HL Deb 02 May 1907 vol 173 cc996-1032

House in Committee (according to Order).

[The EARL of ONSLOW in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3:—

VISCOUNT RIDLEY

moved to substitute a penalty of £50 for £5. The clause provided that if a prospectus were issued without a copy thereof being filed for registration as required by Section 9 of the Companies Act, 1900, the company and every person who was knowingly a party to the issue of the prospectus should, on conviction, be liable to a fine not exceeding £5 for every day from the date of the issue of the prospectus until a copy thereof was so filed. He did not think £5 a sufficient penalty to deter unscrupulous directors. Although if his Amendment were agreed to the clause would provide that the penalty should be one not exceeding £50, it would, of course, be within the power of the Court, for merely technical breaches, to make the fine as low as they considered necessary to meet the particular case.

Amendment moved— In page 4, line 32, to leave out the word 'five' and to insert the word 'fifty.' "—(Viscount Ridley.)

LORD AVEBURY

pointed out that the fine was one of £5 for every day. Therefore, if a number of days had elapsed between the issuing of the prospectus and the filing of a copy the fine would be exceedingly heavy. Moreover, it would fall on the company, the shareholders of which would not be in any way responsible for the offence. He hoped the noble Viscount would not press the Amendment.

* THE EARL OF GRANARD

said that all the penalties in the Bill had been carefully considered by the Board of Trade and their advisers. They felt that a fine of £5 in this case was sufficient. As Lord Avebury had pointed out, it was not a maximum fine of £5, but of £5 for every day from the date of the issue of the prospectus until a copy was filed.

Amendment, by leave of the Committee, withdrawn.

Clause 3 agreed to.

Clause 4 agreed to.

Clause 5:—

VISCOUNT RIDLEY

had an Amendment on the Paper to Clause 5 (limitation of time for issue of certificates), in which he proposed to increase the fine, in cases of default in complying with the requirements of the section, from £5 to £50 for every day during which the default continued. He would like to know from the noble Earl who represented the Board of Trade whether the same objection applied to the increase of the fine in this case.

* THE EARL OF GRANARD

said he was afraid the same objection would apply.

VISCOUNT RIDLEY

intimated that in the circumstances he would not move the Amendment.

Clause 5 agreed to.

Clause 6:—

* THE EARL OF GRANARD

said the Amendments standing in his name to this clause had been put down at the instance of the Board of Inland Revenue. The object of the clause was to secure the filing of particulars of contracts in respect of which allotments of shares had been made, in cases where such contracts had not been put into writing. The Amendments were proposed in order to improve the drafting and to prevent any evasion of the stamp duties.

Amendments moved— In page 5, line 14, to leave out the words 'a contract which under' and to insert the words 'such a contract as is mentioned in'; in lines 15 and 16 to leave out the words 'is required to be filed with the registrar'; in lines 16 and 17 to leave out the words 'it shall be a sufficient compliance with that paragraph if the company' and to insert the words 'the company shall'; in line 21, after the word 'writing' to insert as new subsections:

  1. "(2) Such particulars shall be deemed to be an instrument within the meaning of the Stamp Act, 1891, and the registrar may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section twelve of that Act.
  2. "(3) The provisions of section seven of the Companies Act, 1900, imposing penalties for default, shall apply as if the requirement of this section were a requirement contained in that section."—(The Earl of Granard.)

LORD AVEBURY

asked if it was quite clear that the proposed new subsections involved no addition to the stamp duties payable.

* THE EARL OF GRANARD

replied in the affirmative. The only object was to prevent any evasion of the present stamp duties.

On Question, Amendments agreed to.

Clause 6, as amended, agreed to.

Clause 7:—

VISCOUNT RIDLEY

said this clause provided for the issue of shares at a discount under certain circumstances, and the object of the Amendment standing in his name was to secure that if such a practice Were to be sanctioned at all, a point upon which he had considerable doubt, it should only be done under adequate safeguards. He held that it should only be allowed with the sanction of a special resolution of the company. The safeguard in his Amendment was not, he feared, a very large one. It might be possible to evade it, but he hoped the Board of Trade would accept the Amendment. In many other matters of company management a special resolution of the company was required, and he submitted that in a very important clause of this kind, under which a great many doubtful transactions could take place, it was only proper that the power should be safeguarded as much as possible.

Amendment moved— In page 5, line 26, after the word 'may' to insert the words 'with the sanction of a, special resolution of the company, passed and duly confirmed in manner hereinafter mentioned, and should such a course be desired by not less than 10 per cent, in amount of the shareholders with the subsequent approval of the court.' "—(Viscount Ridley.)

THE EARL OF GRANARD

said that when the clause was drafted it was recognised that safeguards were necessary, and consequently the provision was inserted that no company would be able to issue capital at a discount unless it had continuously carried on business for more than two years. They also insisted upon a statement being filed with the registrar giving exactly the same information as would have been contained in a prospectus, had one been issued. But in order to ensure further publicity the Government were prepared to agree to the noble Viscount's Amendment down to the word "company," thereby accepting the stipulation that such issue should be sanctioned by a special resolution of the company. They could not go further than that, as they thought it undesirable that a small minority of shareholders should have the power of continually harassing the directors, which he was afraid would be the case if the Amendment were agreed to in its entirety.

LORD LEITH OF FYVIE

regarded it as extraordinary that they should be considering at this time of day the sale of stock at a discount, when every other country in the world had made it a sine qua non that stock should never be issued at a discount. If this power were granted there should be adequate safeguards. In Germany, France, Belgium, Holland, and throughout the United States, the issue of stock at a discount was prohibited by law, and he was surprised that there was no Amendment on the Paper raising this question.

* LORD FABER

reminded the noble Lord who had just sat down that though there was in the countries referred to no sale of stock at a discount, yet a heavy fee was paid to underwriters which had the effect of a discount.

THE LORD CHANCELLOR (Lord LOREBURN)

said there was no doubt that dangers surrounded the issue of shares at a discount. But at present it was lawful to pay an underwriting commission on the issue of shares, which was practically the same thing. It was not thought desirable that the law should in practice be something in the nature of a sham, and therefore this clause, with its safeguards, was proposed. He would be glad if noble Lords at a later stage would suggest any further safeguards to the practice, as, for example, some method providing that all the shares in the same issue should be issued at the same discount. He had served on the Committee until a late stage, and believed most of the members were of opinion that it was better to make the thing genuine than to keep it on its present artificial and fictitious footing. The Government had accepted the vital part of the noble Viscount's Amendment, but he suggested that instead of requiring a special resolution of the company the Amendment should read "an extraordinary resolution," which would necessitate only one meeting, whereas a special resolution would require two.

THE MARQUESS OF LANSDOWNE

suggested that his noble friend should leave the matter where it had been left by the Lord Chancellor. What was really before the House was not whether it was desirable to permit the practice of issuing shares at a discount, but whether a particular safeguard against the abuse of that practice should or should not be adopted. He understood that the Government were prepared to meet Lord Ridley up to a certain point at all events, and if the noble and learned Lord would consider whether any further precautions were possible, he for one would be quite content to leave it there.

