the Articles of Association and disclosed in the prospectus, and the commission paid or agreed to be paid does not exceed the amount or rate so authorised."' Those hon. Members who were familiar with these matters knew that, in the first instance, there need not be a prospectus, and nothing would then be disclosed. The point he wished to make was that it was much better to have this tiling, which was a dangerous thing, unlawful as it was now, because they were doing no good by licensing it and then limiting the licence. It had been said that underwriting was a very good thing, and in some few cases it might be. But everybody knew what actually took place, and he would appeal to their experience upon the subject. The promoter himself was the dangerous person, for he often took all the shares himself for the concern, and afterwards handed them over to the company. He generally made a bargain with the stockbroker, or somebody on the Stock Exchange, by which he placed a very large number of those shares on the market at a particular commission, and the stockbroker used all those methods of working the market, and all the rest of it, which caused the scandals with regard to these transactions. But whether underwriting was right or wrong, the point he wished to make was that it, was better to have underwriting unlawful, as at present, rather than to legalise it.

* MR. SYDNEY GEDGE

This clause to which objection has been taken is an exceedingly important one, and I only regret that the audience which heard the hon. and learned Member for Dumfries is not now present.

Attention called to the fact that forty Members were not present (Dr. TANNER, Cork Co., Mid.). House counted, and forty Members being found present.

* MR. SYDNEY GEDGE

The hon. and learned Member for Dumfries objected to this clause, because he thought it was bettor to leave certain existing customs alone than in any way to legalise them. I take a different view. The law as it stands undoubtedly prevents a company issuing any of its shares at a discount, but the obvious necessities of the case have rendered it necessary to evade that law in a very curious way. The advantages of so doing are so great that a very large number of people who ordinarily would not think of disobeying the law or doing anything wrong consider themselves perfectly justified in committing what may be called an evasion of the law. They proceed as follows: It is absolutely necessary to raise the capital required by a new company. This, as has been found by experience, cannot be done in most cases except by finding people to underwrite, as it is called, the minimum capital required to enable the company to commence business. The company cannot do that directly, and therefore the money required to secure the underwriting is added to the price paid to the vendor. He knows what it is, and the directors know what it is, but the existing shareholders and the subscribing public do not. It may be a large sum or a moderate sum, but the public have no knowledge of it. We have, therefore, an evasion of the law, we have secrecy, we have an unknown amount, and we have an abuse which this clause will remedy. The Government have, to my mind, looked this matter fairly in the face. They have recognised facts as they have found them, and have dealt with them accordingly. The mischief is that companies are not permitted to pay directly for underwriting, or, in other words, to issue shares at a discount, and, therefore, have to have recourse to a roundabout way of securing what they require. The Bill as it is framed does away with the indirectness and secrecy, and provides that except in the manner provided— No company shall apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount, or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price or otherwise. The Bill removes the illegality of issuing shares at a discount, and renders underwriting lawful under conditions which secure publicity, because the rate per cent. of the commission must be mentioned and the underwriting must be authorised by the Articles of Association, and must be set out in the prospectus. Therefore the investing public will have before them what has taken place. Surely the House will see that that is an infinitely better state of things than the existing law. I do not maintain that it will stop abuses, but it will make them much more difficult, because everyone who subscribes to a company will know what is being done and will know the difference between fair and unfair profit. The underwriter subscribes for a large number of shares, and runs the risk of their being left on his hands, and it is quite fair that he should be paid for that risk. Next I come to the companies already in existence who wish to issue more capital. The first thing is that the Articles of Association will have to be altered, because under existing Articles of Association it would be illegal to issue shares at a discount. The Articles can only be altered by two special meetings of the company, and the alteration must be carried by a majority of three-fourths, and full notice must be given to all concerned; and if there is to be a prospectus issued, the prospectus must give full particulars. I therefore cannot think how, under such circumstances, the hon. and learned Member for Dumfries can prefer the present state of legal evasion to this rational proposal, which secures full publicity.

MR. FAITHFULL BEGG

I hope the Government will adhere to this clause. The only thing which the clause requires is, possibly, that it should be extended so as to include all kinds of companies, and not be limited as it is at present, but that is a matter which will come up for discussion in connection with a later Amendment. I hope the Government will adhere to the clause, so that the whole of the transactions which have taken place in connection with a company should be shown. This is a matter which has practically emerged from the Committee with all parties in agreement regarding it. It has become manifest to everyone that some means must be found to enable the underwriting of the capital of a company to be legitimately undertaken in an above-board and straightforward manner. I do not say that under this clause, or under any clause which can be drawn, you will get a state of things that will be ideal, or to which objection cannot be taken; but that under this clause you will get a state of things infinitely better than the existing state of things is beyond question. The hon. and learned Member for Dumfries who spoke against this clause seemed to me to rest his case on exceedingly flimsy grounds. He practically gave his case away when he spoke of "this wretched underwriting business." Why should the principle of underwriting be recognised in connection with all other matters of business in which risk is involved, and not in connection with companies? Why it should be spoken of as a wretched business seems to be inexplicable. To underwrite a vessel at sea, or the immunity of a house from fire or any other risk, is a legitimate piece of business, but it is considered improper and illegal to underwrite the capital of a company offering its shares for public subscription. It might be vital to that company that a certain amount of capital should be secured in advance, and there is no other plan of doing that except by getting certain persons to take this underwriting risk. The law hitherto in this country—though it is not the case in other countries — has nominally prohibited the underwriting of capital; but practically, as my hon. friend has explained, the law has been evaded. Nowadays no prospectus is ever issued to the public without a statement that some contracts have been entered into which may come under the regulations of the Companies Acts as they exist, and acceptance of which is taken as waiving the right to challenge these contracts. What has been the result? The prices have been unduly inflated, and exactly that which the hon. and learned Gentleman opposite said might take place, has been done, but in an infinitely more vicious form than will be possible if this clause becomes law, and transaction of the kind has to be disclosed. I quite agree with my hon. and learned friend opposite, who said that we ought to have further consideration of certain clauses of the Bill, but I think he was entirely wrong in saying that we have not had full opportunity of considering this particular clause. This matter has been before the country in one form and another for four or five years. There is nothing in the direction of the Amendment of the Companies Acts which has been more thoroughly threshed out, and I hope that the Government will adhere to the clause, and thus enable us to get rid of this constant scandal. Under the protection of the clause the public will be able to know exactly what it is they are subscribing for, in the sense that there is no loading or watering of the stock of which they are not aware.

MR. LABOUCHERE

said they had been told that at present underwriting was illegal; but whether illegal or not they knew that it took place in numbers of companies, and practically the company paid for the underwriting. The clause recognised underwriting as an existing fact, and declared that it should be permitted provided it was disclosed in the prospectus. One could form a pretty accurate estimate of the character of a company when the amount paid for underwriting was known. If 1, 2, or 3 per cent. was paid, then that company must be worth something; but suppose it ran up to 90 per cent., then they knew that that was a perfectly speculative and gambling transaction. The amount paid for underwriting was, in fact, a natural barometer, showing what a company was in the estimate of business men. He hoped the right hon. Gentleman would stand to the clause; in truth, the Bill without it would be a perfect farce. He would ask whether a promoter would have a right to underwrite a company?

SIR ROBERT FINLAY

The promoter may do that at his own expense, but he cannot got the cost of the underwriting out of the company.

MR. LABOUCHERE

said there was another point on which he desired some light. Sub-section 3 said that "nothing in this section should affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay." What did that mean? It meant that they might pay any broker— not necessarily a man on the Stock Exchange—any amount of money to place shares.

MR. FAITHFULL BEGG

There is a limit.

MR. LABOUCHERE

The hon. Gentleman said there was a limit; but the limit had not been fixed. The words were, "Such brokerage as has heretofore been lawful." Brokerage was paid to brokers, and it might be there had hitherto been some limitations. What was underwriting? It was a species of brokerage, but the underwriter guaranteed that a certain number of shares would be taken, and therefore he was the better man than the broker. The underwriter said, ''I will guarantee to take so many shares if you pay me 5 per cent." The broker said, "If you pay me 5s. per share I will try and place the shares among my clients." It seemed to him that, if they insisted on the amount paid for underwriting being disclosed, the payments for brokerage should be disclosed also.

SIR ROBERT FINLAY

said he found himself in entire accordance with the hon. Gentleman who had just spoken as to what he stated in regard to the existence of underwriting and the desirability of recognising the fact which could not be prevented—precautions being taken at the same time to prevent an abuse of the practice. These precautions were to secure that the public would know what allowance was being made to the underwriter. As long as that was known he could not help thinking that the more judicious course was that indicated in the clause. His hon. and learned friend seemed to think that they ought not to recognise anything so unholy as underwriting.

SIR ROBERT REID

By a company.

SIR ROBERT FINLAY

By a company. But did his hon. and learned friend suppose that it would not go on very much as before? The promoter paid the underwriter a commission, and then he added that to the purchase money which he got out of the public. Surely the more sensible course was to recognise the facts, and to take such precautions as would pre vent mischief being done to the public.

MR. LABOUCHERE

asked if the Attorney General would be kind enough to say whether the promoter must add the commission paid for underwriting, and the commission paid to the broker.

SIR ROBERT FINLAY

said that what was proposed to be done was to secure entire publicity, and except under that publicity the company should not directly or indirectly be concerned in payment for underwriting. What the sub-section said was— Save as aforesaid no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount, or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money paid out of the nominal purchase money or contract price, or otherwise. Now, surely if it was possible to forbid a company doing indirectly what they desired to prevent, the words of the clause would have that effect. If the promoter chose to pay commission for underwriting, in future he would have to do it out of his own pocket, because there was an express prohibition to prevent him doing it otherwise.

MR. LABOUCHERE

said that the promoter received the money; he did not have to say, "I am going to use it in underwriting, "but he said," it is worth my while to pay 5 or 10 per cent. to have these shares taken up."

SIR ROBERT FINLAY

said that if the price was a fair price the promoter might pay it out of his own pocket; but if it was not a fair price it was expressly forbidden to be done. Of course there might be evasions in every case. No Act was so broad that it would be impossible that it should be evaded. The hon. Gentleman referred to the subject of brokerage. Brokerage was perfectly distinct from underwriting. An underwriter had to guarantee that the shares would be taken up by the public or that he would take them up himself. In the case of brokerage the broker guaranteed nothing of the kind, and it had been held that it was the law that a company might pay brokerage for having shares placed.

MR. LABOUCHERE

To any amount?

SIR ROBERT FINLAY

No; a proper amount.

AN HON. MEMBER: What is a proper amount?

SIR ROBERT FINLAY

No actual limit has been fixed, but the amount of brokerage as distinguished from commission for underwriting is very small indeed —an eighth or a quarter per cent. If a broker was found charging beyond those figures it was not really brokerage but commission for underwriting with a guarantee that the shares would be taken up by himself or his friends. What had been done by this clause was to recognise what was at present the law as regarded brokerage. Every lawyer knew that payment of brokerage was at present not illegal—say an eighth or a quarter—for placing shares of a company. According; to the section, it was proposed to enact that a company might pay a certain commission for underwriting so long as everything was above board and the public were fully aware of what was being done. Under the circumstances, he hoped the House would not refuse to agree to a clause which promised to have a very beneficial effect.

