Page:Encyclopædia Britannica, Ninth Edition, v. 6.djvu/250

222 panies by letters patent, without incorporation, the privilege of suing and being sued by a public officer. When a charter could not be obtained, companies might be incorporated, or empowered to plead by public officers, under special Acts of Parliament. For such corporate or quasi-corporate privileges application had to be made either to the Crown or Parliament. In 1826 banking companies were allowed to obtain the privilege of suing by public officer on complying with certain rules. In 1844, all companies (with some exceptions) were enabled to obtain a certificate of incorpora tion without applying for a charter or a special Act. Bank-ing companies, however, were required to apply to the Crown for a charter. Members of companies thus created were still responsible, to the whole extent of their fortune, for the debts of the companies. In 1855 limited liability was introduced by 18 and 19 Viet. c. 133, shareholders being made responsible to the extent only of the amount of their shares. Companies with this privilege must use the word &quot; limited &quot; after their names. The dissolution and winding-up of insolvent companies remained to be simplified, and from 1846 to 1850 various measures were introduced, enabling different classes of companies to be wound up, with out the usual process by bill to which the shareholders, as partners, necessarily had to appear. The legislative history of companies, thus briefly traced, exhibits their development out of simple partnerships in a not uninstructive manner. Partnerships in the eye of the law, they are looked upon by the Legislature as false pretenders to the character of corporations; they are at first denounced as nuisances, then tolerated, and gradually relieved one by one from those legal incidents of partnership which impede their functions in the organization of commerce. In 1862 a consolidation of the numerous Acts relating to companies was effected by the Act for the incorporation, regulation, and winding-up of trading companies and other associations, which gave to the Court of Chancery exclusive jurisdiction in windiug-up. The following are a few of the chief provisions of this important Act. It prohibits the formation of any company, association, or partnership, of more than ten persons for the business of banking, and of more than twenty persons for any business having for its object the acquisition of gain, unless it is registered under this Act. Companies, formed by Act of Parliament or letters patent, or engaged in mining within the jurisdiction of the stannaries, are exceptions. Or, as it may be otherwise stated, all associa tions for the acquisition of gain, other than those last mentioned, and excluding banking partnerships of fewer than ten, or other trading societies of fewer than twenty members, will be illegal unless registered under this Act. Any seven or more persons, joining together for the pursuit of any lawful object, may form an incorporated company by subscribing a memorandum of association and registering. The liability of members may be unlimited, or it may be limited to the amount unpaid of the nominal value of their shares, or to sums guaranteed. The memor andum of association must contain particulars as to the name, object, &c., of the proposed company ; and companies limited by share or guarantee must use the word &quot; limited &quot; after their names. Companies limited by shares may, and other companies, whether limited by guarantee or unlimited, must also send articles of association, containing regulations for the management of the company. The Act contains in a schedule a table of regulations which may be adopted in such companies, and in the case of companies limited by shares will be held to apply, unless expressly modified or excluded by the articles. The memorandum and articles of association are sent to the registrar, who issues a certificate of incorporation, and the subscribers and persons joining them thereupon become a corporate body with perpetual succession, and a common seal, and power to hold lands, but with liability on the part of members to contribute to the assets of the company in the manner prescribed by the Act. Companies, not intended for the pursuit of gain, may not hold more than 2 acres of land without a licence from the Board of Trade. Part II. deals with the distribution of capital and liabilities of members of companies and associations under this Act. When a company is wound up, every present and past member shall be liable to contribute to the assets of the company, with the following (among other) qualifica tions : No past member shall be liable, if he has ceased to be a member for a year before the winding-up, nor shall he be liable for any debt contracted by the company after he has ceased to be a member, nor unless present members are unable to satisfy the contributions required. Part III. contains provisions for the protection of creditors and oi members. Part IV, treats of the winding-up of companies, which may be either by the court or voluntary. A company may be wound up by the court (i.e., the Court of Chancery in England and Ireland, and Court of Session in Scotland) in the following cases, viz., when a special resolution of the company has been passed requiring it ; when the company does not begin business within a year from its incorporation, or suspends business for a year ; when the members are reduced to less than seven ; when it is unable to pay its debts ; and when the court thinks it ought to be wound up. Where a voluntary winding-up has been begun, the court may order it to be continued, subject to the supervision of the court. Part V, constitutes a registration office. Part VI. applies the Act to companies registered under the various Joint-Stock Companies Acts. Part VII. defines the companies &quot; authorized to register under this Act.&quot; Part VIII. applies the Act to unregistered companies. Part IX. contains a repealing clause and some temporary provisions. After five years experience of the original Act an amending Act was published in 1867, and the two are to be construed together. The Companies Act 1867 contains provisions facilitating changes in the constitution of companies. A limited company may have directors with unlimited liability. A company limited by shares may under certain conditions reduce its capital, or divide its capital or part thereof into shares of smaller amount than is fixed by the memorandum of association. Associations not intended for gain may have the privileges of limited liability without being compelled to use the word &quot; limited ; after their names. A company may have some shares fully paid and others not. A limited company may issue warrants for shares fully paid up, in name of bearer. There are several sections dealing with contracts made on behalf of a company, and one important section, the 38th, enacts that any prospectus not specifying such contracts shall be deemed fraudulent on the part of the promoters, &c., issuing the same, as regards any person taking shares in the company on the faith of such prospectus. This section was drawn to meet the practice of concealing from investors contracts which would be binding on the intended company when formed, and its somewhat ambiguous phraseology has been the subject of much discussion in the law courts See, for example, in re Coal Economizing Gas Company- Lover s Case, Law Reports 1, Chancery Division 182. The objects of certain trading companies, as, for example, railways, involve an intenerence with the rights of private persons, which requires the direct authority of the Legisla ture. Such undertakings are therefore authorized by special Acts of Parliament, which begin as private bills before one or other of the two Houses, and pass through both, and receive the assent of the sovereign in the same manner as public bills (see BILL). The principles on which state interference with private rights is thus granted have so far been ascertained and fixed by the practice of 