HL Deb 11 July 1889 vol 338 cc61-8

Order of the Day for the Second Reading read.

LORD HERSCHELL

My Lords, this is a Bill to enable alterations to be made in the Memorandum of Association of the Belgrano (Buenos Ayres) Gas Company. It was a Company formed, as its name implies, to supply gas to the town of Belgrano in Buenos Ayres; and the Company desire by this Bill so to alter their Memorandum of Association as to enable them to supply electric light as well as gas. My Lords, my noble Friend the Chairman of Committees thought that, under the circumstances, there were objections to such a Bill, and that I ought not to move it as a matter of form. I may say, my Lords, I entirely concur in that view; and when after his refusal the matter was brought before me, and I was asked to undertake to move the Bill, I said I certainly could not do so under the circumstances which then existed, because all that appeared then was that a large majority of the shareholders supported the Bill, and desired to have this alteration made in the Memorandum of Association. It appeared to me, my Lords, that that was not sufficient, and that considering that the Memorandum of Association is the basis of the Company, determining the undertaking which is to be carried on by the Company, no mere majority of the shareholders should merely, because they were a majority, have the right to alter the Memorandum of Association which is the Charter of the Company settling its rights and its powers, so as to enable a new undertaking to be entered upon which might be distasteful to a minority, even an inconsiderable minority, of the shareholders. But, my Lords, under the special circumstances of this case, it appeared to me that, practically the whole of the shareholders assenting to the alteration of this Memorandum of Association, my difficulty would be removed. In consequence of that, inquiries have since been instituted by those who have charge of the Bill, and the result showed that that is the case—that practically the whole of the shareholders assent to the alteration. There are 220 shareholders holding 14,000 shares. That is the total number of shareholders and shares in the Company. Of those, 220 shareholders, 218, representing 13,964 shares, have expressed their approval, leaving only two shareholders unaccounted for. One of those two shareholders, representing 14 shares, has lately died, and that leaves really only one shareholder unaccounted for. That shareholder has been abroad, and has only just returned to England, and there has consequently been no opportunity of obtaining his assent. So that, my Lords, substantially, we may take it that the whole of the shareholders in this Company desire this alteration in. the Memorandum of Association, and desire that this power should be conferred upon the Company of entering upon this new branch of business as part of their undertaking. My Lords, the circumstances of the case are somewhat peculiar. In an ordinary case it might be said it is unnecessary to apply for an amendment of the Memorandum of Association, because the existing Company can be dissolved, and a new Company formed; and there are cases in which I should have thought that would be the proper course to be pursued. But in the present case the Company has certain concessions from Foreign Governments, and I am assured that if that course were adopted, of dissolving the existing Company and forming a new Company, difficulties would be likely to arise which would not, perhaps, be very intelligible to the Foreign Governments by whom the concessions were granted, and the result of doing so might, therefore, be disastrous to the Company. The alteration is one which will enable a business to be carried on which is cognate to that now being carried on for the purpose of lighting a certain district, a new method of lighting having come into vogue since the Company was formed. Under all these circumstances, it seems to me that I may safely and properly ask your Lordships to read this Bill a second time, and there would be no danger of its creating a precedent which might prove inconvenient hereafter. There are, indeed, precedents for altering by Acts of Parliament Memorandums of Association; but I do not go into them now. Some of them might be said to be stronger cases than that which I am bringing before your Lordships' notice. Those Acts may have passed from want of proper precaution and care being taken when the matter was brought before Parliament. I am satisfied, my Lords, to rest the present case upon its own circumstances; and I am satisfied that there will be, under the circumstances, no danger of creating an inconvenient precedent in asking your Lordships to give your assent to the Second Reading of this Bill.

Moved, "That the Bill be now read 2,ª"—(The Lord Herschell.)