VISCOUNT RIDLEY

accepted the suggestion of the Lord Chancellor and deleted from his Amendment all the words after "company," and substituted the word "extraordinary," for the word "special."

On Question, Amendment, as amended, agreed to.

VISCOUNT RIDLEY

inquired whether the noble Earl in charge of the Bill was prepared to accept his next Amendment, to insert the words "provided that such shares shall first be offered to existing shareholders."

* THE EARL OF GRANARD

said the Government could not accept the Amendment. The directors in the ordinary course would meet the shareholders at the general meeting, and if it were desired to impose any condition on the issue of shares at a discount it could be done then.

VISCOUNT RIDLEY

said he would not, therefore, move the Amendment. The question could be considered between this and the Report Stage.

Clause 7, as amended, agreed to.

Clauses 8 and 9 agreed to.

Clause 10:—

* THE EARL OF GRANARD

said his next Amendment was moved at the request of the India Office, who desired that Clause 10 (Payment of interest out of capital) should not over-ride the Indian Railway Company's Act, 1894.

Amendment moved— In page 7, line 12, after the word 'relate' to insert as a now sub-section '(2) Nothing in this section shall affect any company to which the Indian Railway Company's Act, 1894, as amended by any subsequent enactment, applies.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 10, as amended, agreed to.

Clause 11:—

* THE EARL OF GRANARD

moved to leave out the following proviso— (i) In the case of a mortgage or charge created out of the United Kingdom, it shall not be necessary to send the instrument by which the mortgage or charge is created. This Amendment was also moved at the instance of the Board of Inland Revenue. Its object was to prevent the evasion of stamp duties. If it were not obligatory for the deeds to be produced before the registrar it would be impossible for him to judge whether or not the duty on them had been paid.

Amendment moved— In page 8, to leave out lines 2 to 5."—(The Earl of Granard.)

On Question, Amendment agreed to.

* THE EARL OF GRANARD

moved the insertion of a new sub-section, the object of which was, he said, to remove any doubt as to whether a debenture the term of which was extended required fresh registration. The desire was to make it clear that if the life of a debenture were increased the extension would require registration.

Amendment moved— In page 10, line 24, after the word 'sufficient' to insert as a new sub-section '(9) Where a debenture containing or giving by reference to a deed containing a charge required to be registered under this section is renewed by extending the currency thereof beyond the date originally fixed, such renewal shall require to be registered under this section as if it were a fresh charge. (The Earl of Granard.)

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Clauses 12 to 15 agreed to.

Clause 16:—

VISCOUNT RIDLEY

moved a similar Amendment to this clause (Power to give Mortgagee option of purchase) as that which had been agreed to on his Motion with regard to Clause 7, providing that the power should only exist with the sanction of an extraordinary resolution of the company.

Amendment moved— In page 11, line 37, after the word 'company' to insert the words 'with the sanction of an extraordinary resolution of the company.' "—(Viscount Ridley.)

* THE EARL OF GRANARD

said the Government could not accept the Amendment, as in their opinion the conduct of all company affairs should be left as much as possible with the directors. They feared that if the Amendment were accepted it would unduly hamper business and hinder a company borrowing money. The main clause allowed a mortgagee to be given an option of purchase, and he reminded their Lordships of a case tried some years ago in which Lord Halsbury and the other Law Lords expressed regret that the existing state of the law prevented a mortgage being issued with, option of purchase attached.

LORD AVEBURY

hoped the noble Viscount would not press the Amendment. This clause stood on a different footing from the one authorising the issue of shares at a discount. Where the raising of an advance was required it might be a question of time, and, if the company had to wait for an extraordinary meeting, it might happen that, although the company was perfectly solvent and might have made all necessary arrangements if unhampered, in the meantime it would have to stop payment.

VISCOUNT RIDLEY

fully recognised that this was a highly technical matter. He would not, therefore, press the Amendment now; but perhaps the noble Earl in charge of the Bill would allow him to consult with him before the Report Stage.

Amendment, by leave of the Committee, withdrawn.

Clause 16 agreed to.

Clauses 17 to 19 agreed to.

Clause 20: —

VISCOUNT RIDLEY

moved to amend sub-section (3) so as to provide that where inspection of the register was refused, or a copy refused, the company should on conviction be liable to a fine of £20. The fine at present in the clause—£2—was quite inadequate, and as the fine was not one per day he hoped the objection which had been taken to his previous Amendment would not apply.

Amendment moved— In page 13, line 19, to leave out the word 'two' and to insert the word 'twenty.' "—(Viscount Ridley.)

* THE EARL OF GRANARD

said the Government could not accept the Amendment except in a qualified form. The Bill at present made the fine £2, and a further fine of £2 for each day the refusal continued. The Government would agree to the first fine being raised to £5.

VISCOUNT RIDLEY

Could not the noble Earl make it £10?

* THE EARL OF GRANARD

I am afraid not.

VISCOUNT RIDLEY

Then I will alter the word "twenty" in my Amendment to "five."

On Question, Amendment, as amended, agreed to.

Clause 20, as amended, agreed to.

Clause 21:—

LORD AVEBURY

proposed that one at least of the auditors, in the case of every company whose authorised capital amounted to £50,000, should be a professional accountant. This provision was necessary because auditors not specially trained in accounts sometimes overlooked matters that ought to be brought to light. The auditing of accounts was a very technical, he might almost say scientific, business, and it was extremely desirable in the interests of the shareholders that one at least of the auditors in all important companies should have had professional training. He had been told that the term "professional accountant" was not exactly a legal term, but he could not insert "chartered accountant" because there were many excellent accountants who were not chartered. There was a precedent for the words he proposed in the Public Trustee Act, which enacted that accounts should be audited by a solicitor or public accountant; and for the last thirty years the term "public accountant" in that Act had been taken to mean a person in the profession of an accountant. But even if it should be held that there was not a very clear legal definition, still there was no doubt that the insertion in the Act of words of the kind proposed would have very great effect in inducing companies to appoint as one of their auditors a person who had been really trained to that duty. He had known several cases where otherwise excellent auditors had, through not having special training, overlooked frauds which a professional accountant would at once have detected. In the interests, therefore, of the shareholders of these companies he hoped his Amendment would be accepted.

Amendment moved— In page 13, line 32, after the word 'auditors' to insert the words 'one at least of whom, in the case of every company whose authorised capital amounts to fifty thousand pounds, shall be a professional accountant.' "—(Lord Avebury.)

* LORD FABER

said this point came up before the Committee, and it was felt that there was great difficulty in ascertaining what was meant by a professional accountant. The Committee were told that it would really mean an accountant who belonged to one or other of the chartered societies. The Committee felt that that would be narrowing the appointment too much, and it was therefore left to the company. Though the Amendment looked very reasonable on the face of it there was still the same ambiguity as to what the term "professional accountant" really meant. In his opinion it would lead to more harm than good to stereotype the matter in the way proposed, and he therefore hoped the Amendment would not be pressed.