MR. BRYCE

said, as he understood from what they hoard in Grand Committee, that brokerage was to some extent elastic, but it was a pretty well established rule that it should not go above a half or three-quarters per cent. If that was agreed to, the result of the clause which the Government proposed to pass was that when any brokerage had been paid by the company it would be for those who endeavoured to justify brokerage to show that it was really brokerage, leaving it to the court to decide whether it was a secret or unlawful form of underwriting and the payment of a secret commission. He could not feel quite satisfied with the answer of the Attorney General to the criticisms of his hon. and learned friend with regard to the position of the promoter. If the promoter knew, to begin with, that it was he rather than the company who had an interest in planting the shares, and ought to undertake the underwriting, he would estimate how much he had to pay for underwriting before selling to the company, and add that to the amount for which he was going to sell. The Attorney General said that that must be a fair price, but who was to say what was a fair price? How was it possible, where the vendor was the promoter, and was selling the business to a company, to estimate within any fair distance of the truth what was a reasonable price to pay? They all knew how excessively vague was the estimate that was put on the worth of a company's business—not only of the tangible assets but of the goodwill. Therefore he said that it would not be possible under this clause to catch the promoter, and he feared they must at present acquiesce in the probability that promoters would continue to pay secret commissions as they had hitherto done. But was it not better if they could compel the company to a full disclosure that they should do so, even if they could not got at the promoter? This matter had been very fully debated by an exceedingly strong Departmental Committee, which included four of Her Majesty's judges, upon whose labours this Bill was founded; and the Committee said that it would be tar safer to practically prohibit these underwriting commissions unless they were disclosed, rather than have the secret practice continued.

* MR. MARKS

ventured to say that the most pregnant observation made in the course of the debate on this section was that made by the President of the Board of Trade. He pointed out the great advantage it would be to a company which decided to pay a certain amount for underwriting their shares if the rate of underwriting commission were set forth in the prospectus and in the memorandum and articles of association. He was inclined to the view of the right hon. Gentleman that if the underwriting commission was of a reasonable and moderate amount, it would induce the public to come in and take shares. It was within the knowledge of anyone who took an interest in the matter that these underwriting commissions had not hitherto been paid by the company, but by the promoter; and it was absolutely impossible to prevent the promoter from taking the amount of his underwriting risk into consideration when he fixed the price of the property of which he was the vendor. The price was always inclusive of the underwriting commission. But the company might come in and say to the promoter, "According to what you and your friends have told us you are willing to underwrite these shares at a penny," and he would reply, "Oh, yes; my friends say that they are so confident in the success of the company that they will underwrite it at a penny." Thereupon the company would pay the penny, and a prospectus would then be issued, in which it would be set forth that; the directors were so happy to state that they had succeeded in underwriting the shares at a penny. Was that a protection to the public? Was it not to open the door to another trap to the public? Again, it was said that the company would have to disclose all the facts; but they could not fix on the company that they knew all that had been done by the underwriter behind their back. There is this one thing to beware of. By this power to underwrite or pay commission for underwriting to an indefinite and unlimited extent you will introduce into your limited company business an evil which has been the greatest evil in this business in the United States of America, the issue of shares at a discount "treasury stock," as it is called, which is one of the greatest evils in the States. A company is required to state in its Memorandum and Articles of Association not the amount going to be paid, but what the company takes power to pay in respect to underwriting. The company issues its prospectus and states that it takes power to issue shares at a discount at 19s. in the £, and they may so issue. Who is to know six months after the statutory meeting has been called, which is the only protection given by this Bill to the general public, that the £1 shares then upon the market were issued at 19s.? They may be valuable assets in the case of bankruptcy, but they are not valuable assets to the investing public. There ought to be a legitimate power to underwrite, but there should be some limit beyond which the company should not go. The great evil of this clause seems to be that it gives a power to the company to put into its prospectus statements with respect to underwriting which might be a direct incentive to the public to come in and take shares. The promoters will not find fault with this clause, it does not touch them; nothing in this Bill does touch them in their powers as to underwriting, and in my opinion nothing in any Bill could. That is a fact that it is as well should be known, and it cannot be known too soon.

MR. BANBURY (Camberwell, Peckham)

thought there might be something to be said for disclosing in the prospectus every commission paid, but the first to be disclosed should be the commission paid to brokers; that was far more important than the commission paid to underwriters. The commission paid to brokers, as a rule, would be one-eighth or quarter per cent., but how was anybody to find out until too late what commission had been paid? The great thing to consider was how the public were most likely to be safeguarded, and he thought that they would best be safeguarded if there was declared in the prospectus the commissions that had been paid to everybody, brokers, solicitors, stockbrokers, etc. Without such a provision, all the solicitor had to do was to put a stamp upon the paper and to send the prospectus to people whom he thought were likely to invest, and nobody would be the wiser and able to find out until too late what had been done. As to underwriting, after a sound company came into existence it might be found necessary to issue debentures or preference shares in order to obtain capital to carry on a legitimate enterprise, and it was necessary to get that money by a certain date. Then, with the sanction of the shareholders, the company went to an underwriter and paid 2½ per cent. to him, and he subscribed in the hope that in a few months he would be able to recoup him" self. That was a legitimate transaction, and such a transaction did no harm to the company. If this clause was to be passed he thought every commission that was paid ought to be disclosed.

* MR. LAWSON WALTON

agreed with the hon. Member for St. George's that the abuse of underwriting was entirely unaffected by the clause of the Bill as it stood. But he thought that the clause was a stop in the right direction, because it made underwriting, instead of being a secret process, a legitimate operation performed in the open light of day. Was it not better to legitimatise such an operation, and to provide that the companies should give full notice of the terms which wore paid for the services rendered to it? The tendency of such legislation would be to put an end to furtive and secret operations, and make them legitimate, and it would also bring the law into harmony with the practice and the views of commercial men upon the question.

MR. BOUSFIELD (Hackney)

hoped that the House would not go to a division on the motion to omit the clause. Although the discussion had been most valuable, he did not see that the result desired would be attained by rejecting the. clause, and he hoped some way would be found of utilising two or three of the points which had been raised. Every-one was anxious to put down secret underwriting, and he thought that the form of underwriting by the company itself, as was suggested by the clause, was the right way of proceeding. The whole matter was a question of evolution, and that process had gone so far now that company directors them-selves were putting into the prospectus statements that no underwriting had been undertaken. But these matters were put in the prospectus merely to catch the unwary, and people were now beginning to look for some legislation of this kind. It was possible that a double set of commissions might be paid, and that that state of things might coincide with the secret and unannounced fact that promoters them-selves had been paid a large amount by way of commission for underwriting Therefore it seemed to him that in order to carry out the policy of the clause as drafted, and to prevent its being used in an illegitimate way, the clause ought to go further as regards disclosure of underwriting contracts, by providing that these should be stated, at all events so far as known to the directors and vendors. This would tend to put underwriting in the hands of the company, where it might very well be. As regards brokerage, too, he suggested that it was desirable to put something more definite into the clause instead of merely a permission to pay such brokerage "as had hitherto been lawful."

MR. RITCHIE

said that considerable time had now been spent in discussing the clause, and a good deal of business yet remained to be done, and he therefore hoped that the House would now consider that discussion was practically exhausted, and that they would come to a decision upon it.

MR. LOUGH (Islington, W.)

said that the appeal of the right hon. Gentleman was, he thought, far from being reasonable. The Bill had been rushed through the Committee, whose Report was not yet in the hands of Members, and this discussion was very valuable.

MR, RITCHIE

said he could not agree with the hon. Member, seeing that the Committee sat day after day, and of the discussions which had taken place the House had been kept fully informed.

MR. LOUGH

quite agreed that the proceedings of the Committee had been distributed day by day, but was of opinion that a great deal of trouble was necessary to discover what had actually taken place in Committee. He submitted that the House ought to be treated with greater respect, and not be hurried along in a matter of this importance before a proper Report of the Committee had been issued. The arguments urged to recommend this clause were that the clause would have a tendency to restrict the evil practice of underwriting if it were passed, but the object of the clause was to enable companies to pay underwriting commissions out of their capital, and thus legalise underwriting. That was a fundamental change in regard to companies, which ought not to be made in too great a hurry. The Government practically said, "Although we legalise the practice, we will prevent any harm arising by taking precautions"; but then the question arose as to whether those precautions would be sufficient; he did not think they would. After this Bill was passed the company would be empowered to pay large commissions for underwriting out of their capital, and it would be absolutely impossible to find out what capital they had left. He thought that the clause was an attempt to make people honest by Act of Parliament, and he did not think it would succeed.

MR. H. S. FOSTER

supported the view that this difficult and complex question was being discussed under most unfortunate circumstances through hon. Members not having the Report of the Committee before them. This question had engaged the attention of a Committee of the House of Lords for five years, and was practically pitchforked into the House of Commons, which was asked to discuss and settle a most difficult problem under exceedingly difficult circumstances. This clause, if passed, would create much greater evils than it sought to remedy. It would give a company power to under write or issue their own shares at a discount, a power which at present was very wisely withheld from them. A great deal had been said of the illegality of underwriting, but it was perfectly legal; the only illegality there could be would be in the company being allowed to underwrite. A company was a nonentity until it had gone to allotment, and the underwriting was antecedent to that stage. It was a scheme to call a company into existence and provide the necessary funds, and a certain amount was paid to recoup the underwriter for the necessary risk. Therefore, the company itself could never be asked to underwrite its own shares, for the reason that a company was unable to enter into a contract until after it started business. The remedy which he would suggest was that the President of the Board of Trade should provide in the clause that the underwriting contract entered into between the promoters and the underwriters should be disclosed in the pro- spectus, and that unless that was so disclosed the contract should be void.

MR. LAWSON WALTON

There is an Amendment further down on the Paper to effect that very object.

MR. H. S. FOSTER

said that in that way publicity would be ensured in the most effective way.

MR. PERKS

said that underwriting was simply gambling and betting in public companies, involving large sums of public money, and he thought it was better to leave promoters to run the risks they run at present than to give Parliamentary sanction to a practice which in itself was so reprehensible.

MR. BUTCHER (York)

said that underwriting was a perfectly fair transaction in itself. An abuse of the process took place when underwriting was done at an exorbitant commission and that fact was concealed from the investing public.

Under proper conditions of disclosure it appeared to him that there could be no objection to underwriting. It had been objected to the clause that there might be two underwriting commissions, one paid by the company, which according to that clause would be disclosed, and one paid by the promoter or vendor, which would not, it was alleged, be disclosed, and that thereby the public would be deceived; but he did not think that would be so, because Sub-section (h) of Clause 12 was drawn up in terms which amounted to a provision that the prospectus issued by a company should set forth on the face of it the amount of underwriting commission, no matter by whom it was paid. It might be that that was not sufficiently clear on the face of it, but he thought the sub-section would provide for cases of this kind, and he supported the clause

Question put.

The Mouse divided:—Ayes, 160; Noes, 32. (Division List No. 235.)

