§ [SECOND READING.]
§ Order of the Day for the Second Reading read.
LORD HAMILTON OF DALZELLMy Lords, this is a very short Bill consisting of a single clause and dealing with a single point. Its object is to validate the transactions of certain companies which have been entered into in perfectly good faith and in accordance with what was believed to be the law at the time, but which, in consequence of recent legal decisions, are now believed to be invalid. I can explain to your Lordships in a very few words how this situation has arisen. Under the Friendly Societies Act of 1896, and also under the former Acts, friendly societies were permitted to convert themselves into limited liability companies by following certain procedure. That procedure was laid down in Section 71 of the Act of 1896. This section was somewhat modified by the Insurance Companies Bill of last year. I need not, however, deal with that point, because all these transactions took place under the former law. Under that law what had to be done was that a special general meeting of the friendly society was called and at that meeting a special resolution was submitted authorising the conversion. That resolution also set forth the powers which it was proposed to confer upon the new company, and if that resolution received the requisite support the conversion could then take place, and the terms of the resolution were incorporated in the memorandum of agreement of the new company.
It was always supposed by every one who has given any attention to the matter that, provided they did not contravene the ordinary company law and the assurance companies law, any powers might be taken by the new company which they deemed to be desirable, and on that understanding a number of conversions have taken place and the companies have carried on business ever since. Recently a series of legal decisions have been given under which it is laid down that a friendly society, in converting, could only confer upon the new company powers which it itself possessed, and therefore the restrictions imposed by the Friendly Societies Acts would also be imposed upon the new company. The result of that is that certain transactions which have been entered into, 417 as I say in perfectly good faith, are now believed in all probability to be illegal and irregular.
In the ease of one particular company which has been brought to the notice of the Board of Trade 1,000,000 policies arc believed in all probability to be invalidated—policies issued to insure small sums of money, but amounting in the aggregate to£18,000,000. It would he very hard upon the management of these societies and upon the policy-holders that this state of affairs should be brought about, and what it is proposed by this Bill to do is to say that these transactions—transactions which have been entered into up to the passing of this Act—shall be made valid, but that for the future all these companies will have to conform to the law as it at present stands. This Bill has passed through the House of Commons without any opposition. I hope your Lordships will agree that it is right that this relief should be given to these people, who, through no fault or carelessness of their own, now find themselves in a very difficult position. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Hamilton of Dalzell.)
§ THE EARL OF HALSBURYMy Lords, I have no intention at present of opposing this Bill, but I should like to hear what the Lord Chancellor has to say on the subject. A general proposition is advanced with regard to this first section, and I entertain some doubt whether it relieves what it ought to relieve, and whether it does not go a great deal further than it ought to go. I hope the noble and learned Lord on the Woolsack will look into that point.
§ THE LORD CHANCELLOR (LORD LOREBURN)I will look into it before the next stage of the Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House Tomorrow.