NEW CLAUSE.—(Offences by Corporations.) (Hansard, 28 November 1916)

§ Sir F. BANBURY
Could the hon. Gentleman give me any interpretation of the word "corporation"? I am sorry there is no Law Officer present. We have been told several times that this Bill does not cover companies. The word "corporation" is used several times in the Bill. Does it include a company, or does it not?

Sir H. DALZIEL
This subject was mentioned in the discussion on the previous Clause. I think I am correct in saying that the ordinary man in the street would interpret a corporation to mean a company, consisting of shareholders with limited liability. I am sure some of my City friends will agree. A corporation is very generally regarded as covering a limited liability company. I suppose what is intended by the Bill is a firm.

§ Mr. PRETYMAN
Perhaps I had better explain the Clause.

Sir H. DALZIEL
If we include the word "corporation," I am afraid it would be the subject of a long discussion 202 as to the interpretation of what it really means. It would be necessary to have a definition Clause if the word "corporation" is to be kept in. I stated just now that in certain circumstances a company might be dealt with. In Clause 2 you find this:
"where a firm, individual, or corporation having a place of business within the United Kingdom carries on the business wholly or mainly as nominee or trustee of, or for another person."
Anyone reading that Clause without any further information cannot be blamed for supposing that it applies to a limited company. I hope we shall have some statement on behalf of the Government in reply to the right hon. Baronet (Sir F. Banbury) so that we may understand exactly what the word "corporation" implies.

§ Mr. PRETYMAN
I think I can explain the matter. If the House will look at Clause 1 (a) they will see that a firm may include a corporation who are members of the firm—that is to say, a corporation is only brought into Clause 1 and therefore into all the Clauses of the Bill which depend on Clause 1 where it is in partnership with an individual or another firm. That is the point. It is only subject to the Clauses of the Bill as a partner, not as a principal. That is the exact position. It may commit an offence. There are offences under this Bill for which secretaries and directors of companies as such are made liable to penalties. That is only where they are acting as partners with others and constitute an element in a business or firm which is brought under this Bill. I believe I am correct in saying that that answer applies to every Clause in the Bill except Clause 2. My right hon. Friend (Sir H. Dalziel) is right when he points to Clause 2 in that connection. I am rather at a disadvantage in not having any legal assistance and in having to deal with this matter alone. I therefore speak subject to correction.

§ Sir F. BANBURY
Are there any cases where companies are in partnership with private individuals?

§ Mr. PRETYMAN
Oh, yes! In drafting Clause 1 I went into this important matter very carefully, and I was advised that there were many such cases. Therefore, we must bring in a corporation where it is a partner. As to Clause 2, 203 it does seem to me that the word "corporation;" may have to be taken out, otherwise it would be outside the Bill. Perhaps I may be allowed to reserve that point.

§ Mr. J. HENDERSON
This Bill is a very unfortunate Bill, and is very roughly drawn. The only remedy is to bring in a Bill which will include private firms and limited liability companies. There are, of course, all sorts of corporations—statutory corporations created by Acts of Parliament, civil corporations and limited liability companies. Therefore this word "corporation" includes a limited liability company. My hon. Friend admits that Clause 2 speaks of a corporation having a place of business in the United Kingdom. The Clause does not say that it carries on business in partnership, or as a partner.

§ Mr. PRETYMAN
Clause 2 does not apply to this.

§ Mr. HENDERSON
The Amendment we are discussing says:
Where a corporation is guilty of an offence under this Act, every director, secretary and officer of the corporation who is knowingly a party to the default shall be guilty of the like offence and liable to a like penalty. I think that is taken from the Companies Acts. It pre-supposes that a company has to register.

§ Mr. PRETYMAN
No.

§ Mr. HENDERSON
Then I do not understand it.

§ Mr. PRETYMAN
The company has not got to register, but it may have to be registered. The position is this: that you may have a British firm, not a company, and therefore liable to be registered. A large proportion of the interest in that firm may be owned by a German company. What we want to secure is that particulars of that share in the business held by the German company should be registered, and that if particulars of that German company holding are not registered by any default of theirs, they are to be liable.