AYES.
Allison, Robert Andrew	Douglas, Rt. Hon. A. Akers-	Labouchere, Henry
Allsopp, Hon. George	Doxford, Sir William T.	Lambert, George
Arnold-Foster, Hugh O.	Dyke, Rt. Hn. Sir W. Hart	Lawrence, Sir E. Durning-(Corn
Atkinson, Rt. Hon. John	Faber, George Denison	Lawson, John Grant (Yorks.)
Bailey, James (Walworth)	Fellowes, Hon. Ailwyn Edward	Lawson, Sir W. (Cumberland)
Baillie, J. E. B. (Inverness)	Fenwick, Charles	Lea, Sir Thomas (Londonderry)
Balcarres, Lord	Finch, George H.	Leigh-Bennett, Henry Currie
Balfour, Rt. Hn. A. J. (Manch'r)	Finlay, Sir Robert Bannatyne	Llewelyn, Sir Dillwyn-(Swans.)
Balfour, Rt. Hn. G. W. (Leeds)	Fisher, William Hayes	Long, Col. Charles W (Evesham
Beach, Rt. Hn. Sir M. H. (Bristol)	FitzGerald, Sir R. Penrose.	Lonsdale, John Brownlee
Begg, Ferdinand Faithfull	Fitzmaurice, Lord Edmond	Lowles, John
Bemrose, Sir Henry Howe	Flower, Ernest	Macartney, W. G. Ellison
Bentinck, Lord Henry C.	Foster, Sir W. (Derby Co.)	Macdona, John Cumming
Bigwood, James	Garfit, William	M'Arthur, Charles (Liverpool)
Bousfield, William Robert	Gedge, Sydney	Malcolm, Ian
Brodrick, Rt. Hon. St. John	Gibbons, J. Lloyd	Marks, Henry Hananel
Bryce, Rt. Hon. James	Gibbs, Hn A. G. H. (City of Lond.	Massey-Mainwaring, Hn. W. F.
Burns, John	Godson, Sir Augustus Frederick	Mellor, Colonel (Lancashire)
Burt, Thomas	Gorst, Rt. Hon. Sir J. Eldon	Melville, Beresford Valentine
Butcher, John George	Goschen, Rt Hn G J (St. George's	Middlemore, Jn. Throgmorton
Caldwell, James	Gray, Ernest (West Ham)	Milward, Colonel Victor
Carson, Rt. Hon. Sir Edw. H.	Green, W. D. (Wednesbury)	Monckton, Edward Philip
Cavendish, V. C. W (Derbyshire)	Gull, Sir Cameron	Monk, Charles James
Cecil, Lord Hugh (Greenwich)	Hamilton, Rt. Hn. Lord Geo.	Moon, Edward Robert Pacy
Chamberlain, Rt. Hn. J. (Birm)	Hanbury, Rt. Hn. Robert W.	More, Robt. Jasper (Shropshire)
Chamberlain, J. Austen (Worc'r)	Haslett, Sir James Horner	Morrell, George Herbert
Charrington, Spencer	Hazell, Walter	Morrison, James A. (Wilts., S)
Coghill, Douglas Harry	Hedderwick, Thomas Chas. H.	Morton, A. H. A. (Deptford)
Cohen, Benjamin Louis	Helder, Augustus	Muntz, Philip A.
Collings, Rt. Hon. Jesse	Henderson, Alexander	Murray, Rt. Hon. A. G. (Bute)
Colomb, Sir John Charles Ready	Hermon-Hodge, Robt. Trotter	Murray, Col. Wyndham (Bath)
Cook, Fred. Lucas (Lambeth)	Hickman, Sir Alfred	Myers, William Henry
Cooke, C. W. Radcliffe (Heref'd)	Hoare, E. Brodie (Hampstead)	Nicol, Donald Ninian
Corbett, A. Cameron (Glasgow)	Hoare, Sir Samuel (Norwich)	Norton, Capt. Cecil William
Cox, Irwin Edward Bainbridge	Holland, William Henry	Oldroyd, Mark
Cross, Herb. Shepherd (Bolton	Houston, R. P.	O'Neill, Hon. Robert Torrens
Curzon, Viscount	Howard, Joseph	Parkes, Ebenezer
Davies, M. Vaughan-(Cardigan	Kearley, Hudson E.	Pease, Herbert P. (Darlington)
Phillpotts, Captain Arthur	Shaw, Chas. Edw. (Stafford)	Whittaker, Thomas Palmer
Platt-Higgins, Frederick	Shaw, Thomas (Hawick B.)	Williams, Joseph Powell-(Birm
Plunkett, Rt. Hn. H. Curzon	Sinclair, Louis (Romford)	Willox, Sir John Archibald
Purvis, Robert	Skewes-Cox, Thomas	Wilson, John (Falkirk)
Rankin, Sir James	Smith, J. Parker (Lanarks.)	Wilson-Todd, Wm. H. (Yorks.)
Remnant, James Farquharson	Spencer, Ernest	Wodehouse, Rt. Hn. E. R. (Bath)
Richardson, Sir T. (Hartlep'l)	Stewart, Sir Mark J. M 'Taggart	Wortley, Rt. Hn. C. B. Stuart-
Rickett, J. Compton	Stone, Sir Benjamin	Wrightson, Thomas
Ridley, Rt. Hn. Sir Matthew W.	Tollemache, Henry James	Wylie, Alexander
Ritchie, Rt. Hn. Chas. Thomson	Tomlinson, Wm. Edw. M.	Young, Commander (Berks, E.)
Robertson, Herbert (Hackney)	Tritton, Charles Ernest	Young, Samuel (Cavan, East)
Robson, William Snowdon	Tuke, Sir John Batty	Yoxall, James Henry
Russell, T. W. (Tyrone)	Wallace, Robert
Samuel, J. (Stockton-on-Tees)	Walton, J. Lawson (Leeds, S.)	TELLERS FOR THE AYES—
Saunderson, Rt. Hn. Col. E. J.	Warde, Lieut.-Col. C. E. (Kent)	Sir William Walrond and
Seely, Charles Hilton	Warr, Augustus Frederick	Mr. Anstruther.
Sharpe, William Edward T.	Wentworth, Bruce C. Vernon-
NOES.
Banbury, Frederick George	Humphreys-Owen, Arthur C.	Perks, Robert William
Bond, Edward	Jameson, Major J. Eustace	Pickersgill, Edward Hare
Cameron, Robert (Durham)	Jones, William (Carnarvonsh.)	Provand, Andrew Dryburgh
Donelan, Captain A.	Lough, Thomas	Reid, Sir Robert Threshie
Doogan, P. C.	Macaleese, Daniel	Steadman, William Charles
Dunn, Sir William	Mac Neill, John Gordon Swift	Sullivan, Donal (Westmeath)
Foster, Harry S. (Suffolk)	M' Dermott, Patrick	Tanner, Charles Kearns
Gourley, Sir Edw. Temperley	M' Ghee, Richard	Wilson, John (Durham, Mid)
Hayden, John Patrick	M' Leod, John
Healy, Maurice (Cork)	Molloy, Bernard Charles	TELLERS FOR THE NOES—
Healy, Timothy M. (N. Louth)	Morgan, W Pritchard (Merthyr)	Mr. Atherley-Jones and
Horniman, Frederick John	O'Brien, Patrick (Kilkenny)	Mr. Billson.

Amendment proposed— In page 5, line 38, to leave out the words 'for public,' and insert the words 'to the public for.'"—(Mr. Ritchie.)

Question proposed, "That the words 'for public' stand part of the Bill."

MR. FAITHFULL BEGG

said that the Amendment left matters as regarded private companies exactly where they were. Was it not possible to extend the provisions of the clause to all companies? If the clause was a good one there could be no reason why it should not equally apply to private companies equally as to public companies. To limit whatever privilege the clause conferred to one class of subscribers was a mistake. If the word 'public' were struck out altogether the permissive power would extend to both public and private subscribers.

* MR. SYDNEY GEDGE

suggested that the words of the Amendment would exactly meet the object of the hon. Member.

MR. RITCHIE

said it was manifest that where no appeal was made to the public the clause would be inappropriate; its object was the protection of the public. He could not accept the proposal of the hon. Gentleman.

MR. H. S. FOSTER

argued that if it was right to clothe a public company with such power as the clause gave to pay a commission to subscribers, it could not be wrong to clothe a company which did not make an appeal to the public with similar power, should that company desire to pay commission to private subscribers.

SIR THOMAS LEA

said he had an Amendment dealing with this particular point, and the very close division in the Grand Committee when this point was discussed at length justified raising it in the House. He thought that a private company should at least have the same privilege in this matter as was conceded to a public company.

* MR. SYDNEY GEDGE

contended that it was perfectly reasonable that shareholders should be able to take up shares at a discount, and to raise further capital among themselves. If it was lawful for directors to give this boon to the public, why not to their own shareholders?

MR. LOUGH

said that although this was described as a verbal Amendment, it was of a very substantial character. If the Amendment of the President of the Board of Trade was adopted, it would be impossible to make the important alteration suggested by the hon. Member for St. Rollox.

MR. RITCHIE

pointed out that he was merely proposing to do in this clause the same as had been done in other clauses where the words "for public subscription" had been used. Instead of "for public subscription" the words "to the public for subscription," were to be inserted. It was purely verbal.

MR. LOUGH

could not agree with the view of the right hon. Gentleman. If this alteration were agreed to it would be very difficult, if not impossible, to make the Amendment suggested by the hon. Member for St. Rollox. It was evident there was a considerable consensus of opinion in the House of Commons, and a very considerable minority of opinion in the Grand Committee, that whatever benefits this clause conferred on public companies should be conferred on private companies also. The matter certainly required further consideration. There was no definition in the Bill of a "public" company or of a "private" company; the one ran into the other, and practically it was very hard to draw a line between the two. This point ought to be cleared up before the Government asked the House to vote for the Amendment.

MR. BOUSFIELD

said that while it was quite true that this matter was raised in the form of a purely drafting Amendment, it came just at a critical point when the House wanted to discuss whether the provisions of the clause should be limited to cases where shares were offered for public subscription, or whether they ought not also to apply to cases where the shares were offered privately for subscription. The best way of settling the matter would be merely to leave out the word "public." With regard to the substance of the question, it seemed to be supposed that there was some distinction in law or in the Bill between public and private companies, and that supposition very much confused the issue before the House. There was no such distinction. Every company was in the eye of the law a public company, even though it was what was commonly called a private company. The question at issue was not whether the clause ought to apply to private as well as public companies, but whether it was to apply to shares offered privately as well as to shares offered publicly for subscription. It was difficult to see why this disability should be maintained in the case of private issues if it was removed in the case of public issues, and it would seem far better, and would greatly simplify matters, if the disability were removed in both cases. Moreover, private issues and public issues so merged the one into the other that it was very difficult in practice to distinguish between the two. Take the case of a company with a large body of shareholders. If that company wanted to issue further shares, and sent out a memorandum to all its shareholders offering these shares for subscription, would the Attorney General consider that to be a public or a private issue? There was no real distinction to be drawn, and the best way would be for the Government to omit the word "public" altogether.

MAJOR JAMESON (Clare, W.)

contended there never was an Amendment which opened the way to more litigation than this so-called purely verbal alteration. All the talent on the front bench was unable to define the difference between a public and a private company, and he agreed with the previous speaker that the word "public" had better be omitted.

Question put, and negatived.

Question proposed, "That the words 'to the public for' be there inserted."

Amendment proposed to the proposed Amendment— To leave out the words 'to the public' "— (Mr. Sydney Gedge.)

Question proposed, "That the words 'to the public' stand part of the proposed Amendment."

MR. H. S. FOSTER

hoped the Attorney General would respond to the appeal which had been made, and define whether, in a given case, an issue was for public or private subscription. The point under discussion was decided by a very narrow majority in the Committee, and as a supposed concession to the minority this verbal alteration was being made. But it was really no concession whatever, and did not remove the objection of those who desired that the one class of companies should not labour under disabilities from which the other were free.

SIR ROBERT FINLAY

The answer to the question which has been raised is very simple. The issue is not offered to the public if it is offered only to a particular class of persons. It does not; matter whether the shareholders of the company are many or few; as long as the offer is only to that particular class it is not an offer to the public for subscription.

MR. BOUSFIELD said the reply of the Attorney General did not at all improve matters, and he appealed to the Government to reconsider the question and see whether they could not do away with the distinction altogether.

* MR. MARKS

pointed out that the reply of the Attorney General simply emphasised the peculiar difficulty which this clause would cause. According to that reply an issue of shares to the 70,000 shareholders in Lipton's would not be a public issue, but an' issue to a company with 1,000 shareholders, if only ton outsiders came in, would be a public issue. Absurdity could really go no farther.

MR. PHILIPPS

asked the Attorney General to define a "class." If a company which was going to issue shipping shares sent prospectuses marked "private" to the shareholders in another shipping company, would that be an issue to a class? Or if it was proposed to turn a political club in any constituency into a company, and the shares were offered to the members of that club, would that be an issue to a class? Many such instances at once occurred to one's mind, and it was certain that such a provision would lead to endless litigation. The least the Government could do was to define what they meant by a private or public issue, as, if the Bill went out in its present form, countless lawsuits would be the result.

MR. TOMLINSON

hoped the Government would see their way to allow this Amendment to be made. If a privilege was to be given to one sorbs of company, why should it be withheld from another class in regard to which it could do no harm, and might do much good?