* THE EARL OF MORLEY

My Lords, I merely wish to say a few words in explanation of the position which I have taken up with regard to this Bill, and which has been correctly stated by my noble and learned Friend. This Bill, as my noble and learned Friend has stated, is to enable a Company, which is registered under the Joint Stock Companies' Act, to alter its Memorandum of Association. I need not point out to your Lordships the great importance of a Memorandum of Association as being the Charter of a Company, and the great danger of altering the terms of that Memorandum of Association. My noble and learned Friend has said there are precedents for changes being made by special Acts of Parliament in Memorandums of Association of Joint Stock Companies. My Lords, that is perfectly true; there are many instances of such Acts of Parliament being passed, but they were all justified either by special circumstances over which the Company concerned had no control; or, secondly, by the requirements of concessions from Foreign Governments; or, thirdly, in order to clear up any doubts which might be entertained with regard to the construction of the Memorandum of Association. On the other hand, I may mention that many Bills for altering Memorandums of Association have been refused. I will give your Lordships an instance last Session of the United States and South American Investment Company, the powers of which were limited to America. That Company applied to have its powers extended to this country, and that Bill was refused. Then there was also the case of the Compagnie Générale des Asphaltes which, being a Foreign Company, also applied to have its powers extended to the United Kingdom, and that Bill again was refused by my Predecessor in Office. There was also the case of another Bill of a very similar character to the Bill now before the House in reference to a Company called the Tuscan Gas Company. That Company, precisely as in the present case, had powers for lighting a certain district by gas. My Predecessor refused the application of the Company in general terms, but they were allowed to light by electricity places where they could be forced by the Government, or by the Municipality, to supply electric light, the reason being that if they had not been allowed to do so they would have lost their concession. There was another case of the Telegraph Construction Company in 1883. I have looked at that Bill, and it is not a case at all parallel with the one before the House. It is merely as to the construction of the terms of the Memorandum of Association; and the Bill was for the purpose of clearing up doubts as to what the Company's powers were and what they were not. My Lords, I referred just now to the danger of touching any Memorandum of Association of a Company, though, no doubt, a case might, under special circumstances, be made out for doing so. But I cannot see that this Company has made out any such special case. It is, no doubt, the fact that electric lighting has become more general since the formation of the Company five years ago; and the result appears to be, I am sorry to say, that the profits of the Company are diminishing; but it is not enough to show that, in consequence of the introduction of the electric light, the profits of the Company have been diminished. The noble and learned Lord says that the consent of all the shareholders has been obtained; and I admit at once that that is a great argument in favour of the Bill. There are, indeed, only two shareholders who have not assented, and their absence has been accounted for. But I would ask the House whether that gets over all the difficulties of the case? It seems to me to be a somewhat novel principle that Parliament should be called upon to legislate simply upon the requisition and by the consent of all the parties concerned in the particular Company whose interests it is desired to protect by legislation. My Lords, if that principle is admitted, is there not a danger that you will get beyond the simple position of universal consent by the shareholders, and that in the future you may be asked to consent to powers being given upon the wish of a majority? But, my Lords, there is besides another point to be considered. I am now speaking of this case simply as a precedent for future legislation, and not merely in reference to this particular Company. There are other parties interested besides the shareholders; there may be mortgagees, or other creditors, who are interested in the Memorandum of Association being maintained. There may be other circumstances existing which would require to be considered. I am told, my Lords, that in this particular case there is already an Electric Lighting Company established at Belgrano, which may have been started on the ground that this Gas Company has no power to supply electric light. I admit, my Lords, that the present case is somewhat exceptional; but I confess that I should not recommend the adoption by your Lordships of a measure which may be considered to some extent a precedent. We may have Bills introduced where the circumstances require that such an alteration should be made as is here proposed; but this appears to me to be a new precedent entirely, and I am afraid there are not sufficient grounds existing to justify it, or grounds which would be satisfactory to your Lordships' House. My Lords, I have explained the particular circumstances which, in my opinion, rendered it impossible for me to take the responsibility of moving the Second Reading of the Bill in this case, as in that event it would have come before your Lordships in the ordinary course without any remark being made upon it. However, the noble and learned Lord has moved the Second Reading, and I leave it entirely to the House to state the course which is to be pursued in regard to it. But, as I have said, there have been precedents for passing such a Bill altering a Memorandum of Association, and it only remains for your Lordships to express your opinion upon it.