* THE EARL OF GRANARD

said the Government could not accept the Amendment in the form proposed. He suggested that the words might run— One at least of the auditors shall be a person who publicly carries on business as an accountant.

LORD AVEBURY

accepted this suggestion, and asked permission to withdraw his Amendment as previously worded and to substitute one in the terms suggested by the noble Earl.

Amendment, by leave of the Committee withdrawn.

Amendment moved— In page 13, line 32, after the word 'auditors,' to insert the words 'one at least of the auditors shall be a person who publicly carries on business as an accountant.' "—(Lord Avebury.)

LORD ASHBOURNE

still thought the words proposed were vague. Any person who merely had a brass plate fixed to the door of an office, and who knew nothing whatever about the business of an accountant, might claim publicly to carry on that business.

THE LORD CHANCELLOR

said the object, of course, was to make sure, if possible, that a competent person would be appointed. That could not be done by a definition of professional accountant, because that might set up a monopoly for those who belonged to alimited number of societies. On the other hand, a perusal of the records at the Board of Trade would show many comic instances of the type of person who had been employed by bogus companies as an accountant, a term which had no definite meaning in law. Extraordinary persons had been put forward as accountants merely to discharge a sham duty. If a satisfactory term could be found, he, for one, would be glad; but, as Lord Granard had said, there was a precedent for the requirement that the person should publicly carry on the business of an accountant. This provision would at least exclude a number of objectionable persons, but he agreed with his noble and learned friend opposite that it was not an ideal one.

THE EARL OF GALLOWAY

submitted that it was quite unnecessary to insist on a professional accountant. The most successful company in this country was the Army and Navy Co-operative Society; yet ever since its inception the auditors had been military men.

On Question, Amendment agreed to.

LORD AVEBURY

moved an Amendment to Sub-section (3) to provide that "the balance-sheet shall be signed by two of the directors of the company." He said that as the directors were really the responsible persons, it would be more satisfactory that two of them should sign the balance-sheet.

Amendment moved— In page 14, line 5, at the beginning of Sub-section (3), to insert the words 'The balance-sheet shall be signed by two of the directors of the company and.' "—(Lord Avebury.)

* THE EARL OF GRANARD

said the Government had no objection to this Amendment, which simply applied to all companies the existing rule as to banking companies.

On Question, Amendment agreed to.

LORD AVEBURY

moved to omit the words "and by the company to every shareholder not less than seven days" from Sub-section (4), which read— A person, other than a retiring auditor, shall not be capable ofbeing appointed auditor at an annual general meeting unless notice of an intention to nominate that person to the office of auditor has been given by the nominator to the company not less than fourteen days, and by the company to every shareholder not leas than seven days, before the annual general meeting. He contended that under the subsection, if shareholders gave notice of their intention to nominate a new auditor, the directors might defeat their object by omitting to give notice to every shareholder. It might be said that that could be avoided by inserting corresponding words at a Liter part of the subsection, but he hoped that would not be done, because the effect of putting in those words would be that any enterprising firm of accountants might get some person to nominate them as auditors of a great company and then there would be imposed upon the directors the obligation of sending an intimation of the nomination to every one of the shareholders. In that way a substantial expenditure might be imposed on a company in order to advocate some young person who perhaps did not at all deserve it. The object of deleting the words in his Amendment was to enable the shareholders, if they really wished to do so, to change the auditors. He suggested that it would also be desirable to insert words providing that where a change was made notice of the change should be given to the existing auditors. Perhaps the noble Earl in charge of the Bill would consider that point before the next stage.

Amendment moved— In page 14, lines 14 and 15, to leave out the words 'and by the company to every shareholder not less than seven days.' "—(Lord Avebury.)

* LORD FABER

pointed out that if this Amendment was accepted the directors might appoint a new auditor without giving the shareholders notice. In his opinion it would be very dangerous to leave out the words requiring this notice.

LORD BALFOUR Of BURLEIGH

said the Amendment had produced something like consternation among gentlemen who had communicated with him from Scotland, and who thought the Amendment would have an opposite effect from that desired. The words in the clause were, in his opinion, a protection to the shareholders, and he hoped they would be retained.

* THE EARL OF GRANARD

said that if the Amendment were accepted the directors would be able to spring the appointment of an auditor on the shareholders, as there would be no obligation whatever upon the directors to send notice of a proposed change to the shareholders. He suggested that the matter should be left over until the Report stage.

* LORD AVEBURY

was quite willing to agree to this course, but thought there was some obvious misunderstanding as to the effect of the clause. The clause did not say that the directors should give notice to the shareholders, but that if they did not, the shareholders could not make a change. The clause had an exactly opposite effect from that which Lord Balfour and Lord Faber supposed. Let them take the case where shareholders wished to change an auditor. As the clause stood they would give notice to the directors, but unless the directors themselves gave notice to all the shareholders the auditor could not be changed. As the clause at present stood the directors had nothing to do, if they wished to prevent the change, but to put the nomination in the waste-paper basket.

LORD BALFOUR Of BURLEIGH

held that the omission of the words would not cure the evil which the noble Lord feared, because if no notice were given to the shareholders of an intended change the shareholders who approved of the existing auditor and did not wish a change would probably not come to the meeting, as they would be ignorant of the proposal. The directors, would, therefore, have their own way. He did not see how they could secure effective notice being given to the shareholders without laying the obligation on the directors.

LORD AVEBURY

said that, if the words were left in, the auditors, however much the shareholders might wish it, could not be changed unless the directors gave the notice. He would not pursue the matter further now, but would let it stand over till Report stage.

Amendment, by leave of the Committee, withdrawn.

Consequential Amendment agreed to.

LORD AVEBURY

moved to add a new sub-section to provide that where, in any prospectus issued by a company, any person was named as the auditor, the said person should, unless he resigned the appointment, continue to be the auditor until the first annual general meeting succeeding the issue thereof. This Amendment was, he said, intended to guard against cases in which a highly respectable firm of accountants were advertised in the prospectus as auditors, and then, before the next meeting, were displaced and someone else more under the control of the directors appointed in their stead.

Amendment moved— In page 14, line 22, after the word 'pounds' to insert, the following new subsection: '(6) Whore in any prospectus issued by a company any person is named as the auditor the said person shall, unless he resign the appointment, continue to be the auditor of the said company until the first annual general meeting succeeding the issue thereof.' "—(Lord Avebury.)

* THE EARL OF GRANARD

said there was so much similarity between the sub-section proposed by the noble lord and that already existing in the Companies Act of 1900, that he trusted his noble friend would not press the Amendment. The section in the Companies Act read— The first auditors of a company may be appointed by the directors before the statutory meeting, and, if so appointed, shall hold office until the first annual general meeting, unless previously removed by the shareholders at a general meeting. He had inquired that day as to whether this section in the Act of 1900 had worked well, and had been informed that since the Act came into force there had been no trouble such as the noble Lord had referred to.