MR. BRYCE

I am not quite sure that the effect of this Amendment is generally apprehended. I understand that if we agreed to the Amendment now being made it would be possible for a company not making a public issue to pay underwriting commission. That is the very thing we do not wish a company to have power to do. We say there are certain arguments which may justify the payment of underwriting commissions in cases where there is a public issue, and whore all the facts are disclosed in the prospectus, but we think—and this was the view argued out in the Standing Committee—that those arguments do not apply to companies not going to the public for subscription, and that in such cases there ought not to be any provision whatever for underwriting. I therefore hope the Government will adhere to the Bill as it stands.

COLONEL MILWARD (Warwickshire, Stratford-upon-Avon)

hoped the Amendment would be adopted. It was quite evident that private companies were placed under disadvantages in this clause. It was impossible in an Act of Parliament to draw any distinction between a public and a private company, and under the circumstances it would be advisable that the Amendment should be accepted.

MAJOR JAMESON

supported the Amendment. He absolutely denied that it was ever the intention that private companies should come under the Bill, while the definition given by the Attorney General was the most absurd statement ever made. The Bill was of the utmost importance to the country, and he strongly protested against it being rushed through the House with such unwarrantable speed.

MR. FAITHFULL BEGG

thought perhaps the right hon. Gentleman had overlooked the precise wording of the clause itself. The provision was not limited to the case of a man who took a largo number of shares and afterwards endeavoured to get other people to buy them, but it extended to the case of a man who agreed, whether absolutely or conditionally, to take shares in a company. The provision would permit a company to make a payment to a man who took shares for his own use and profit, and the House were discussing a privilege which went far beyond the question of underwriting.

MR. PERKS

I notice that the minority of fifteen who voted against the Government in the Standing Committee consisted entirely of gentlemen who usually vote with the Government. I think that is some reason why the Government should not consider unfavourably the proposal to extend the operation of this clause to all companies alike, whether they are called "private" or "public." I quite agree with the hon. and learned Member for North Hackney as to the great difficulty of drawing a line between the two classes of companies; in fact, I believe it is absolutely impossible. At least half a dozen appeals have been made to the Law Officers to define the difference, but we have had no information on the point at all. I wish to call attention to a statement on this particular point made by a counsel well known at the Equity Bar, and one who has probably more experience than any other in connection with joint stock company enterprises—I mean Mr. Palmer. In his letter to The Times a few days ago, dealing specifically with this question—and I think his opinion is worth considering—he says— As to Clause 10, this limits the power to pay commission for placing shares to cases in which an offer of shares for public subscription is made. It should be extended to all cases, for there is no reason why a private company should not be at liberty to pay a commission for placing shares, or why it should not be allowable to pay a commission where the shares, as in the case of a reconstruction, are offered not to the public, but only to the shareholders in the reconstructing company. Therefore, the clause should be amended by inserting after the word 'public' the words' or 'private,' and by inserting the words 'if any after the word 'prospectus.' That is the opinion not of a mere child. but of a man who has had probably more experience than any counsel at the Equity Bar on this matter, and I venture to commend it to the attention of Her Majesty's Government.

MR. BRODIE HOARE (Hampstead)

said it really did not very much matter whether the word "public" was omitted or not, as anybody with the smallest ingenuity could get round the provision. All a private company would have to do would be to print enough circulars and prospectuses to go round to all its shareholders, and one hundred additional, which could be scattered broadcast about the streets or anywhere. The issue would then become a public issue, and be within the provisions of the clause. The whole thing was not worth fighting about, and he hoped the right hon. Gentleman would accept the Amendment.

MR. LAWSON WALTON

contended that no reason whatever had been shown why a private company should be allowed to pay underwriting commission on the placing of shares which were not issued to the public. In other words, it was argued that a private company should be allowed to pay underwriting commission for issuing shares to its own shareholders. He could understand a commission being paid for outside assistance in inducing members of the public to subscribe, as in that case the consideration for the payment was the service thus rendered. If a company was not going to make a public issue why should they be allowed to use these agents? The whole of the limitations were placed not upon shares held by the public, but upon those held by persons who were not members of the public. He thought it was clear that an issue to the public was an issue to any member of the public who came forward and took shares in the ordinary way. Why should they give power to a company to detract from the nominal value of the capital by the employment of brokers, who ought not to be required? He hoped the Government would not yield to the pressure which was being put upon them from all quarters of the House.

MR. BOND

pointed out that the effect of the clause was simply to enable companies to issue shares at a discount. Why should a company be allowed to issue its shares at a discount?

MR. LOUGH

said he only wished to answer one question. The hon. Member who had just sat down asked, why should a company be allowed to offer shares to its own shareholders at a discount? At such times as those shares were offered there might be some very good reason. It might be difficult to get money, and it might be advisable to take advantage of some bargain that had been offered to the company. In such circumstances the company would be offering to all its shareholders some advantage. He wished to ask his hon. and learned friend why should it be an unlawful proceeding with

these particular companies, while it might be quite lawful in the case of some other companies? He hoped the House would take a common-sense view of this question.

Question put.

The House divided:—Ayes, 136; Noes, 61. (Division List No. 236.)

AYES.
Allsopp, Hon. George	Flower, Ernest	Murray, C. J. (Coventry)
Arnold-Forster, Hugh O.	Foster, Sir Walter (Derby Co.)	Murray, Col. Wyndham (Bath)
Atkinson, Rt. Hon. John	Gibbons, J. Lloyd	Nicol, Donald Ninian
Bailey, James (Walworth)	Gibbs, Hn. A. G. H. (City of Lond.)	Parkes, Ebenezer
Baillie, James E. B. (Inverness)	Godson, Sir Augustus Fred.	Phillpotts, Captain Arthur
Balcarres, Lord	Gorst, Rt. Hn. Sir John Eldon	Plunkett, Rt. Hn. Horace Curz'n
Balfour, Rt. Hn. A. J. (Manch'r)	Goschen, Rt. Hn. G J (St. George's)	Powell, Sir Francis Sharp
Balfour, Rt. Hn. Gerald W (Leeds)	Goschen, George J. (Sussex)	Purvis, Robert
Banbury, Frederick George	Gray, Ernest (West Ham)	Rankin, Sir James
Beach, Rt. Hn. Sir M. H. (Bristol)	Greville, Hon. Ronald	Remnant, James Farquharson
Bemrose, Sir Henry Howe	Gull, Sir Cameron	Rentoul, James Alexander
Bentinck, Lord Henry C.	Hamilton, Rt. Hon. Lord George	Richardson, Sir T. (Hartlepool)
Bethell, Commander	Hanbury, Rt. Hon. Robert Wm.	Rickett, J. Compton
Bigwood, James	Harwood, George	Ridley, Rt. Hon. Sir Matt. W.
Blundell, Colonel Henry	Hayne, Rt. Hon. Charles Seale-	Ritchie, Rt. Hn. Chas. Thomson
Brodrick, Rt. Hon. St. John	Hedderwick, Thomas Chas. H.	Robson, William Snowdon
Bryce, Rt. Hn. James	Helder, Augustus	Russell, T. W. (Tyrone)
Butcher, John George	Henderson, Alexander	Saunderson, Rt. Hon. Col Edw. J.
Caldwell, James	Hermon-Hodge, Robert Trotter	Seeley, Charles Hilton
Carson, Rt. Hon. Sir Edw. H.	Hoare, Sir Samuel (Norwich)	Sharpe, William Edward T.
Cavendish, V. C. W.(Derbysh.)	Holland, William Henry	Shaw, Thomas (Hawick B.)
Cecil, Evelyn (Hertford, East)	Houston, R. P.	Sinclair, Louis (Romford)
Cecil, Lord Hugh (Greenwich)	Jackson, Rt. Hn. Wm. Lawies	Skewes-Cox, Thomas
Chamberlain, Rt. Hon. J. (Bir.)	Kay-Shuttleworth, Rt. Hn. Sir U	Smith, James Parker (Lanark)
Chamberlain, J. A. (Worc'r)	Kearley, Hudson E.	Stanley, Edward J. (Somerset)
Chaplin, Rt. Hon. Henry	Keswick, William	Stewart, Sir Mark J. M' Taggart
Charrington, Spencer	Lambert, George	Stone, Sir Benjamin
Coghill, Douglas Harry	Lawrence, Sir E. Durning-(Corn)	Tritton, Charles Ernest
Cohen, Benjamin Louis	Lawson, John Grant (Yorks.)	Tuke, Sir John Batty
Collings, Rt. Hon. Jesse	Lawson, Sir Wilfrid (Cum'land)	Wallace, Robert
Colomb, Sir John Charles Ready	Leigh-Bennett, Henry Currie	Walton, John Lawson (Leeds, S.)
Cook, Fred. Lucas (Lambeth)	Lowles, John	Warde, Lieut.-Col. C. E. (Kent)
Corbett, A. Cameron (Glasgow	Macartney, W. G. Ellison	Wentworth, B. C. Vernon-
Crombie, John William	Macdona, John Cumming	Williams, J. Powell- (Birm.)
Cross, H. Shepherd (Bolton)	M' Arthur, William (Cornwall)	Willox, Sir John Archibald
Curzon, Viscount	Massey-Mainwaring, Hn. W. F.	Wilson, John (Falkirk)
Davies, M. Vaughan-(Cardigan)	Melville, Beresford Valentine	Wodehouse, Rt. Hn. E. R. (Bath)
Douglas, Rt. Hon. A. Akers-	Monckton, Edward Philip	Wortley, Rt. Hn. C. B. Stuart-
Dunn, Sir William	Monk, Charles James	Wrightson, Thomas
Dyke, Rt. Hon. Sir William Hart	Moon, Edward Robert Pacy	Wylie, Alexander
Faber, George Denison	More, Robt. Jasper (Shropshire)	Wyndham, George
Fellowes, Hon. Ailwyn Edward	Morgan, Hon. F. (Monm'thsh.)	Young, Commander (Berks, E.)
Finch, George H.	Morrell, George Herbert
Finlay, Sir Robert Bannatyne	Morrison, Jas. A. (Wilts., S.)	TELLERS FOR THE AYES—
Fisher, William Hayes	Morton, A. H. A. (Deptford)	Sir William Walrond and
FitzGerald, Sir Robert Penrose-	Muntz, Philip A.	Mr. Anstruther.
Fletcher, Sir Henry	Murray, Rt. Hn. A. G. (Bute)
NOES.
Allison, Robert Andrew	Bond, Edward	Emmott, Alfred
Ashton, Thomas Gair	Bonsor, Henry Cosmo Orme	Fenwick, Charles
Austin, M. (Limerick, W.)	Bousfield, William Robert	Foster, Harry S. (Suffolk)
Bainbridge, Emerson	Clark, Dr. G. B.	Green, W. D. (Wednesbury)
Bayley, Thomas (Derbyshire)	Cooke, C. W. Radcliffe (Heref'd)	Hayden, John Patrick
Billson, Alfred	Doogan, P. C.	Healy, Maurice (Cork)
Bolton, Thomas Dolling	Duckworth, James	Healy, Timothy M. (N. Louth)
Hoare, Ed. Brodie (Hampstead)	Morgan, W Pritchard (Merthyr	Steadman, William Charles
Horniman, Frederick John	Norton, Capt. Cecil William	Sullivan, Donal (Westmeath)
Howard, Joseph	O'Hrien, Patrick (Kilkenny)	Tanner, Charles Kearns
Jameson, Major J. Eustace	Oldroyd, Mark	Tollemache, Henry James
Jones, William (Carnarvonash.)	Pease, H. Pike (Darlington)	Tomlinson, Wm. Edw. Murray
Lea, Sir Thomas (Londonderry	Perks, Robert William	Walton, Joseph (Barnsley)
Long, Col. Chas. W. (Evesham)	Philipps, John Wynford	Wedderburn, Sir William
Lonsdale, John Brownlee	Pickersgill, Edward Hare	Whittaker, Thomas Palmer
Lough, Thomas	Platt-Higgins, Frederick	Wilson, John (Durham, Mid)
Macaleese, Daniel	Provand, Andrew Dryburgh	Yoxall, James Henry
MacNeill, John Gordon Swift	Reckitt, Harold James
M'Arthur, Charles (Liverpool)	Robertson, Herbert (Hackney)	TELLERS FOR THE NOES—
M'Ghee, Richard	Samuel, J. (Stock on-on-Tees)	Mr. Sydney Gedge and
M'Leod, John	Scott, Chas. Prestwich (Leigh	Mr. Faithfull Begg.
Milward, Colonel Victor	Shaw, Charles Edw. (Stafford)
Words inserted.