THE EARL OF CRAWFORD

My Lords, I may say that I have no interest in this Company; but I have inquired into the circumstances of the case, and must support the Second Reading. The noble Lord has stated, in his remarks, that no special case has been made out by the Company. At the time the Company was constituted under the Companies' Act (1862) no question existed of this kind as to the possibility of using electricity for lighting any large or considerable area. As soon as the possibility arose of the electric light being utilized in that way, there was immediately a demand for it. The noble Lord is perfectly correct in saying that, so far, the Gas Company has not been called upon to supply electricity—if that had been the case the House might probably have thought that was a ground for granting the Second Reading; but although that is not the case the Gas Company has been put in the position of being very considerably cut down in its receipts. The noble and learned Lord has also said there is another Electric Lighting Company in existence at Belgrano. I have made inquiries into the matter, and I find there is already one Company established there which is in a very strong position. Arrangements have been made with the Gas Company which I think are desirable for both Companies and also in the interests of the public; because it seems they have arranged to supply electricity in bulk to the Gas Company for the purpose of being delivered to the Gas Company's consumers. I think, my Lords, it is very desirable in the interests of both Companies, and also of the public, that your Lordships should accede to the Bill being read a second time.

THE LORD CHANCELLOR

My Lords, I cannot help thinking that no satisfactory reply has been given to the difficulties and objections which the noble Lord the Chairman of Committees has felt upon this subject. If the Bill were passed it might place a burden upon him which, I think, it is not fair to place upon him. What is the case before the House? The case is simply this It has been shown by the noble Lords who have spoken that this Company desires to enter upon a new business. But what is to be the answer, in this and other cases, of my noble Friend the Chairman of Committees when a request of this kind is made to allow Companies to embark in a different business to that in which they started? What rule, what line, is he to adopt? My Lords, I cannot say that I have heard anything to justify a departure in this case from the ordinary rule, or that anything really has been alleged for it, except this—that, as a commercial matter, this being a commercial undertaking, it is more profitable to this Company to extend its powers. That is very wide. I do not know how far we shall have to go if once that principle is adopted, or how the Chairman of Committees is to act. It is said that this is a Bill asking for a power of a cognate character; and in one sense that is no doubt correct, as it is for lighting purposes; but I cannot say that that is a justification for so important a change in this case. I cannot help thinking that your Lordships should require very strong grounds to be shown before you pass the Second Reading.

* LORD FITZGERALD

My Lords, I have no personal interest whatever in this Company, and I know nothing of it beyond what I have read in the Papers, which I received this morning, and which I believe to have been generally distributed. There can be no doubt what the object of the Company is. This, Memorandum speaks of lighting by gas, and the alteration proposed is to enable the Company partially to use lighting by electricity. It is said there is another means of doing this. What is it? By the liquidation and winding-up of this Company, and the formation of a new one with a new Memorandum of Association. The legal consequences of that would be very important to this Company, and very costly, and would possibly be disastrous to it. They say that, in order to carry on their business, they must provide lighting by electricity, and that otherwise they will lose the benefits of their concession. It is not only the Company and its shareholders that are interested in this matter but the local public; and it is to the interest of everybody concerned that the object of the Company should be carried out. No one objects. There are no creditors, and the shareholders as a body desire the alteration. The noble and learned Lord has pointed out that the Company will be enabled to go on by allowing its Memorandum of Association to be extended in this way. In doing so you violate no principle, and I therefore support the Second Reading.

LORD HERSCHELL

My Lords, I will only say in reply that the Chairman of Committees in the House of Commons, has thought that this was a matter which should be brought forward. If any general rule is to be laid down, it is very desirable that there should be a common understanding between both Houses as to what course should be pursued with regard to these Bills. It is very undesirable that one rule should be followed in the House of Commons and another in this House. At the same time, I may say I am not sure that I can see any great distinction between a private Act of Parliament altering the terms of a Memorandum of Association and a private Act of Parliament altering the constitution of a Company. I confess I do not see any real distinction between the two, and the latter is of everyday occurrence.

On Question, their Lordships divided:—Contents 23; Not-Contents 44.

Resolved in the negative.