LORD ASHBOURNE

said there was a word in the Amendment which was not to be found in the Companies Act of 1900. Removal was provided for in that Act, but not resignation. He thought it would be wise to provide that a company should be bound, if an auditor resigned, to make the fact public.

THE LORD CHANCELLOR

thought the Amendment weakened the existing law. At present the auditor continued to be the auditor, not until he resigned, but until publicly removed. This business bristled with difficulties, and if the noble Lord would communicate with him he would consider the matter before the Report stage.

LORD AVEBURY

said they were, of course, all aiming at the same object, and he gladly accepted the noble and learned Lord's suggestion.

Amendment, by leave of the Committee, withdrawn.

Clause 21, as amended, agreed to.

* LORD BALFOUR OF BURLEIGH

moved to insert a new clause after Clause 21 to provide that in the case of companies registered in Scotland the summary mentioned in Section 26 of the Companies Act, 1862, in addition to the particulars required to be specified by that section and by Section 19 of the Companies Act, 1900, should also specify the total amount of debt due from the company in respect of all' mortgages and charges. The Amendment had been suggested to him by a society of accountants in Scotland, who thought that, having regard to the provisions of the Scottish law, it was desirable that this information should be given. He had sent a detailed memorandum to the noble Lord who represented the Board of Trade, in order that he might be enabled to say whether or not the Board of Trade considered the Amendment an improvement. He would feel quite satisfied on a point of this kind with the opinion of the Board of Trade. He understood that the Amendment would carry out the recommendation of the Departmental Committee which reported about two years ago; but if the Board of Trade, having considered the effect of the proposal, said it would not be a good Amendment, he was not prepared at the present moment to divide the House upon it.

Amendment moved— After Clause 21, to insert the following new clause:— In the case of companies registered in Scotland the Summary mentioned in Section 26 of the Companies Act, 1862, in addition to the particulars required to be specified by that section and by Section 19 of the Companies Act, 1900, shall also specify the total amount of debt due from the company in respect of all mortgages and charges.' "—(Lord Balfour of Burleigh.)

* THE EARL OF GRANARD

said the Board of Trade had always been in favour of the clause as moved by his noble friend. The only reason it was not incorporated in the Bill in the first instance was that the Board of Trade had not then received a reply from the Scottish Office.

On Question, Amendment agreed to.

Clause 22:—

* THE EARL OF GRANARD

moved an Amendment, the object of which was, he said, to attach, a penalty to failure to file an annual statement of assets and liabilities.

Amendment moved— In page 14, line 25, to leave out the words 'annually forward to the registrar with' and to insert the words 'include in.' "—(The Earl of Granard.)

LORD BALFOUR OF BURLEIGH

said his friends in Scotland were afraid that the Amendment as now worded would have an opposite effect, and might operate to prevent companies filing their balance sheets. If so that would be very unsatisfactory, because the filing of the actual balance sheet, as audited and presented to the shareholders, was the most satisfactory way of making the position of the company public.

THE LORD CHANCELLOR

said the point was really one of drafting. The clause now read— Every company required to forward to the registrar a summary under Section 26 of the Companies' Act, 1862, shall annually forward to the registrar with that summary a statement of its affairs. If the Amendment were accepted it would run— Every company require 1 to forward to the registrar a summary under Section 26 of the Companies Act, 1862, shall include in that summary a statement of its affairs. The Amendment only meant that, instead of sending an accompanying document, the statement of the affairs of the company should be included as part of the summary.

LORD BALFOUR Of BURLEIGH

said the provision as it stood in the clause implied the forwarding of another document which had been audited and made public. The operation of the word "include" did not seem so distinctly to connote the actual balance sheet. But if the noble and learned Lord was clear on the point he had nothing further to say.

On Question, Amendment agreed to.

LORD AVEBURY

moved to leave out the words "of its affairs" from the provision as amended, and as read a moment before by the Lord Chancellor, He understood that the Amendment would be accepted.

Amendment moved— In page 14, line 26, to leave out the words 'of its affairs.' "—(Lord Avebury.)

* THE EARL OF GRANARD

accepted the Amendment.

On Question, Amendment agreed to.

* LORD BALFOUR OF BURLEIGH

moved an Amendment designed to secure tint the clause should not apply to a private company unless such company had created a mortgage or charge as defined by subsection 1 of Section 11 of the Bill. He said there was a large class of private companies in the country which wore more or less family affairs, the shares being held, as a rule, by relations, and not being alienable to the public at all. It seemed unnecessary that companies of that kind, which did not go to the public for mortgages or debentures, should be asked to disclose their affairs.

Amendment moved— In page 14, line 32, after the word 'loss' to insert the words 'this section shall not apply to a private company unless such company has created a mortgage or charge as defined by subsection one of section eleven of this Act.' "—(Lori Balfour of Burleigh.)

* THE EARL OF GRANARD

said many people looked upon small companies, with shareholders limited to friends and numbers of a family, as being in the nature of partnerships. The difference was that in the case of a partnership the liability of each partner was unlimited, while in the case of a limited company the liability was only on the assets of the company, and not unlimited, as in the other case. It was not quite logical, when they required ordinary limited companies to file an annual statement, not to require the same thing from a private company.

* LORD FABER

thought that the Amendment, if agreed to, would strike a very heavy blow at the Bill. After all, the man who was concerned most vitally in the matter of limited companies was not the shareholder but the creditor. In limited companies, and more especially in the small limited companies, the shareholder knew all about the company, but the creditor did not. Private companies were generally turned into limited companies for family reasons, but there was a class of man who turned his company into a limited company because he desired to escape liability. In the former case the absence of a requirement that the company should disclose its affairs did not very much matter, but in the case of a man whose only desire was to escape liability and responsibility it was of vital importance that the creditor should know the position of the company. No man was obliged to turn his private company into a limited company, and if he came under the protection afforded by statute to a limited company there was no reason why he should not be compelled to file a statement showing, not how he was going on, but how the limited company was going on.

THE LORD CHANCELLOR

said the existing law was liable to abuse in this sense, that people might carry on business under a limited liability and keep the public entirely in the dark as to their financial position. That might operate hardly on the shareholders, who might be cheated into taking shares, but it might operate with still greater severity towards the creditors, who had no opportunity whatever of knowing what was the financial position of the concerns with which they were asked to deal, and who yet found that under the limited liability law they were unable to recover their debt. Banking companies now were obliged to publish their statements of affairs, and they had done it without objection for many years, while private bankers, who were not by statute obliged to do so, had followed suit. The object of this amendment of the law was to secure publicity as to the true state of affairs of a company in order that the creditors and those who dealt with it might know where they were. He did not think it was unfair that private companies should be asked to give this public information in return for the limit of liability which was bestowed upon them by statute. On principle, he could not see any reason why people who took advantage of the limitation which the law gave them in their liability should not accept the legitimate consequences of that limitation. He did not think it was unfair, and he did not think it would hurt these companies. He would be very sorry indeed to do anything of the kind, because he knew perfectly well that the great bulk of business in this country was done by limited companies, and that they were mostly honestly conducted. They had to steer between the danger of injuring the public enterprise of companies, and the danger of the swindles which took place on a considerable scale every year. It seemed to him they could not complain if people asked that these companies should, like bankers, give public information as to what their financial state was in return for the protection which the law offered.

