§ Order of the Day for the Second Reading, read.
§ LORD ABERDARE,in moving that the Bill be now read a second time, said, that it was substantially the same as that to which their Lordships gave a Second Reading last year, and its purpose was to enable Companies, by a less cumbrous process than at present, to apply accumulated profits to the reduction of the share capital, instead of distributing the same in the form of a bonus. With respect to the shareholders, no resolution dealing with the profits in this manner could be arrived at unless it was passed by three-fourths of the shareholders; while with respect to the creditors of a Company, their security would remain as good as before, as it was provided that the capital, when reduced, should not be extinguished, but remain in abeyance, and be available if required. It was also proposed to enable trustees of persons holding shares, in order to save them the necessity of making other investments, to leave their shares untouched, that portion which was in excess of the reduced capital receiving interest at the rate of not less than 3 and not more than 4 per cent.
§ Moved,"That the Bill be now read 2a"—(The Lord Aberdare.)
LORD DENMANsaid, that in 1856, when the Limited Liability Acts were discussed, Lord Overstone had said that in all cases capital should be fully paid up. Now, this Bill appeared to him (Lord Denman) to be in reduction of paid up capital. He might be wrong; but, if so, some noble Lord would be kind enough to set him right.
§ THE EARL OF REDESDALEtook exception to the clauses of the Bill relating to trustees and others who declined to accept the bonus. No provision was made as to the manner in which the money left untouched was to be dealt with. It was necessary both for those shareholders and for the Company that it should be safely invested, and the interest received from such investments, neither more nor less paid to those shareholders, that money having no concern in the increasing or diminishing profits 1277 of the Company, those shareholders holding their shares as paid up only to the same amount as those who accepted the bonus.
§ LORD SELBORNEbelieved that the limitation of interest was inserted in the present Bill in consequence of a suggestion he had made last year; but, on further consideration, he thought it would be unwise to fix a maximum limit to the interest to be so paid. He should recommend that it should be struck out.
§ LORD ABERDAREsaid, he would consider the point suggested by the two noble Lords before the Bill went into Committee.
§ Motionagreed to:Bill read 2ª accordingly, andcommittedto a Committee of the Whole House onThursdaythe 11th of Marchnext.