§ Mr. HENDERSON
You refer to Clause 2.

§ Mr. PRETYMAN
No; I propose to take the word out of Clause 2.

§ Mr. HENDERSON
If you have a German corporation which has a large holding in a firm in this country, how are you going to make the directors and secretary of the German company in Berlin liable to the penalty?

§ Mr. PRETYMAN
They have to register the business here. There must be a place of business here.

§ Mr. HENDERSON
I can see in this Bill the most awful confusion.

§ Mr. PRETYMAN
No.

§ Mr. HENDERSON
I shall have something to say about that later. Let me say here that limited liability companies are the concerns in which enemy interests are held in the greatest number. They do not mix up very much with private firms. There may be a few, but the great majority cover themselves, very naturally, by means of limited companies. In a limited liability company the liability is limited, and when a man takes shares in it he knows the extent to which he is involved. If he becomes a member of a private firm his liability is unlimited. I am perfectly certain that limited liability companies will include more enemy interests than private firms; therefore, unless my hon. Friend is going to bring in a Bill to cover or so amend this Bill that it will cover limited liability companies as well as other corporations, I think it wants a great deal of consideration.

§ Mr. ELLIS GRIFFITH
According to the Amendment Paper this new Clause is to be inserted after Clause 19. I do not know 0whether that is a misprint. Clause 19 says:
"There shall be paid out of moneys to be provided by Parliament such remuneration in respect of the duties performed under this Act as the Treasury may assign."
Does not the hon. Gentleman mean that this Clause should come after Clause 9, which deals with the penalty for false statements?

§ Mr. SPEAKER
There was no question put as to where the new Clause should be inserted. The Amendment Paper is obviously wrong, and this Clause will be put in its proper place.

Mr. GRIFFITH
Assuming for the moment that this new Clause comes in after Clause 9, these words are rather curious: 205 "Where a corporation is guilty of an offence under this Act, every director, secretary, and officer of the corporation who is knowingly a party to the default shall be guilty of the like offence."
The corporation is not yet guilty of any offence, nor does the Bill make them guilty of any offence. If you strictly construe it and say that the secretary, officer and director are guilty of a like offence, if they are charged with an offence, they will say, "We are not guilty of a like offence. There is no like offence of which we should be guilty." This is not a technical point, but a point of substance, and I think there is something in it. It would be worth while taking it into account in another place. I do not wish to call further attention to it now, but it is a matter worthy of investigation.

§ Mr. FELL
I think I can give an explanation of this Clause which has not yet been given. If a British limited company registered under the Companies Acts takes an interest in some establishment or concern which has foreigners interested in it and is trading under some other name, it is the duty of that firm to register and supply the proper particulars and all the parties who do not register are guilty of an offence. But if you have a corporation which has an interest in a foreign firm, there is no one you can make responsible under this Bill unless you have some such Clause as this, which provides that the secretary and directors shall be equally liable. They are made equally responsible with the other persons interested in the business which has not been registered but ought to be registered. Then it makes the directors who had an interest in this responsible with the other people. I think that is the explanation, that it is not a German firm, but an English company which takes an interest in a firm which should be registered but is not.

Mr. CUIRRIE
I think the Board of Trade in passing the Bill in its present form in some respects is taking a good deal of responsibility, and I very much doubt whether it will work smoothly. The chambers of commerce have been asking for a Bill of this kind for years and should have got it years ago. But that does not alter the fact that as things have turned out—possibly my hon Friend is not in the least to blame for it—the consideration which chambers of com- 206 merce have been able to give to this Bill at the last moment is really most inadequate. I have had several communications with chambers with which I correspond.

§ Mr. SPEAKER
It seems to me that those observations are relevant to the whole Bill on the Third Reading, but not to the Clause.

§ Mr. CURRIE
I will make no more observations of the same kind. I think I have made my meaning plain to the hon. Gentleman.

§ Mr. SPEAKER
I think Clause 19 is a mistake.

§ Mr. PRETYMAN
It clearly ought to be Clause 9.

§ Mr. SPEAKER
It should come as an Amendment to Clause 9. It is better to withdraw the Clause.