* LORD BALFOUR Of BURLEIGH

said he adhered to his opinion that the Bill as it stood pressed unduly hardly upon private companies in making them disclose their affairs, with which nobody could have any real concern. But, in deference to the weight of opinion on both sides of the House, he should not press his Amendment.

Amendment, by leave of the Committee, withdrawn.

Clause 22, as amended, agreed to.

Clauses 23 and 24 agreed to.

Clause 25:—

VISCOUNT RIDLEY

said the fine in this clause was for a serious offence and should be increased. The clause substituted the following section for Section 49 of the Companies Act, 1862— A general meeting of every company shall be held once at least in every calendar year, and not more than fifteen months after the holding of the last preceding general meeting and if not so held, the company, and every director, manager, secretary, and other officer of the company, who is knowingly a party to the default, shall on conviction be liable to a fine not exceeding fifty pounds. He moved that the fine of £50 should be per day for every day in default. The Amendment was safeguarded by the fact that only those who were knowingly parties to the default could be mulcted. The offence could be a very serious one for shareholders, and he hoped the Government would accept the Amendment.

Amendment moved— In page 15, line 23, after the word 'pounds' to insert the words 'per day for every day in default.' "—(Viscount Ridley.)

LORD AVEBURY

hoped the Amendment would not be pressed. The company would have to pay the fine, and it would be very hard on the shareholders if, through some mistake of the directors or officials, the meeting was not held for some time. He could not help feeling that the provision in the clause as it stood was quite sufficient.

VISCOUNT RIDLEY

thought the objection which Lord Avebury had taken would be removed if the words "the company and" were omitted. The clause would then read— And if not so held every director, manager, secretary," etc.

THE LORD CHANCELLOR

said it was very difficult to draw the line. They did not wish to worry directors. It was essential that good men should be obtainable as directors, and he did not think it would be advisable to expose them to such a penalty as that proposed by the noble Viscount, because what they did might be done through a slip though knowingly done. Under the Amendment an honest man might find himself liable to considerable fines for an offence which was not a very serious one.

VISCOUNT RIDLEY

submitted that it was not likely, in cases such as the noble and learned Lord had mentioned, that the maximum penalty would be imposed.

On Question, Amendment negatived.

VISCOUNT RIDLEY

moved to insert a new sub-section to provide that at least twenty-one days notice, exclusive of the date by which proxies must be lodged, must be given of all meetings of every company. At present, he said, the notice was only seven days. That might be sufficient in certain cases, but, in the case of companies who desired to evade the provisions of the Act and not to fulfil their obligations, the limit of seven days could be used in such a way as to make the notice nugatory and to render any combined agitation on the part of the shareholders entirely useless. It was possible, and it was done in certain cases, to hold meetings on 28th December. The previous three days were practically non-business days, so that, with the provision as to the lodging of proxies, they gave no opportunity to shareholders of combining amongst themselves, and placed the whole proceedings entirely at the mercy of unscrupulous directors. He attached great importance, therefore, to an increase in the time for the serving of notice.

Amendment moved— To insert as a new subsection: '(2) At least twenty-one days notice exclusive of the date by which proxies must be lodged must be given of all meetings of every company.' "—(Viscount Ridley.)

* LORD BALFOUR OF BURLEIGH

said the noble Viscount had put a very extraordinary case. Personally he would have no sympathy with a company which held its meeting on 28th December under such circumstances as the noble Viscount had indicated. Care must be taken not to hamper legitimate companies which desired to make changes in their articles of association. If there had to be twenty-one days notice of each meeting, proceedings in connection with even the smallest change in the articles of association would be spread over three months.

* LORD FABER

expressed a certain amount of sympathy with the Amendment. Seven days was too short a time in which to issue proxies and to get them in again. But, on the other hand, twenty-one days was too long, and might lead to "lobbying" which was to be avoided. He suggested the reduction of the period of notice to fourteen days.

* THE EARL OF GRANARD

said that if the noble Viscount would agree to a notice of fourteen days the Government would be willing to accept it.

VISCOUNT RIDLEY

said he would be glad to alter his Amendment accordingly.

On Question, Amendment, as amended, agreed to.

Clause 25, as amended, agreed to.

VISCOUNT RIDLEY

moved to amend this clause, which provided that— The Court may, if it thinks fit, on the application of any member of a company, call or direct the calling of a general meeting of the company, by the addition, at the end, of the words, "or direct the suspension of any meeting."

Amendment moved— In page 15, line 25, after the word 'company' to insert the words 'or direct the suspension of any meeting.' "—(Viscount Ridley.)

* LORD FABER

did not think it advisable to throw too much responsibility on the Board of Trade in this matter. It was not the duty of the Board of Trade to manage a company, but to see that when a company was being formed true data were given to the shareholders. If the shareholder had true data before him he must be the master of his own destiny, and it was not advisable to call in the Board of Trade unnecessarily.

* THE EARL OF GRANARD

said the Government were not disposed to accept the Amendment. They did not wish to enable individual Members to worry companies unduly. The clause, as it stood, gave power to call or direct the calling of a general meeting of the company, and he did not think the Court should be asked to interfere any further in the matter.

Amendment, by leave of the Committee, withdrawn.

Clause 26 agreed to.

Clause 27:—

VISCOUNT RIDLEY

moved an Amendment to provide that a poll might be demanded at a meeting of a company on any motion for adjournment as well as on any special resolution. It frequently happened that directors of a company whose conduct was attacked by shareholders adjourned the proceedings time after time in their own interest under the rule which placed the adjournment entirely in the hands of the chairman.

Amendment moved— In page 15, line 26, after the word 'demanded' to insert the words 'on any resolution whether for adjournment or otherwise.' "—(Viscount Ridley.)

THE LORD CHANCELLOR

said there might be cantankerous shareholders bent on worrying the company, as well as unscrupulous chairmen; and it was perhaps better to leave such a matter as the adjournment of the meeting to be regulated by each company in its articles of association.

VISCOUNT RIDLEY

hoped the noble and learned Lord would consider the point a little further. He was assured by many who had close acquaintance with the affairs of companies in the City that; the case which he had put in moving his Amendment was one which frequently occurred. The particular companies which might take the course his Amendment was designed to prevent were just the companies whose articles of association could not be trusted to regulate the matter.

