STATUTORY COMPANIES (REDEEMABLE STOCK) BILL. (Hansard, 17 May 1915)

§ THE UNDER-SECRETARY OF STATE FOR THE COLONIES (LORD ISLINGTON)

My Lords, this is a. measure of emergency on account of the state of war in which we now are. It has been passed in another place without amendment and by general consent, and it is a Bill to enable statutory companies—that is, companies possessing Parliamentary powers for public purposes, such as railway, gas, water, and dock companies—to create and issue preference shares or stock, and debentures or debenture stock, so as in each case to be redeemable. At present these companies can only issue capital on terms incident to the emergency of the war, and it is deemed desirable that a power should be granted to redeem stock so issued when normal conditions again prevail. Without such power it would be, on the one hand, difficult for companies to acquire capital to enable them to discharge their obligations to the public in the direction of necessary improvements, whilst on the other hand the investing public prefer at this time to invest in redeemable stock because they are naturally nervous of the depreciation of their securities. Irredeemable stock can only be issued at a very high rate of interest, and it would have the effect of reducing a company's securities below the minimum which has been fixed by the Government in accordance with the Treasury Stock Exchange Regulations. If stock under this Bill is redeemed by the issue of substituted stock, in all cases the consent of the stockholder has first to be obtained.

I might point out to your Lordships that this is no novel departure. The power to issue redeemable stock is already possessed by certain statutory companies, such as the London & South-Western Railway Company and the London, Brighton & South Coast Railway Company, and in the case of the former already £1,000,000 has thus been raised since the outbreak of war in the form of Five Per Cent. Redeemable Preference Shares. I may add that several other companies during this session are seeking similar powers in their Bills to raise capital. I think there are five companies in all that are doing so. This Bill, as your Lordships will observe in Clause 1 (5), is confined to 1012 stock authorised to be created or to be issued before the outbreak of the present war, or after the outbreak of the present war and before the commencement of this Bill; and redeemable stock is not to be created or issued, in pursuance of the powers given by this Bill, during the continuance of the present war and a period of twelve months thereafter except with the consent of the Treasury. I think I have explained the Bill sufficiently to your Lordships to show that it is one which will be mutually convenient both to the companies and to the shareholders. It is one of emergency due to the financial conditions incident on the war, and it is one which I believe I am correct in saying has the assent and approval of leading financial authorities in the City. I therefore ask your Lordships to allow the ! Bill to be read a second time this afternoon.