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 COMPANY 173 holders was limited. Lord Bramwell solved the problem Scotland, or Ireland, in which the registered office of the by a happy suggestion—“ write it on my tombstone,” he company is proposed to be situate. said humorously to a friend. This was that the company 3. The objects for which the proposed company is to be should add to its name the word “ Limited ”—paint it up established. on its premises, and use it on all its invoices, bills, pro4. A declaration that the liability of the members is missory notes, and other documents. The proposal was limited. adopted by the Legislature and has worked successfully. 5. The amount of capital with which the company proThe best evidence of the influence which the introduction poses to be registered, divided into shares of a certain of limited liability has exercised is to be found in the fixed amount. returns of companies registered under the Act of 1862. No subscriber of the memorandum is to take less than That Act contemplates three classes of companies—(1) one share, and each subscriber is to write opposite his companies limited by shares, (2) companies limited by name the number of shares he takes. guarantee, (3) unlimited companies. The number of These five matters the Legislature has deemed of such companies limited by shares which were registered from intrinsic importance that it has required them to be set the commencement of the Act to the year 1901 is out in the company’s Memorandum of Association. They 60,000; of companies limited by guarantee, 1300; of are the essential conditions of incorporation, and as such unlimited companies, 140. The companies limited by they must not only be stated, but the policy of the Legisshares show a progressive increase from 689 in 1863 to lature has made them unalterable, with certain exceptions. 4675 in 1897; the unlimited companies registered in The most important of these five conditions is the third, 1863 were 8 in number, in 1897 they were nil. The and its importance consists in this, that the objects defined unlimited company is practically an extinct species. Tire in the memorandum circumscribe the sphere of the comcompany limited by shares has become the normal type: pany’s activities. This principle, which is one of public it is incomparably the most important, and as such it is policy and convenience, and is known as the “ ultra vires chiefly dealt with in this article. doctrine,” carries with it important consequences, because Companies Limited by Shares. — The Companies Act, every act done or contract made by a company ultra vires, 1862, Avas intended to constitute a comprehensive code of i.e., in excess of its powers, is absolutely null and void. The law applicable to joint stock trading companies for the policy, too, is a sound one. Shareholders contribute their whole of the United Kingdom. Recognizing the mischief money on the faith that it is to be employed in prosecuting of large trading concerns being carried on by fluctuating certain objects, and it would be a violation of good faith bodies, the Act begins by declaring that no company, if the company, i.e., the majority of shareholders, were to association, or partnership, consisting of more than twenty be. allowed to divert it to something quite different. So persons, or ten in the case of banking, shall be formed strict is the rule that not even the consent of every inafter the commencement of the Act for the purpose of dividual shareholder can give validity to an ultra vires carrying on any business which has for its object the act. The consent of all the shareholders was, till quite acquisition of gain by the company, association, or part- recently, equally incompetent to alter the objects defined nership, or by the individual members thereof, unless it is in the memorandum, as being part of the so-called charter. registered as a company under the Act, or is formed in The inconveniences attending this unalterability of the pursuance of some other Act of Parliament or of letters objects were, however, so sensibly felt that in 1890 the patent, or is a company engaged in working mines within Companies (Memorandum of Association) Alteration Act and subject to the jurisdiction of the Stannaries. Broadly was passed, qualifying the prohibition against alteration, speaking, the meaning of the Act is that all commercial but only to a limited extent. This Act enables a company undertakings, as distinguished from literary or charitable to obtain the sanction of the Court to an alteration of the associations, shall be registered. “ Business ” has a more objects in its memorandum when it appears that the alterextensive signification than “trade.” Having thus cleared ation is required for certain specified purposes, such as the the ground the Act goes on to provide in what manner a carrying on of the company’s business more economically company may be formed under the Act. The machinery or more efficiently. is simple, and is described as follows :— A company’s Memorandum of Association was described “Any seven or more persons associated for any lawful by Lord Cairns as its charter. The Articles of Association purpose may, by subscribing their names to a memoran- are the regulations for its internal management dum of association and otherwise complying with the —the terms of the partnership agreed upon by ArticIes requisitions of this Act in respect of registration, form an the shareholders among themselves. They regu- ”/0^SS°C,a* incorporated company with or without limited liability ” late such matters as the transfer and forfeiture (§ 6). The fact that six of the subscribers are mere dummies, of shares, calls upon shares, the appointment and qualificlerks, or nominees of the seventh, will not affect the cation of directors, their powers and proceedings, general validity of the company; so the House of Lords decided meetings of the shareholders, votes, dividends, the keeping in Salomon v. Salomon and Co. (1897, A. C. 22). The and audit of accounts, and other such matters. In regard Memor- document to be subscribed—the Memorandum to these internal regulations the Legislature has left the andum of of Association — corresponds, in the case of company free to adopt whatever terms of association it chooses. It has furnished in the schedule to the Companies u‘o/jOC,a” com Panto iesthe formed under the of Companies 1862, charter or deed settlementAct, in Act, 1862 (Table A), a model or specimen set of regulathe case of other companies. The form of it is given in tions, but their adoption, wholly or in part, is optional; the schedule to the Act, and varies slightly according as only if a company does not register articles of its own the. company is limited by shares or guarantee, or is un- these statutory regulations are to apply. When, as is limited. (See the 2nd schedule to the Act, forms A, B, commonly the case, a company decides to have articles C, D.) It is required to state, in the case of a company of its own framing, such articles must be expressed in limited by shares, the five following matters :— separate paragraphs, numbered arithmetically, and signed 1. .The name of the proposed company, with the by the subscribers of the memorandum. They must also addition of the word “ limited ” as the last word in such be printed, stamped like a deed, and attested. When name. so perfected, they are to be delivered, with the Memoran2. The part of the United Kingdom, whether England, dum of Association, to the Registrar of Joint Stock Com-