THE LORD CHANCELLOR

said the Government would consider the point in the light of what the noble Viscount had said.

Amendment, by leave of the Committee, withdrawn.

Drafting Amendment agreed to.

Clause 27, as amended, agreed to.

VISCOUNT RIDLEY

moved the insertion of a new section after Clause 27. He assured the Committee that the proposed section was not so formidable as it looked. The only difference between this section and the section which it proposed to amend consisted in the word "like" in the middle of the clause. The new section provided that when a resolution had been passed by a majority of not less than three-fourths of the members, that resolution should be confirmed by a "like" majority at a subsequent meeting. At present a resolution passed by a majority of not less than three-fourths had only to be confirmed by a bare majority.

Amendment moved— After Clause 27, to insert the following new clause, 'The following section shall be substituted for Section 51 of the Companies Act, 1862: A resolution passed by the company under this Act shall be deemed to be special whenever a resolution has been passed by a majority of not less than three-fourths of such members of the company for the time being entitled, according to the regulations of the company, to vote, as may be present in person or by proxy (in cases where, by the regulations of the company, proxies are allowed) at any general meeting at which notice specifying the intention to propose such resolution has been duly given: and such resolution has been confirmed by a like majority of such members for the time ! being entitled according to the regulations of the company, to vote, as may be present in person or by proxy at a subsequent meeting of which notice has been duly given, and held at an interval of not less than fourteen days nor more than one month from the date of the meeting at which such resolution was first passed. At any meeting mentioned in this section, unless a poll is demanded by at least five members, a declaration of the chairman that the resolution has been carried shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the same. In computing the majority under this section when a poll is demanded, reference shall be had to the number of votes to which each member is entitled by the regulations of the company.' "—(Viscount Ridley.)

* LORD BALFOUR OF BURLEIGH

said the noble Viscount was not quite accurate in his statement of the effect of his Amendment, as certain words now in the section were proposed by it to be repeated. On the general question, he submitted that it was rather a large and undue burden to place upon those who had the management of a company that they should secure a three-fourths majority at the subsequent meeting. He thought that if a resolution was once carried by three-fourths of those entitled to vote at the first meeting, it was sufficient that it should be subsequently confirmed by a bare majority. Considering the extreme difficulty of getting together three-fourths of a body of one way of thinking, it would be placing too large a power in the hands of a relatively speaking small minority to adopt the Amendment.

VISCOUNT RIDLEY

said that if the Amendment had any other effect than that which he had stated it was entirely unintentional, and due to a mistake in copying. There was no intention on his part to make any change except the one to which he had referred.

LORD AVBBURY

said he had had to do with a great number of cases where these special resolutions had been passed, and had heard no complaint of the present law. It had worked in a manner satisfactory to all concerned, and he saw no reason why it should now be altered.

* THE EARL OF GRANARD

stated that the view of the Board of Trade had been admirably expressed by Lord Avebury. There had been no complaint of the working of the section as it stood. Indeed petitions had been received at the Board of Trade asking that the necessity for a majority at the confirmatory meeting should be abolished altogether. The noble Viscount appeared to be alone in wishing to make these special resolutions more difficult.

Amendment, by leave of the Committee, withdrawn.

Clauses 28 to 31 agreed to.

Clause 32:—

* THE EARL OF GRANARD

said this, clause gave the Court jurisdiction in regard to the making of an order staying the dissolution of a company, and the object of the Amendment standing in his name was to secure that an office copy of the order made should be filed with the registrar, so that the information should be thereby given of the fact to anyone searching the file.

Amendment moved— In page 17, line 5, after the word 'dissolved' to insert as a new sub-section: '(3) It shall be the duty of the person on whoso application the order was made, within seven days after the making of the order, to file with the registrar an office copy of the order, and if such person fails to do so he shall be liable on conviction to a fine not exceeding five pounds for every day during which the default continues.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 32, as amended, agreed to.

Clauses 33 and 34 agreed to.

Clause 35:—

* THE EARL OF GRANARD

said he moved the next Amendment with the object of making it perfectly clear that when a director had not the qualifications laid down by the Act of 1900 he would be liable to a penalty of £5 for every single day up to the last day on which he attended a Board meeting or otherwise acted as a director.

Amendment moved— In page 17, line 33, to leave out from the word ' person' to the end of the clause, and to insert the words 'acts as a director of the company he shall be liable on conviction to a fine not exceeding five pounds for every day between the expiration of the said period or shorter time and the last day on which it is proved that he acted as a director.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 35, as amended, agreed to.

VISCOUNT RIDLEY

moved to insert a new clause to provide that no director might vote or take part in any matter or dealing of any kind with or affecting any other business or company in which he was interested or concerned unless the fullest disclosure was made in writing of his interest or connection. This was a case in which they were all desirous of defeating wrong-doers, but they felt the difficulty of doing that effectively without unduly hampering legitimate business. But there had been cases of inter-dealings with other companies which had led to serious disclosures. His Amendment merely provided for the setting out in writing of the director's interest, and was not one which in any way hampered legitimate business.

Amendment moved— After Clause 35, to insert the following new clause, 'No director may vote or take part in any matter or dealing of any kind so ever with or affecting any other business or company in which he is interested or concerned unless the fullest disclosure is made in writing of his interest or connection.' "—(Viscount Ridley.)

THE LORD CHANCELLOR

said there was no doubt whatever that the principle which animated the noble Viscount was a perfectly right one, but his noble friend ignored the extent to which the law already recognised the propriety of this rule. If a director were interested in a contract with his company, no matter whether it was a fair or an unfair one, for the law would not allow the question to be investigated, the mere fact that he had such an interest was sufficient in itself to enable the company to annul the contract, or, if they liked, to sue him for misfeasance. The thing which the noble Viscount sought to prohibit by his Amendment was void as it was. If a director made a contract in which he himself was interested the transaction was void in law.

Amendment, by leave of the Committee, withdrawn.

Clause 36 agreed to.

* LORD BALFOUR OF BURLEIGH

said there was an old Act of the Scots Parliament which had been held to invalidate what were known as bearer bonds. The new clause, the insertion of which he now rose to move, adopted the recommendation of the Incorporated Law Society of Scotland confirmed by the Report of the Committee of June last. There were some companies in Scotland which had issued bonds to bearer. That being so, it was obviously beyond all doubt that the old Act of the Scots Parliament should not stand in the way of the acknowledgment of their validity.

Amendment moved— After Clause 36, to insert the following new clause, 'Notwithstanding anything contained in the statute of the Scots Parliament of 1696, cap. 25, debentures to bearer issued in Scotland are declared to be valid and binding according to their terms.' "—(Lord half our of Burleigh.)

* THE EARL OF GRANARD

accepted the Amendment.

On Question, Amendment agreed to.