Words inserted.

MR. HENDERSON (Staffordshire, W.)

said that the effect of the Amendment he had to move was to treat all underwriters in the same way. It was a fact that today a colonial or a foreign issue might be dealt with in this way without disclosing the fact. Why should they make a distinction between a colonial or a foreign company and the interests of an English company? Suppose a company already in existence determined upon making a new issue for the purpose of purchasing some additional property. That property might be purchasable to-day, but before the company could get its money to effect the purchase it had to call its shareholders together, which would take from seven to fourteen days. The company would have to hold a confirmatory meeting, and at least a month would lapse between the time the company was in a position to obtain the money by publication. That company might go to the underwriters who would for a small commission agree to underwrite the transaction, and then the company could proceed at once to make its bargain. Therefore it was essential that this underwriting should be done, and where the commission was a small one he did not see why the issue should be prejudiced by disclosure. That it would be prejudiced was clearly proved by the fact that it is not uncommon to find it stated in prospectuses as an inducement to the public to subscribe that no part of the capital has been underwritten. Therefore the effect of disclosing that the capital had been underwritten must be detrimental. Where a large commission of a very excessive character was paid it should be disclosed, for that would do away with a good deal of fraud and dishonesty, but where the sum paid did not exceed two and a-half per cent. he did not think it was necessary to disclose it. He thought the right hon. Gentleman in charge of the Bill might very well accept the words of his Amendment.

Amendment proposed- In page 6, line 4, after the first word 'and,' to insert the words 'in case the said commission, with brokerage, exceeds two and a half per cent. are.' "-(Mr. Henderson.)

Question proposed, "That those words be there inserted."

MR. RITCHIE

I can assure my hon. friend that if I could possibly see my way I should be only too glad to accept his proposal. I will briefly state the reasons why I think it would be unwise for the Committee to accept this Amendment. The effect of it would be to create two classes of underwriters, one class disclosed and the other class not disclosed. You would thus divide companies into two categories, and the effect might very well be to leave an impression on the public mind that those companies which did not disclose were really of a superior kind to those companies which did disclose -which paid a brokerage of over 2½ per cent., and consequently were obliged to disclose. I think that would give an erroneous impression, because it might be just as reasonable to pay 4 or 5 per cent. in one case as to pay 2½per cent. in another. It is clear that there is in some cases a greater element of risk, but that does not imply that one company is necessarily a bettor company than the other because it has been underwritten at a smaller rate. There is no slur attached to any company which pays a commission of 5 per cent. It is quite clear that the drawing of this distinction between companies paying 2½ per cent. and not disclosing and companies paying 5 per cent. and dis- closing would involve an invidious comparison between the two companies. That is the reason why I think it would be unwise to accept the Amendment of my hon, friend, and I hope he will not press it.

MR. CAWLEY (Lancashire, Prestwich)

I really cannot see that the right hon. Gentleman has given any argument against this proposal at all. If the public discriminate by the fact that only 2½ per cent. is paid, then they are very much the gainers, because anybody who knows anything about company promoting knows that no large financial firm would take over the responsibility of a large issue at 2½ per cent. unless it was a good company which would commend itself to the public generally. I think the right hon. Gentleman's argument in regard to discriminating between 2½ per cent. and a larger commission tells in favour of the Amendment. In several cases it may be imperative for certain companies to have money at a certain time, and if they are to go to a large issuing office and tell them that they want the money immediately, and that the underwriting will have to be disclosed, that prejudices them before the public, and they have to pay a larger amount for underwriting. Therefore, I think the Amendment ought to recommend itself to the House, and I shall be extremely glad to support it. Underwriting is an assurance that the issue will go on, and as far as I know it is a very legitimate thing to have an insurance for a large issue.

MR. PHILIPPS

I hope the Government will see their way to accept the Amendment moved by the hon. Member for West Staffordshire, who is an authority upon this class of business. From such experience as I have had, I am convinced that the hon. Gentleman is right when he says that with high class established companies the fact that they should be compelled to disclose when a commission larger than 2½ per cent. was paid would be detrimental to the success of those high class companies and would act as a check to a class of business which we ought to encourage rather than discourage. The right hon. Gentleman in charge of the Bill said, if we accepted this Amendment it would lead to two classes of underwriting, and that you would have disclosed and undisclosed underwriting. I do not know whether the Attorney General fondly imagines that by this clause he is going to limit the question to disclosed and undisclosed underwriting. I am convinced that if this clause becomes law as it stands, it is going to open the door to more swindles than the Bill it self is going to stop. It has to be remembered that in dealing with company promoters you are dealing with one of the cleverest and one of the most unscrupulous classes in the country. The right hon. Gentleman said some little time ago that it would be a most excellent thing for a company to be able to say in its prospectus that it had paid five per cent. for issuing its capital. Supposing a manufacturing concern is issued to the public in £1 shares, and the directors say in perfect good faith in the prospectus that they have underwritten the £1 shares to the extent of 3d. a share. In that case it would have a very good effect on the public, and would induce them to subscribe. What is going to prevent the promoter of a shady company from lotting the directors pay one and a quarter per cent. while he pays the rest himself?

MR. LOUGH

said he thought that the Amendment was a very moderate one, and that the House did not realise the careful limit which was embodied in it. Any hon. Member who had listened to the speeches must have felt that if the Amendment were not accepted a certain class of very good business would be put a stop to. Supposing that half a million of money were required, a prospectus could not be got out in an hour or a day, but the money could be obtained in a few hours by paying brokerage. The right hon. Gentleman in charge of the Bill seemed to think that a statement in the prospectus that brokerage had been paid would prejudice the issue; but people would say when they read that statement that they would also take shares if they got 2½ per cent. brokerage, but they could not then get it, because it had been paid for getting the money perhaps months before. That was the worst of such skilfully drawn clauses. They often interfered with business that was not fraudulent or undesirable, and he thought the House -should consider well before rejecting the Amendment.

MR. BOUSFIELD

said that the arguments which had been used in favour of the Amendment were in his opinion rather against it. It was urged that if 2½ percent. brokerage had been paid, and if that fact were published in the prospectus, it would prejudice the success of the issue. It seemed to him that if such a statement of fact did prejudice the issue it ought to be disclosed to the public. According to the hypothesis of the hon. Members who supported the Amendment, if he read the prospectus without knowing that the

shares had been underwritten, he might subscribe, but if he did know he would not subscribe. The clause only made certain things legal which were hitherto illegal, and it was quite right to impose on a company the obligation of stating in its prospectus that a commission had been paid.

Question put.

The House divided:—Ayes, 44; Noes, 128. (Division List No. 237.)

AYES.
Austin, M. (Limerick, W.)	Healy, Timothy M. (N. Louth)	Provand, Andrew Dryburgh
Bainbridge, Emerson	Jameson, Major J. Eustace	Remnant, James Farquharson
Banbury, Frederick George	Lawson, Sir Wilfrid (Cumb'land	Samuel, J. (Stockton-on-Tees)
Billson, Alfred	Lea, Sir Thomas(Londonderry)	Smith, James Parker (Lanarks.)
Bolton, Thomas Dolling	Long, Col. Chas. W.(Evesham)	Steadman, William Charles
Bonsor, Henry Cosmo Orme	Lough, Thomas	Sullivan, Donal (Westmeath)
Charrington, Spencer	Macaleese, Daniel	Tanner, Charles Kearns
Clark, Dr. G. B.	M'Ghee, Richard	Wedderhurn, Sir William
Cohen, Benjamin Louis	M'Leod, John	Wentworth, Bruce C. Vernon-
Colomb, Sir John Chas. Ready	Morgan, W. P. (Merthyr)	Wilson, John (Durham, Mid.)
Doogan, P. C.	Morton, Edw. J. C. (Devonport)	Wortley, Rt. Hn. C. B. Stuart -
Duckworth, James	Muntz, Philip A.	Yoxall, James Henry
Foster, Harry S. (Suffolk)	O' Brien, Patrick (Kilkenny)
Gibbs, Hn. A. G. H. (Cy of Lond.)	Pease, Herbert Pike(Darlingt'n	TELLERS FOR THE AYES—
Harwood, George	Perks, Robert William	Mr. Henderson and Mr. Cawley.
Hayden, John Patrick	Philipps, John Wynford
NOES.
Ashton, Thomas Gair	Douglas, Rt. Hon. A. Akers-	Lawrence, Sir E. Durning-(Corn)
Atkinson, Rt. Hon. John	Dyke, Rt. Hon. Sir William Hart	Lawson, John Grant (Yorks)
Balcarres, Lord	Emmott, Alfred	Leigh-Bennett, Henry Currie
Balfour, Rt. Hn. A. J. (Manch'r)	Faber, George Denison	Lonsdale, John Brownlee
Balfour, Rt. Hn. G. W. (Leeds)	Fellowes, Hon. Ailwyn Edward	Lowles, John
Bayley, Thomas (Derbyshire)	Finch, George H.	Macartney, W. G. Ellison
Beach, Rt. Hn. Sir M. H. (Bristol)	Finlay, Sir Robert Bannatyne	Macdona, John Cumming
Begg, Ferdinand Faithfull	Fisher, William Hayes	M' Arthur, Charles (Liverpool)
Bemrose, Sir Henry Howe	FitzGerald, Sir Rbt. Penrose-	M' Arthur, William (Cornwall)
Bentinck, Lord Henry C.	Fitz Wygram, General Sir F.	Marks, Henry Hananel
Bethell, Commander	Fletcher, Sir Henry	Massey-Mainwaring, Hn. W. F.
Blundell, Colonel Henry	Flower, Ernest	Melville, Beresford Valentine
Bond, Edward	Gedge, Sydney	Milward, Colonel Victor
Bousfield, William Robert	Gibbons, J. Lloyd	Monckton, Edward Philip
Brodrick, Rt. Hn. St. John	Godson, Sir Augustus Fred.	Monk, Charles James
Bryce, Rt. Hon. James	Gorst, Rt. Hon. Sir J. Eldon	More, Robt. J. (Shropshire)
Butcher, John George	Goschen, Rt. Hn. G J (St. George's)	Morgan, Hn. F. (Monm'thsh.)
Caldwell, James	Goschen, George J. (Sussex)	Morrell, George Herbert
Carson, Rt. Hon. Sir Edw. H.	Green, W. D. (Wednesbury)	Morrison, J. A. (Wilts., S.)
Cavendish, Y. C. W. (Derbys.)	Greville, Hon. Ronald	Morton, Arthur H. A. (Deptford)
Cecil, Evelyn (Hertford, East)	Gull, Sir Cameron	Murray, Rt. Hn. A. G. (Bute)
Cecil, Lord Hugh (Greenwich)	Hamilton, Rt. Hon. Lord Geo.	Murray, Charles J. (Coventry)
Chamberlain, Rt. Hon. J. (Birm.	Hanbury, Rt. Hon. Robert W.	Murray, Col. Wyndham(Bath)
Chamberlain, J. Austen(Wore'r)	Hayne, Rt. Hon. Charles Seale-	Nicol, Donald Ninian
Chaplin, Rt. Hon. Henry	Healey, Maurice (Cork)	Oldroyd, Mark
Coghill, Douglas Harry	Hedderwick, Thomas Charles H	Phillpotts, Captain Arthur
Collings, Rt. Hon. Jesse	Hoare, Edw. Brodie (Hampste'd)	Platt-Higgins, Frederick
Cooke, C. W. R. (Hereford)	Holland, William Henry	Plunkett, Rt. Hn. Horace Curzon
Corbett, A. Cameron (Glasgow)	Horniman, Frederick John	Powell, Sir Francis Sharp
Crombie, John William	Houston, R. P.	Purvis, Robert
Cross, H. Shepherd (Bolton)	Jones, William (Carnarvonsh')	Rankin, Sir James
Curzon, Viscount	Kay-Shuttleworth, Rt. Hn. Sir U	Reckitt, Harold James
Davies, M. Vaughan-(Cardigan	Kearley, Hudson E.	Rentoul, James Alexander
Disraeli, Coningsby Ralph	Lambert, George	Richards, Henry Charles
Richardson, Sir T. (Hartlep'l.)	Stanley, Edw. Jas. (Somerset	Wilson, John (Falkirk)
Ridley, Rt. Hn. Sir Matthew W.	Stewart, Sir Mark J. M' Taggart	Wodehouse, Rt. Hn. E. R. (Bath)
Ritchie, Rt. Hn. Chas. Thomson	Sturt, Hon. Humphrey N.	Wrightson, Thomas
Robertson, Herbert (Hackney)	Tollemache, Henry James	Wylie, Alexander
Robson, William Snowdon	Tomlinson, Wm. Edw. Murray	Wyndham, George
Russell, T. W. (Tyrone)	Tuke, Sir John Batty	Young, Commander (Berks, E.
Sharpe, William Edward T.	Walton, John L. (Leeds, S.)
Shaw, Charles Edw. (Stafford)	Warde, Lt.-Col. C. E. (Kent)	TELLERS FOR THE NOES—
Shaw, Thomas (Hawick B.)	Williams, Jos. Powell-(Birm.	Sir William Walrond and
Sinclair, Louis (Romford)	Willox, Sir John Archibald	Mr. Anstruther.

