§ [SECOND READING.]
§ Order of the Day for the Second Reading read.
§ THE EARL OF GRANARD
My Lords, it will not be necessary for me to detain the House for more than a few minutes in moving the Second Reading of this Bill. As your Lordships will remember, in the year 1907 I brought in a Bill dealing with the whole subject of joint stock companies, and by that measure all public companies were obliged to file an annual balance sheet 698 with the Registrar of Joint Steel; Companies. During the debates on that Bill it was pointed out that that clause might act hardly on certain private companies, and consequently private companies were ex-eluded subject to their fulfilling certain conditions. It was provided that for the purposes of the Act the expression "private company" meant a company which by its articles—
For several years this went on all right; but a short time ago a case was tried—[Park v. The Royalties 'Syndicate  1 K.B. 330]—in which the Court decided that a company continued to be a private company if the conditions I have referred to were contained in their articles of association, and that they did not lose the privileges and exemptions conferred on private companies if they failed to obey their own articles.
- (a) restricts the right to transfer its shares; and
- (b) limits the number of its members (exclusive of persons who are in the employment of the company) to fifty; and
- (c) prohibits any invitation to the public to subscribe for any shares or debentures of the company.
I do not think it is necessary to trouble your Lordships with the details of the actual case; but I may state that we took proceedings against the company in question in two Courts and that in both the decision was given against, us. Therefore the law as it stands is this, that any company can enjoy the privileges of a private company provided they put into their articles of association time three definitions to which I have referred, and by breaking them they incur no penalty. This, of course, is an impossible position; and it is for this reason that I am introducing the Bill now before the House, which provides that in future any private company not complying with the provisions set forth in the Bill will become a public company and lose all time advantages of a private company. That in effect is all that the Bill contains, and I ask your Lordships to accord it a Second Reading.
§ Moved, That the Bill be now read 2a.—(The Earl of Granard.)
§ On Question, Bill read 2a, and committed to a Committee of the Whole House To-morrow.