Clause 37:—

* THE EARL OF GRANARD

moved an Amendment providing that a private company, in turning itself into a public company, in addition to the requirements specified in the clause, should file with the registrar "such a statement as the company, if a public company, would, under the provisions of Section 6 of the Companies Act, 1900, have had to file before commencing business." The object of the Amendment was to prevent a public company evading the requirements of the Act of 1900.

Amendment moved— In page 19, line 25, after the word 'debentures,' to insert the words 'together with such a statement as the company if a public company would, under the provisions of Section 6 of the Companies Act, 1900, have had to file before commencing business.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 37, as amended, agreed to.

Clause 38 agreed to.

Clause 39:—

* LORD BALFOUR OF BURLEIGH

moved the insertion of a proviso to the effect that no preference or special privilege attached to or belonging to any class of shares should be interfered with except by a special resolution passed and confirmed by shareholders of that class independently of the presence or votes of any shareholders of any other class, and every resolution so passed should be a valid special resolution binding all shareholders of such class. This seemed to him so obviously just that he had every hope that his Amendment would be accepted.

Amendment moved— In page 20, line 5, after the word 'classes,' to insert the words 'but provided always that no preference or special privilege attached to or belonging to any class of shares shall be interfered with except by a special resolution passed and confirmed by shareholders of that class independently of the presence or votes of any shareholders of any other class, and every resolution so passed shall be a valid special resolution, binding all shareholders of such class.' "—(Lord Balfour of Burleigh.)

* THE EARL OF GRANARD

said the Government regarded the Amendment as a great improvement of the clause, and gladly accepted it.

On Question, Amendment agreed to.

* THE EARL OF GRANARD

said the object of his new subsection was to secure that, when an order was made sanctioning a reorganisation of capital, an office copy of the transaction should be filed.

Amendment moved— In page 20, line 5, after the word 'classes' to insert as a new subsection: '(2) Where an order is made under this section an office copy thereof shall be filed with the registrar within seven days after the making of the order, and if default is made in compliance; with this provision the company, and every director, manager, secretary, or other officer of the company who is knowingly a party to the; default, shall on conviction be liable to a fine not exceeding five pounds for every day during which the default continues.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 39, as amended, agreed to.

Clause 40 agreed to.

Clause 41:—

Drafting Amendment agreed to.

THE EARL OF GRANARD

moved an Amendment providing that a receiver or manager of the property of a company shall, on ceasing to act as such receiver or manager, file with the registrar notice to that effect, which notice shall be entered by the registrar on the register of mortgages and charges. The object was to secure that the information on the registrar's file should be as complete as possible.

Amendment moved— In page 20, line 17, after the word 'relates' to insert the words 'and shall also, on ceasing to act as such receiver or manager, file with the registrar notice to that effect, which notice shall be entered by the registrar on the; register of mortgages and charges.' "—(The Earl of Granard.)

On Question, Amendment agreed to.

Clause 41, as amended, agreed to.

Clause 42:—

LORD BARNARD

moved an Amendment providing that a licence grafted by the Board of Trade under Section 23 of the Companies Act, 1867, might at any time be revoked by the Board of Trade if the Board was satisfied that the conditions and regulations under which such licence was granted or held had not been observed. This was a totally different matter from the commercial questions which had hitherto occupied their Lordship's attention. Under Section 23 of the Companies Act, 1867, any association about to be formed which could prove to the Board of Trade that its object was to promote commerce, art, science, religion, or charity, and that its profits were; to be applied in promotion of those objects, and, further, that it strictly prohibited dividends, mightobtain from the Board of Trade a licence to omit the word "Limited" from its title and yet enjoy all the advantages of a limited company. Many such associations had been formed, and had received the sanction of the Board of Trade to omit the word "Limited," from their title. When this clause —Clause 42—first appeared in the Bill; now before their Lordships, enacting that a licence granted by the Board of Trade under 30 and 31 Vict,, c. 131, s. 23, might at any time be revoked, many persons interested in these associations; became alarmed, and brought the matter to his notice. He then stated that he had very little doubt that the clause was put into the Bill as the result of a recommendation of the Departmental Committee which presented its Report in June of last year, and upon whose recommendations the Bill was founded. But he had since looked carefully at the Report, and had not been able to find, any reference to the matter. Therefore, he and his friends were entirely in the dark as to the reason why the clause was inserted. If the clause in. its present form passed into law the result would be that the Board of Trade would be able to deprive these bodies of the exemptions and privileges granted by the section to which he had referred, without giving the persons concerned any opportunity of being heard.

Amendment moved— In page 20, line 23, after the word 'may' to insert the words 'if the Board is satisfied that the conditions and regulations under which such licence was granted or is held have not been observed.' "—(Lord Barnard).

THE LORD CHANCELLOR

said lie was very jealous of giving any company, although it might be called charitable or non-commercial, exemption in this matter. He did not see why an association, even if formed for purposes not of gain, should not be required to enter the word "Limited" at the end of the name of the company. Attempts had been made to carry the privilege given under Section 23 of the Act of 1867 very far. Indeed, when he was Attorney-General he was asked whether a golf club might not be permitted to dispense with the word "Limited" on the ground that it was not a money-making concern. The clause in the Bill proposed that the licence granted by the Board of Trade according this privilege might at any time be revoked at the discretion of the Board of Trade, and he did not see why this general discretion should not be given to the Board. The privilege in question had been granted by the Board of Trade, and he failed to see why the parents of the privilege should not be empowered to destroy their offspring if they so wished.

* THE LORD BISHOP Of SALISBURY

said this clause touched a number of Church Associations, including a very important one in Salisbury — "The Diocesan Board of Finance," and similar Trusts in other Dioceses. At the foundation of their own Board they took the best advice, that of the late Earl of Selborne. If the word "limited" were added to the title of that association they would at once be asked what they were doing with their profits, because he presumed that the addition of "limited" was only reasonable in cases where there was a profit or loss. Under their articles of association there could be neither profit nor loss, and, therefore, he could not see the advisability of adding to their title. He did not think there was any reason to suspect that the Board of Trade would be anxious to withdraw this privilege from them, but it was a real privilege, and if it were proposed to take it away the association should have an opportunity of being heard in opposition to such revocation. The Lord Chancellor had spoken as if he had a strong feeling in the matter. Was not that rather an indication that there might be a movement in the direction of a general sweep of such companies, so as to bring them all into the same net? Speaking for the Salisbury Board of Finance he could say that they would not have the slightest objection to sending in their accounts annually, but they did not wish to be called a limited company.

THE LORD CHANCELLOR

said that although the Government could not accept the Amendment now before the House, they had no objection to the second Amendment standing in the name of Lord Barnard, which provided that, before the revocation of a licence granted by the Board of Trade to charitable associations or non-commercial companies, to dispense with the use of the word "Limited," the Department should give notice in writing of its intention to revoke the licence, and afford the association or company opportunity of being heard in opposition to the revocation.

LORD BARNARD

said he would be glad to accept that concession and would withdraw the Amendment now before the Committee.

Amendment, by leave of the Committee, withdrawn.