* MR. LAWSON WALTON

The Amendment which I now move provides that "where no prospectus is issued a memorandum complying with the terms of this section shall be filed." The House will have observed that the machinery of this Bill provides that the prospectus of a company should contain certain particulars, and that the discipline which is exercised by the Bill, is exercised largely by means of the prospectus. It is necessary that the prospectus shall contain the names of the vendors, the amount of the purchase money and various other particulars, and after the prospectus has been issued to the public, there is a provision that it must be filed. There are, therefore, two steps to be taken for the public protection. One is the issue of prospectus containing certain information, and the second is the filing of the prospectus, giving the documentary history of the company, and the first steps which were taken with reference to it. The result is that two classes of the community receive valuable assistance-one, the persons who are appealed to to subscribe for shares, and the other, the persons who might be invited to give credit to the company. There is a door, however, in the provision which I hope to close. There is a large number of companies that issue no prospectuses, because it is inconvenient, and the promoters may be able to place the capital by some other means. The syndicate which forms the company manages by means of personal recommendation to place its original capital, and having placed its original capital, it is then enabled to create a market for the shares, and the mere transactions on the market and the quotations of the shares advertise the company, and the public are drawn in without knowing anything about it except that the shares are being dealt in and are likely to go to a premium. That is the state of things under the existing law, and it will be enormously increased by the present Bill, which imposes such stringent restrictions on the issue of prospectuses. If under the existing law there are a number of companies which issue no prospectuses, how many more will not come before the public without the instrumentality of a prospectus when under this Bill various stringent requirements must be complied with by all persons issuing documents of that kind. Therefore I propose to check the abuse by enabling any shareholder or creditor to find out the history, main features, and formation of such companies. A company is registered, its shares are placed, but without this Amendment there will be no record filed of the original shareholders or directors, or the subscribed capital, or any of the particulars that are required to be given in a prospectus. What I propose is that where a company issues no prospectus, a memorandum compiled under the requirements of this section shall be placed upon record, and shall be accessible to every shareholder who may have bought shares in the company, and to every person who may, perhaps, have given credit to the company. We have what has been described already as one man companies. The one man company is a private concern; it does not issue its capital to the public, and all the shares are hold by one man and by one or two other persons under his control. There is a case of a one-man company which will be found in the House of Lords Reports for 1897. It is the case of Solomon v. Solomon and Co. The company had a capital of 30,007 shares, of which 30,000 were held by Mr. Solomon and the remaining seven by seven of his nominees. Not only did Mr. Solomon hold all the share capital, but he also held £20,000 of debentures, and he controlled the company with respect to all its transactions and in relation to the whole of its profits. Under this Bill, unless my Amendment is adopted, such a condition of things will not be recorded, and a company not issuing a prospectus will not come within the operation of this section. The transactions will be carried out in complete secrecy, and at a subsequent date, after the shares have been placed on the market, a shareholder may say, "I want to know something about this company. Had it ever a prospectus?" and the answer will be, "I do not know.'' Then the shareholder may ask, "Under what circumstances was it issued?" and the answer will be, "No one can toll."' There is no memorandum availably either for the information of subsequent investors or, what may be more important to the community, to enable traders to ascertain whether they are dealing with a company which is responsible for its debts. It is said that this Amendment will press hardly on honest private companies. Assuming that a private company places its capital without issuing a prospectus, I ask the House to consider whether, with perhaps one exception, any of the requirements of this section are such as any honest company could object to. For instance, no honest company would object to stating the names of its shareholders, how many shares had been allotted, and other similar information. But even if there is some secrecy in regard to these matters, is it not reasonable that these companies, for the very great advantage they obtain in the way of limiting their liability, should conform to some standard of publicity as regards their origin? If a private concern seeks to have the immense advantage of limiting its liability, should it not give to the public some information with regard to its formation, and enable traders to judge whether or not a concern to which they are invited to give credit is or is not responsible? I hope the House will not lightly dismiss this Amendment. I am quite sure that many Members regard it as vital to the Bill, and I feel satisfied that unless you distinctly intimate to future company promoters that this information must be given either by means of a memorandum or in a prospectus you will leave the investor in the future quite as much in the dark as to a company's origin as he is at present, and will give the creditor no means of obtaining the information to which he is entitled, and which he will obtain if this Amendment is adopted.

Amendment proposed — in page 6, line 33, after the word 'filed,' to insert as a new sub-section the words' (4) Where no prospectus is issued a memorandum complying with the terms of this section shall be filed in manner aforesaid.'"—(Mr. Lawson Walton.)

Question proposed, "That those words be there inserted."

SIR ROBERT FINLAY

I would point out to the House that we would be occasioning very considerable hardship if we were to impose all the requirements of Section 12 on a very large and respectable class of companies which are solely private companies. They would resent being required to give these particulars. My hon. and learned friend says that if we do not require such a statement as he suggests we leave the door open to very great abuse. We have endeavoured to provide by Section 12 for the protection of the public whenever a prospectus is issued, and when the public are invited to subscribe for shares. The argument of my hon. and learned friend is that companies will endeavour to avoid the requirements of Section 13 by having no prospectus at all, that all the shares will be allotted to the promoter or an agent of his, and that then the promoter will sell the shares on the Stock Exchange, and that by that means a market will be created for them. The trick against which my hon. and learned friend wishes to guard is not a very common one, although it has come before the courts on certain occasions. If my hon. and learned friend apprehends that shoddy companies will avoid the issue of prospectuses in order that their shares may be put upon the market by the promoters, the Amendment will not meet the case. The public will look askance at any undertaking launched in that way, and I would ask the House not to accept the proposal, which would put upon perfectly respectable people a burden they would very much resent, in order to prevent a possible evil, the extent of which I think has been very greatly exaggerated. I think the House will agree with me that the evil is one which will tend to cure itself, because if a shady company appears without a prospectus the public will avoid it, and for these reasons I trust the House will not accept the Amendment.

* MR. MARKS

said that the view of the public with regard to companies which did not issue prospectuses was not quite the same as the Attorney General seemed to imagine. On the contrary, the company which issued a prospectus did not stand in such great favour with the speculating public as the company which did not. There was a certain charm about mystery, and the public were induced by this, that, and the other rumour to rush in and buy certain shares, so that when the inevitable collapse came it was impossible to bring home the responsibility to the authors of the scheme. He therefore considered the suggestion embodied in the Amendment of the hon. and learned Member for South Leeds to be an admirable one in itself, and one which was vital to the perfection of the scheme before the House. The public which required protection was not the public assailed with prospectuses. A prospectus could be laid before experienced people; contracts might be inspected, and inquiries made; but when no prospectus whatever was issued the public were at the mercy of the hidden promoter, and that was the class of company in regard to which people required to be protected. But the Bill before the House gave no protection whatever in that direction. They were told that if any attempt was made to deal with this obvious evil, they would be unduly oppressing purely private companies. What was a purely private company? There were many companies founded to take over the businesses of well-established firms, and the bulk of the shares were distributed amongst the partners in the firm, very few reaching the customers and the general public. So long as the business was profitable the company continued to be a private company, but as soon as the profits commenced to decline the company began gradually to become a public company. One might sometimes test the good faith of the so-called private company by the announcement made in the prospectus that a quotation and settlement would be applied for on the Stock Exchange. If the public were to be protected from this class of scheme, there must be something in the nature of a memorandum filed at the time of the registration of the company. That memorandum need not be of an exhaustive character or reveal any sacred secrets of a private business. It might merely set forth the name of the person who sold the business, the date of the sale, the price paid, how much of that price was in cash and how much in shares, and the class and numbers of the shares devoted to the purchase-money. The public, if they bought those shares in the market in the future, would then be able to ascertain whether they were buying vendor's shares or not. A few such precautions, without acting detrimentally to genuine private companies, would serve to protect the public. The class of company which had fluctuated in recent years more than any other was the mining class. He believed he was correct in saying that not a single prospectus was issued in connection with any of the Barnato group, and there never was a sot of companies which at one time had stood so high and afterwards come so low. He certainly hoped that some such Amendment as that before the House would be incorporated in the Bill. Such an Amendment would remove a very serious flaw in what might otherwise be an useful measure.

MAJOR JAMESON

characterised the Amendment as absolute nonsense. By it the House would be legislating for one-man companies, and there was already quite enough such legislation. It seemed to be argued that private companies should have none of the privileges but all the disabilities of Public companies, and he trusted the House would vote with the Government against this Amendment.

* MR. BAINBRIDGE (Lincolnshire, Gainsborough)

apprehended that the intention of the Mill was to protect the ordinary speculator and investor, and he could not conceive the use of the House wasting its time in trying to protect the careless gambler. Nobody who bought shares in a Barnato company deserved to be protected by a Bill passed through the House. Such a man could not claim to have been misled; he simply saw shares rising in the market, and, without any information, made up his mind to speculate in them. The House would not be justified in spending time in protecting people of that class.

Question put.

The House divided—Ayes, 35; Noes, 107. (Division List No. 238.)

AYES.
Austin, M. (Limerick, W.)	Healey, Maurice (Cork)	Reckitt, Harold James
Beaumont, Wentworth C. B.	Healy, Timothy M. (N. Louth)	Remnant, James Farquharson
Bentinck, Lord Henry C.	Hedderwick, Thos. Charles H.	Richards, Henry Charles
Bolton, Thomas Dolling	Horniman, Frederick John	Samuel, J. (Stockton-on-Tees)
Bryce, Rt. Hon. James	Jones, William (Carnarvonsh.)	Shaw, Charles Edw. (Stafford)
Caldwell, James	Lawson, Sir W. (Cumb'land)	Shaw, Thomas (Hawick B.)
Cawley, Frederick	Macaleese, Daniel	Sullivan, Donal (Westmeath)
Clark, Dr. G. B.	M'Arthur, Wm. (Cornwall)	Wedderburn, Sir William
Crombie, John William	Marks, Henry Hananel	Wentworth, Bruce C. Vernon-
Doogan, P. C.	Morton, Ed. J. C. (Devonport)
Duckworth, James	O'Brien, Patrick (Kilkenny)	TELLERS FOR THE AYES—
Hayden, John Patrick	Pease, Herb. Pike (Darlington)	Mr. Lawson Walton and
Hayne, Rt. Hon. Charles Seale-	Provand, Andrew Dryburgh	Mr. Billson.

