44. Sir NICHOLAS GRATTANDOYLE
asked the President of the Board of Trade whether he is aware that, in the reconstruction of the Debenham group of companies, £9,000,000 capital is written off; whether he will move to fix liability upon those responsible for the over-capitalisation; and will he prepare an amendment to the Companies Act, 1929, to enable the Board of Trade on its own initiative to check and penalise the practice of company over-capitalisation resulting in loss to the investing public?
§ Dr. BURGIN
My attention has been called to the scheme of reconstruction of Debenhams, Limited, Debenhams Securities, Limited, and the Drapery Trust, Limited which was sanctioned by the court on 29th January. The Companies Act, 1929, already provides that the persons responsible shall be liable for loss sustained by subscribers for shares or debentures by reason of any untrue statements in a prospectus; and it does not appear to be desirable or expedient that the Board of Trade should be given statutory duties which would require them in effect to determine the permissible amount of capital of public companies.
§ Sir ARTHUR MICHAEL SAMUEL
Does the hon. Gentleman propose to allow limited liability to be used as a shield so that over-capitalisation transactions involving a loss of £9,000,000 can be carried on under the protection of the Companies Act of 1929?
§ Dr. BURGIN
No, Sir; my right hon. Friend does not propose to allow the Companies Act to be used as a shield, but he does not propose to do anything by legislation which will fetter the judgment of the commercial community of the City of London in determining what is the right amount of capital for their own business.