Amendment moved— In page 20, line 27, after the word 'section' to insert the words, 'Before any such licence is revoked under this section the Board of Trade shall give notice in writing of their intention to the company, and shall afford the company an opportunity of being heard in opposition to such revocation.' "—(Lord Barnard.)

On Question, Amendment agreed to.

Clause 42, as amended, agreed to.

* THE EARL OF GRANARD

said; the insertion of the new Clause which he now moved was desired by the Colonial Office and by the Commonwealth of Australia.

Amendment moved— After Clause 42, to insert, the following new clause: 'For removing doubts it is hereby declared that the Commonwealth of Australia is a colony within the moaning of the Companies (Colonial Registers) Act, 1883.' "—(Tim, Had of Granard).

On Question, Amendment agreed to.

VISCOUNT RIDLEY

moved a new clause providing that one-tenth of the shareholders might apply to the Board of Trade to have an investigation of the company. He explained that the object of his Amendment was to make it easier, in case of wrongdoing by directors, to get the Board of Trade to move. At present the provisions of Sections 56 and 57 of the Companies Act, 1862, provided under different circumstances for a proportion of not less than one-fifth of the whole number of persons concerned and registered on the list of the company as members being able to apply to the Board of Trade to have an investigation into the affairs of the company. His Amendment was designed to alter the proportion from one-fifth to one-tenth. During the past forty or fifty years the Board of Trade had only been put into motion by one-fifth of the body of shareholders on four or five occasions. Therefore the small change proposed in his Amendment was not likely to throw any serious increase of work on the Board of Trade.

Amendment moved— After Clause 42, to insert the following new clause: 'Section fifty-six, subsection two, of the Companies Act, 1862, shall be read and construed as if the words therein "one-fifth part" had been "one-tenth part." "—(Viscount Ridley).

THE LORD CHANCELLOR

said the Act of 1862 made the proportion one-fifth of the whole body of those concerned. It was not advisable that small minorities should be constantly worrying. But the Government were willing to consider the matter if practical business men assured them one-fifth was too large a proportion to expect.

VISCOUNT RIDLEY

replied that practical business men had assured him that one-fifth was too large.

THE LORD CHANCELLOR

If the noble Viscount will take it at his peril as to what may happen here or elsewhere, I will accept the Amendment.

On Question, Amendment agreed to.

Clauses 43 and 44 agreed to.

VISCOUNT RIDLEY

moved the insertion of a new clause to provide that any condition requiring or binding any shareholder to waive compliance with any of the requirements of this Act should be void. He was assured that there were companies who inserted into their articles a provision that certain sections of the Companies Act should not be held binding upon the company. He was not quite certain what the legal position was or whether it was necessary that his proposed new clause should be put into the Bill. But he felt that the Committee would be especially anxious that no clause which was enacted in the Bill should be evaded. He moved his Amendment in order to make the matter absolutely clear.

Amendment moved— After Clause 44, to insert the following new clause: 'Any condition requiring or binding any shareholder to waive compliance with any of the requirements of this Act shall be void.' "—(Viscount Ridley.)

THE EARL OF GRANARD

said the provision in the Act of 1900, to the effect that any condition requiring or binding any applicant for shares or debentures to waive compliance with the requirements of the Act as to applications should be void, covered the point, and the noble Viscount's clause was, therefore, unnecessary.

VISCOUNT RIDLEY

thought there was a doubt as to whether the point was covered.

THE LORD CHANCELLOR

said the words which his noble friend Lord Granard had quoted were in Section 4 of the Companies Act, 1900, which dealt with the allotment of shares and the conditions affecting their allotment; that was to say, it dealt with the creation of the contract between the shareholders and the company. No individual person could waive a breach of the general law; the only thing that could be waived was what arose out of the contract between the shareholder and the company, and that was provided against. He thought it would be dangerous to use such wide language as that proposed by the noble Viscount. From long experience he dreaded these dangerously wide clauses, because they might have unforeseen consequences.

Amendment, by leave of the House, withdrawn.

Clause 45 agreed to.

* LORD BALFOUR OF BURLEIGH

said he had been in communication with others concerning clauses in this Bill, and the Amendment which he had placed on the Paper was inserted at the instance of those who knew more about these matters than he did. He understood, from a letter he had received from the noble Earl who represented the Board of Trade, that Subsections (1), (3), and (5), in his Amendment were not necessary inasmuch as they were already incorporated in the same words in the Act of1900, and were not repealed by this Bill. If the noble and learned Lord the Lord Chancellor confirmed that view he would not, of course, persist in those three subsections. But Subsections (2) and (4) seemed to stand on a rather different basis. As regarded Subsection (2), there was a desire to deal with the local official, who was easily accessible and could be interviewed if necessary, rather than with the Board of Trade situated in London. He was sure the Board of Trade would understand that this implied no mistrust of them, but it was more convenient in matters of this kind to have a local official with whom they could deal. Section 41, which he proposed in Subsection (4) of his Amendment should not apply to Scotland, dealt only with matters under the Companies (Winding-up) Acts of 1890 and 1893, which were English and not Scottish Acts. It was quite clear, therefore, that Section 41 should not apply to Scotland, and he thought it more con- venient that it should be so stated on the face of the Bill.

Amendment moved— After Clause 45, to insert the following new clause: 'In the application of this Act to Scotland. (1) "Solicitor of the High Court" shall mean enrolled law agent; (2) Where the words "Board of Trade" occur in section 10 (2) and (3) the words "Accountant of Court" shall be read in lien thereof;(3) The provisions of this Act with respect to the registration of mortgages and charges shall not apply to companies registered in Scotland; (4) Section 41 shall not apply to Scotland; (5) All prosecutions for offences or tines shall be at the instance of the Lord Advocate or a Procurator Fiscal as the Lord Advocate may direct.' "—(Lord Balfour of Burleigh.)

THE LORD CHANCELLOR

said he was prepared to accept Subsections (1) and (5). With regard to Subsection (2), the Board of Trade already had authority in Scotland, and it seemed to be desirable that there should be some uniform rule, which could only be secured by having the same authority in different parts of the Kingdom. With regard to Subsection (3) he thought it was desirable that information concerning mortgages and charges should be made public in every part of the Kingdom. He was not aware that Scottish opinion was against it. With regard to Subsection (4), he thought that Section 41 ought to apply in Scotland as well as in England. There was no reason why there should be any diversity in practice, unless any special case could be shown.

* LORD BALFOUR Of BURLEIGH

said he would for the present be satisfied with the first and last subsections, and would delete Subsections (2), (3), and (4) from his Amendment.

On Question, Amendment, as amended, agreed to.

Remaining clause agreed to.

Standing Committee negatived: The Report of Amendments to be received on Tuesday, the 14th instant; and Bill to be printed as amended. (No. 50.)

House adjourned at twenty minutes before Seven o'clock, to Monday next, a quarter before Eleven o'clock.