NOES.
Atkinson, Rt. Hon. John	Foster, Harry S. (Suffolk)	Murray, Rt. Hn. A. Graham(Bute)
Bainbridge, Emerson	Gedge, Sydney	Murray, Chas. J. (Coventry)
Balfour, Rt. Hon. A. J. (Manch'r)	Gibbons, J. Lloyd	Murray, Col. Wyndham(Bath)
Balfour, Rt. Hn. Gerald W. (Leeds)	Gibbs, Hn. A. G. H. (City of Lond.)	Nicol, Donald Ninian
Banbury, Frederick George	Godson, Sir Augustus F.	Phillpotts, Capt. Arthur
Beach, Rt. Hn. Sir M. H. (Bristol)	Goschen, Rt. Hn. G J.(St. George's)	Platt-Higgins, Frederick
Begg, Ferdinand Faithfull	Goschen, George J. (Sussex)	Plunkett, Rt. Hn. Horace Curzon
Bemrose, Sir Henry Howe	Green, W. D. (Wednesbury)	Powell, Sir Francis Sharp
Blundell, Colonel Henry	Greville, Hon. Ronald	Purvis, Robert
Bond, Edward	Gull, Sir Camaron	Rankin, Sir James
Bousfield, William Robert	Hamilton, Rt. Hon. Lord G.	Rentoul, James Alexander
Brodrick, Rt. Hon. St. John	Hanbury, Rt. Hon. Robert W.	Richardson, Sir T. (Hartlep'l)
Carson, Rt. Hon. Sir Edw. H.	Henderson, Alexander	Ridley, Rt. Hn. Sir Matthew W.
Cavendish, V. C. W.(Derbyshire)	Holland, William Henry	Ritchie, Rt. Hon. Charles T.
Cecil, Lord Hugh (Greenwich)	Jameson, Major J. Eustace	Robertson, Herbert (Hackney)
Chamberlain, Rt. Hon J.(Birm.)	Keswick, William	Russell, T, W. (Tyrone)
Chamberlain, J. Austen (Worc'r)	Lawrence, Sir E. Durning-(Corn)	Seely, Charles Hilton
Chaplin, Rt. Hon. Henry	Lawson, John Grant (Yorks.)	Smith, Jas. Parker (Lanarks.)
Charrington, Spencer	Lea, Sir Thomas (Londonderry)	Smith, Hon. W. F. D. (Strand)
Collings, Rt. Hon. Jesse	Leigh-Bennett, Henry Currie	Stanley, Edward J. (Somerset)
Cooke, C. W. Radcliffe (Heref'd)	Lonsdale, John Brownlee	Sturt, Hon. Humphry Napier
Corbett, A. Cameron (Glasgow)	Lough, Thomas	Tanner, Charles Kearns
Cross, Herb. Shepherd (Bolton)	Lowe, Francis William	Tollemache, Henry James
Curzon, Viscount	Lowles, John	Tomlinson, Wm. Edw. Murray
Disraeli, Coningsby Ralph	Macartney, W. G. Ellison	Warde, Lieut.-Col. C. E.(Kent)
Douglas, Rt. Hon. A. Akers-	Macdona, John Cumming	Willox, Sir John Archibald
Dyke, Rt. Hon Sir William Hart	M'Arthur, Charles (Liverpool)	Wilson, John (Falkirk)
Emmott, Alfred	Massey-Mainwaring, Hn. W. F.	Wodehouse, Rt. Hon. E. R.(B'th)
Faber, George Denison	Melville, Beresford Valentine	Wortley, Rt. Hon. C. B. Stuart-
Fellowes, Hon. Ailwyn Edw.	Milward, Colonel Victor	Wrightson, Thomas
Finch, George H.	Monckton, Edward Philip	Wylie, Alexander
Finlay, Sir Robert Bannatyne	Monk, Charles James	Wyndham, George
Fisher, William Hayes	More, Robert J. (Shropshire)	Young, Commander (Berks, E.)
FitzGerald, Sir Robert Penrose-	Morgan, Hn. F. (Monmouthsh.)
Fitz Wygram, General Sir F.	Morrell, George Herbert	TELLERS FOR THE NOES—
Fletcher, Sir Henry	Morrison, James A.(Wilts., S.)	Sir William Walrond and
Flower, Ernest	Morton, A. H. A. (Deptford)	Mr. Anstruther.

* MR. SYDNEY GEDGE

I rise now [12.15] to move the adjournment of the debate. I think that the Government have done a very good day's work indeed. Many of us have been here since noon.

* MR. SPEAKER

When the House has agreed to suspend the Twelve o'clock Rule it is not the custom for the Chair to accept a motion of this kind so soon after midnight.

* MR. SYDNEY GEDGE

We have to meet again to-morrow at twelve o'clock, and in those circumstances I think the Government might consent to an adjournment. Eleven clauses have now been passed, and the twelfth clause is one which requires very careful consideration. The Standing Committee only reported upon this Bill on Thursday, and we actually did not get the Bill in type until yesterday morning, and we have only had one day to look into the matter. In these circumstances I think the Government might be content with their success in getting eleven clauses passed, and I hope the Government will accept this motion.

MR. T. M. HEALY (Louth, N.)

On a point of order. Is this a Coercion Act?

* MR. SPEAKER

I have the power, under the Standing Order, either to refuse this motion, or to put it to the House forthwith. I will give the House an opportunity of saying whether they approve it or not, and I will put it to the House forthwith.

THE FIRST LORD OK THE TREASURY (MR. A. J. BALFOUR,) Manchester, E.

Do you desire, Mr. Speaker, that I should say a word, or do you wish to put the question at once?

* MR. SPEAKER

Does the right hon. Gentleman accept the motion?

MR. H. S. FOSTER

moved to omit from Clause 12 the provision that every prospectus must contain the names, des-

MR. A. J. BALFOUR

No, Sir.

* MR. SPEAKER

Then I will put it to the House.

* MR. SYDNEY GEDGE

I have no wish to go to a division.

Question put— That further proceeding on consideration, as amended, be now adjourned.

The House divided:—Ayes, 32; Noes, 101. (Division List No. 239.)

AYES.
Austin, M. (Limerick, W.)	Gedge, Sydney	Reckitt, Harold James
Bainbridge, Emerson	Gibbons, J. Lloyd	Shaw, Chas. Edw. (Stafford)
Beaumont, Wentworth C. B.	Hayne, Rt. Hon. Chas. Seale-	Shaw, Thomas (Hawick, B.)
Billson, Alfred	Hedderwick, Thomas C. H.	Sullivan, Donal (Westmeath)
Bolton, Thorne as Dolling	Horniman, Frederick John	Tanner, Charles Kearns
Bryce, Rt. Hon. James	Jameson, Major J. Eustace	Ure, Alexander
Cawley, Frederick	Lawson, Sir Wilfrid (Cum'lamd)	Walton, Jno. Lawson (LeedsS.)
Charrington, Spencer	Lea Sir Thomas (Londonderry)	Wedderburn, Sir William
Crombie, John William	Macaleese, Daniel
Doogan, P. C.	M'Arthur, William(Cornwall)	TELLERS FOR THE AYES—
Emmott, Alfred	Morton, Edw. J. C. (Devonport)	Mr. Lough and Mr. Billson
Foster, Harry S. (Suffolk)	Provand, Andrew Dryburgh

NOES.
Atkinson, Rt. hon. John	Godson, Sir Augustus Fredk.	O' Brien, Patrick (Kilkenny)
Balfour, Rt. Hn. A. J. (Manch'r)	Goschen, Rt Hn G J (St George's)	Pease, Herb. Pike (Darlington)
Balfour, Rt Hn Gerald W (Leeds)	Goschen, Geo. J. (Sussex)	Phillpotts, Captain Arthur
Banbury, Frederick George	Green, W. D. (Wednesbury)	Platt-Higgins, Frederick
Beach, Rt. Hn. Sir M. H. (Bristol)	Greville, Hon. Ronald	Plunkett, Rt. Hon. H. Curzon
Bemrose, Sir Henry Howe	Gull, Sir Cameron	Powell, Sir Francis Sharp
Bentinck, Lord Henry C.	Hamilton, Rt. Hon. Lord G.	Purvis, Robert
Blundell, Colonel Henry	Hanbury, Rt. Hon. Robert W.	Rankin, Sir James
Bond, Edward	Hayden, John Patrick	Remnant, James Farquharson
Bousfield, William Robert	Healy, Maurice (Cork)	Rentoul, James Alexander
Brodrick, Rt. Hon. St. John	Healy Timothy M. (N. Louth)	Richards, Henry Charles
Carson, Rt. Hon. Sir Edw. H.	Henderson, Alexander,	Richardson, Sir T. (Hartlep'l)
Cavendish, V. C. W. (Derbysh	Jones, William (Carnarvonsh.)	Ridley, Rt. Hn. Sir Matthew W.
Cecil, Lord Hugh (Greenwich)	Keswick, William	Ritchie, Rt. Hn. Chas. Thomson
Chamberlain, Rt. Hn. J. (Birm	Lawrence, Sir E. D. (Cornw'll)	Russell, T. W. (Tyrone)
Chamberlain, J. Austen (Wore'	Lawson, John Grant (Yorks)	Seely, Charles Hilton
Chaplin, Rt. Hon. Henry	Leigh-Bennett, Henry Currie	Smith, James Parker (Lanarks)
Collings, Rt. Hon. Jesse	Lonsdale, John Brownlee	Smith, Hon. W. F. D. (Strand)
Cooke, C. W. Radcliffe (Heref'd)	Lowe, Francis William	Stanley, Edward J. (Somerset)
Corbett, A. Cameron (Glasgow)	Macartney, W. G. Ellison	Sturt, Hon. Humphry Napier
Cross, Herb. Shepherd (Bolton)	Macdona, John Cumming.	Tomlinson, William E. Murray
Curzon, Viscount	M'Arthur, Charles (Liverpool)	Warde, Lieut.-Col. C. E. (Kent)
Disraeli, Coningsby Ralph	Massey-Mainwaring, Hn. W. F.	Wentworth, Bruce C. Vernon-
Douglas, Rt. Hon. A. Akers-	Melville, Beresford Valentine	Willox, Sir John Archibald
Dyke, Rt. Hn. Sir Wm. Hart	Milward, Colonel Victor	Wilson, John (Falkirk)
Faber, George Denison	Monckton, Edward Philip	Woodhouse, Rt. Hn. E. R. (Bath)
Fellowes, Hon. Ailwyn Edward	More, Robt. J. (Shropshire)	Wortley, Rt. Hon. C. B. Stuart-
Finch, George H.	Morgan, Hn. Fred. (Monmouth.	Wrightson, Thomas
Finlay, Sir Robert Bannatyne	Morrell, George Herbert	Wylie, Alexander
Fisher, William Hayes	Morrison, James A. (Wilts., S.)	Wyndham, George
FitzGerald, Sir Robert Penrose-	Morton, Arthur H. A. (Deptford	Young, Commander (Berks, E.)
FitzWygram, General Sir F.	Murray, Rt. Hn. A. G. (Bute)
Fletcher, Sir Henry	Murray, Chas. J. (Coventry)	TELLERS FOR THE NOES—
Flower, Ernest	Murray, Col. Wyndham (Bath)	Sir William Walrond and
Gibbs, Hn. A. G. H.(Cy of Lond.)	Nieol, Donald Ninian	Mr. Anstruther

cription, and addresses of the signatories to the Memorandum of Association and the number of shares subscribed for by them respectively. The prospectus already had to contain a vast number of clauses giving general information. As a matter of fact, the Memorandum was so extensive that it had to be printed in very small type, and it was doubtful whether one person in 10,000 ever read it. It was therefore absurd to require to be added to that the information here provided for, which was perfectly unnecessary, of no value, and would minimise the value of the other information for which the clause provided.

Amendment proposed— In Page 6, line 37, to leave out the words from the word 'association,' to the word 'the,' in line 39."—(Mr. H. S. Foster.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

MR. RITCHIE

was of opinion that this information ought to be given to the public in a prospectus.

MR. BRODIE HOARE

Why should it be given?

MR. RITCHIE

For information.

MR. BOUSFIELD

did not think anybody would pay the slightest attention to the persons who signed the Memorandum, as they were usually solicitors' clerks, and there was really no importance attached to it. This certainly was a very trivial matter.

* MR. SYDNEY GEDGE

said there was a very good reason for not burdening a prospectus with valueless information. The more stuff was put in the less likely were people to read it. What was desired was that the pith of the matter should be given. If he desired to take people in he should put into the prospectus every possible bit of nonsense, because then the people would tire of reading it.

* MR. BAINBRIDGE

thought nothing existed in a prospectus more weighty than the names therein given, and certainly it would take away from their value if the prospectus were crowded with names which were absolutely unimportant.

MAJOR JAMESON

cordially agreed with the Amendment. If everything the right hon. Gentleman desired was in- serted the prospectus would extend to greater length than the New Testament, and to put in line after line which would not have the slightest meaning to the persons concerned was most absurd. The only persons who would benefit by such information being given were, newspaper proprietors, who received 1s. 6d. per line for advertising the prospectuses, but surely that was not the desire of the President of the Board of Trade. So far from people being kept out of difficulty by having lino after line of this rigmarole put in, they would be plunged in deeper and deeper, and not the slightest good would result. The House should, as business men, support the Amendment.

MR. LOWE (Birmingham, Edgbaston)

joined in the appeal that the Amendment should be accepted. His experience was that the signatories of the Memorandum were not looked upon as at all material: whether a person took five or 500 shares, he usually signed simply for one share, and this information would not be of the slightest value.

MR. BILLSON (Halifax)

said the reason the Memorandum was usually signed by obscure persons was that it was merely a matter of convenience, but if this provision was made pains would be taken in future that persons having a real interest in the concern should sign. As to benefiting newspaper proprietors, the clause did not require that the names should bn advertised, but merely that the prospectus should contain them. Usually an abridged prospectus was advertised, so there was no force in that objection.

MR. LOUGH

believed the advertisement of an abridged prospectus was always looked upon with suspicion. The argument that substantial signatories would be obtained simply because they would be published was purely conjectural. Not a single word had been said in favour of the clause, and he thought the Government, in deference to their many supporters who had spoken against this clause, should give some further reason for resisting this Amendment. If the Solicitor General could give some legal reason of any kind for this extraordinary proposal it might not be necessary to go to a division.

MR. T. M. HEALY

said this Amendment raised a very important question, which was emphasised by the statement of the hon. Member in regard to abridged prospectuses. If the hon. Member would refer to the definition of prospectus in Clause 34 he would find the following explanation— The expression 'prospectus' means any prospectus, notice, circular, advertisement,

Amendment proposed— In page 7, line 34, after the word 'specifying,' to insert the words 'if possible.'"—(Mr. H. S. Foster.)

Question proposed, "That the words 'if possible' be there inserted."

MR. RITCHIE

It is clear that if no amount has been paid for goodwill it will not be put in, but if any amount has been paid for goodwill then it should be put in.

Question put, and negatived.

or other invitation offering to the public for subscription or purchase any shares or debentures of a company.

Any advertisement issued must contain all the matter provided for in that clause.

Question put.

The House divided:—Ayes, 102; Noes, 18. (Division List No. 240.)

AYES.
Atkinson, Rt. Hon. John	Fletcher, Sir Henry	Nicol, Donald Ninian
Austin, M. (Limerick, W.)	Flower, Ernest	Pease, Herbert Pike (Darlingt'n
Balfour, Rt. Hon. A. J. (Manch'r	Gibbons, J. Lloyd	Phillpotts, Captain Arthur
Balfour, Rt Hn Gerald W (Leeds	Gibbs, Hn. A. G. H. (City of Lon.	Platt-Higgins, Frederick
Banbury, Frederick George	Godson, Sir Augustus Fred.	Plunkett, Rt Hn Horace Curzon
Beach, Rt. Hn. Sir M. H. (Bristol	Goschen, Rt Hn G. J (St George's	Powell, Sir Francis Sharp
Bemrose, Sir Henry Howe	Goschen, George J. (Sussex)	Purvis, Robert
Billson, Alfred	Green, Walford D (Wednesbury	Reckitt, Harold James
Blundell, Colonel Henry	Greville, Hon Ronald	Rentoul, James Alexander
Bond, Edward	Gull, Sir Cameron	Richards, Henry Charles
Bousfield, William Robert	Hamilton, Rt. Hn. Lord George	Richardson, Sir Thos. (Hartlepl
Brodrick, Rt. Hon. St. John	Hanbury, Rt. Hon. Robert Wm.	Ridley, Rt. Hn. Sir Matthew W
Bryce, Rt. Hon. James	Hayne, Rt. Hn. Charles Seale-	Ritchie, Rt. Hn. Chas. Thomson
Caldwell, James	Henderson, Alexander	Russell, T. W. (Tyrone)
Carson, Rt. Hon. Sir Edw. H.	Horniman, Frederick John	Seely, Charles Hilton
Cavendish, V. C. W. (Derbysh.	Jones, William (Carnarv'nshire	Shaw, Charles Edw. (Stafford)
Cecil, Lord Hugh (Greenwich)	Lawrence, Sir E. Durning- (Corn	Shaw, Thomas (Hawick B.)
Chamberlain, Rt. Hon. J (Birm.	Lawson, John Grant (Yorks.)	Smith, James Parker (Lanarks)
Chamberlain, J. A. (Worc'r.)	Leigh-Bennett, Henry Currie	Smith, Hon. W. F. D. (Strand)
Chaplin, Rt. Hon. Henry	Lonsdale, John Brownlee	Stanley, Ewd. Jas. (Somerset)
Charrington, Spencer	Macartney, W. G. Ellison	Sturt, Hon. Humphry Napier
Collings, Rt. Hon Jesse	Macdona, John Cumming	Tomlinson, Wm. Edw. Murray
Cooke, C. W. Radcliffe (Heref'd)	M'Arthur, Charles (Liverpool	Walton, J. Lawson (Leeds, S.)
Corbett, A. Cameron (Glasgow)	Massey-Mainwaring, Hn. W. F.	Warde, Lieut.-Col. C. E. (Kent)
Crombie, John William	Melville, Beresford Valentine	Wentworth, Bruce C. Vernon-
Cross, Herb. Shepherd (Bolton	Milward, Colonel Victor	Willox, Sir John Archibald
Curzon, Viscount	Monckton, Edward Philip	Wilson, John (Falkirk)
Disraeli, Coningsby Ralph	More, R. Jasper (Shropshire)	Wodehouse, Rt. Hn. E. R. (Bath
Douglas, Rt. Hon. A. Akers-	Morgan, Hn. Fred. (Monm'thsh.	Wortley, Rt. Hon. C. B. Stuart-
Emmott, Alfred	Morrell, George Herbert	Wrightson, Thomas
Fellowes, Hon. Ailwyn Edwd.	Morrison, James A. (Wilts, S.)	Wylie, Alexander
Finch, George H.	Morton, A. H. A. (Deptford)	Wyndham, George
Finlay, Sir Robt. Bannatyne	Murray, Rt. Hon. A. G. (Bute)	TELLERS FOR THE AYES—
Fisher, William Hayes	Murray, Chas. J. (Coventry)	Sir William Walrond and
FitzGerald, Sir R. Penrose-	Murray, Col. Wyndham (Bath)	Mr. Anstruther.

NOES.
Bainbridge, Emerson	Lea, Sir Thomas (Londondy.)	Sullivan, Donal (Westmeath)
Doogan, P. C.	Lough, Thomas	Tanner, Charles Kearns
Foster, Harry S. (Suffolk)	Lowe, Francis William	Ure, Alexander
Hayden, John Patrick	Macaleese, Daniel	Wedderburn, Sir William
Healy, Maurice (Cork)	M'Arthur, William (Cornwall	TELLERS FOR THE NOES—
Healy, Timothy M. (N. Louth	O'Brien, Patrick (Kilkenny)	Major Jameson and
Lawson, Sir Wilfrid (Cumb'land	Provand, Andrew Dryburgh	Mr. T. D. Bolton.

MR. BOUSFIELD

proposed an Amendment in line 35. Two or three times they had had the ease put which arose under Clause 10 of underwriting a company at a small rate of commission mentioned in the prospectus, while there might be behind that an underwriter at a large commission. The President of the Board of Trade had rightly stated the importance which might be attached by the public to statements of that sort. That state of things was quite misleading, because there might be an undisclosed under- writing by a promoter at a large commission. It was urged that if there was any money paid by a promoter for underwriting it would have to be disclosed in the prospectus. There was great doubt whether that reading was correct. The clause dealt with commission paid by the company, and he rather gathered from the silence of the Government on the point that the provision did not deal with the case of underwriting paid by the promoter. The opinion of the House, as shown in the discussion, was certainly that the prospectus should contain a statement of all underwriting, and if that was also the intention of the Government it ought to be made clear. He therefore moved to insert after the word "paid" the words "by any person."

Amendment proposed— In page 7, line 35, after the word 'paid,' to insert the words 'by any person.'"—(Mr. Bousfield.)

Question proposed, "That those words be there inserted."

MR. RITCHIE

These words would not, I think, in any way alter the meaning of the clause, but if my hon. and learned friend desires to have it explicitly stated I have no objection.

MR. BAINBRIDGE

said the amount of commission paid might not be known to the person issuing the prospectus, and therefore by passing this Amendment the House might be asking for particulars of which the person issuing the prospectus had no knowledge whatever.

MR. RITCHIE

suggested that the Amendment should be withdrawn, He would undertake that the point should be considered, and if necessary a provision inserted in another place.

MR. H. S. FOSTER,

pointed out that underwriting might be, and usually was, done after the prospectus had been settled and passed by the directors. In such a case it would manifestly be impossible for the directors to specify the amount of underwriting commission.

* MR. SYDNEY GEDGE

said that when the question of underwriting was being discussed Members were told it did not matter what the promoter might do, because the money would not come out of the pocket of the company. The promoter avowedly added a certain amount of money to the fair price of the property he was selling, because he undertook all the preliminary expenses, including underwriting. But now the company was empowered to underwrite it would be very improper for any such addition to be made to the amount paid to the vendor in that respect, and therefore the directors would always have to show that only the fair value was being given for the property or contract purchased. If the principle was introduced that the vendor also might pay for underwriting the House would be legalising a practice which was much bettor not legalised, and taking away the one safeguard the public had that only a fair price was being paid.

MR. RITCHIE

thought the observations of the last speaker were very much to the point, and he would take care that nothing was done which would in any way affect the point he had raised.

MR. LAWSON WALTON

said their present position showed the extreme difficulty of discussing a highly complicated measure in the early hours of the morning; it was almost impossible to understand the moaning of some of these Amendments, and Amendments to Amendments. He failed to see how it was possible to ensure payments by the promoter being put in the prospectus.

MR. RITCHIE

explained that all he had promised was that the point should be considered.

MAJOR JAMESON

objected to the withdrawal of the Amendment. The present confusion was the direct result of the attempt to run the Bill through the House at such an hour. First the right hon. Gentleman agreed to accept the Amendment, and then he said he would not. The only result of a great many of the Amendments which had been made would be to give business to the lawyers, and he could therefore understand learned Members being in favour of them.

Amendment, by leave, withdrawn.

Other Amendments made.

Further proceedings on Consideration, as amended, adjourned till To-morrow.

Motion made, and Question "That this House do now adjourn"— (Sir William Walrond)—put, and agreed to.

Adjourned at a quarter after One of the clock.