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THE GREEN BAG

prises and respond freely to the exciting influences of the Stock Exchange. Deben tures, on the other hand, can be issued at a discount, are not dependent upon profits for a return, are free from some of the restrictions of the Act of 1900, and in the hour of disaster enable their holders to seize assets and rank before the outsider who has merely traded and given credit to the company. It is ob vious that if something can be invented which combines the excellencies of both orders, the hard-pressed promoter of modern times has a new and valuable commodity to place before the speculating public. "Two prospectuses which essay the desir able combination lie before the writer. One offers a ' profit-sharing perpetual debenture stock ' the holders of which ' will be entitled to si per cent cumulative interest on the amount paid up on the stock and in addition thereto to a sum equal to one moiety of the balance of net profits available for dividend in any one year, etc' The other offers 5 per cent debentures of £8 each at par ' con vertible at the option of the holders at any time up to the 31st day of December, 1911, into fully paid £1 shares of the company at the rate of one fully paid share for every £8 of the nominal amount of the debentures i.e., one share for each debenture.'" Mr. MacDonald thinks these offers offend the ancient equitable rule against clogging the equity of redemption. And in the first scheme there is a further difficulty. "' Debenture ' is not a term of art. It may take many shapes and cover very differ ent contractual obligations. There is, how ever, a principle governing it, a fundamental idea at the back of it. It imports a debit; it involves some obligation of repayment. There is no virtue or charm in the appellation itself. Calling a thing a debenture does not make it one. An interest or holding which is per petual, which shares profits, which votes and appoints directors, and assists in manage ment may not be recognized by the courts as a debenture at all. It may even be regarded as a highly irregular and wholly unauthorized sort of share. . . . Here ... is a security possessing all the attributes of a share but escaping in its inception the duty, payable under the Stamp Act, 1891, escaping in its

allotment many of the obligations of dis closure laid down by the Companies Act, 1900, capable of being issued at a discount and of receiving interest paid out of capital, and entitled in liquidation to rank in front of the creditors of the company. Such holdings, it is submitted, stand every chance of being held mere attempts to evade the spirit and letter of the Companies Acts." CORPORATIONS (Status Abroad). A care ful study of the rights and duties of a juridi cal person operating abroad is begun by E. Hilton Young in the April Law Quarterly Review (V. xxiii, p. 151) under the title "The Status of Foreign Corporations and the Legislature." He reduces the many vari eties of opinion to two: a restrictive and a liberal system. According to the former a foreign juridical person enjoys few if any rights, and scarcely even possesses civil per sonality; according to the liberal system it enjoys with specified exceptions the same rights as a natural person and possesses civil personality in the same manner and for the same reason. "In legal systems derived from Roman law, the orthodox doctrine as to the nature of juridical personality is that it is a mere creature of the sovereign power, having no other existence than a fictitious one which the law concedes to it. This is also the doc trine of our own common law, introduced into it by Canonists. "All supporters of the restrictive system agree on the ' fiction ' theory, and, therefore, that where the law that feigns it does not operate a juridical person cannot exist. As to the consequences of this theory there is not the same agreement. The most restric tive theory is that since a juridical person can exist only in so far as it is contemplated by the law of some state, to confer upon it civil personality in a foreign state, a special act of the foreign sovereign power is neces sary. By virtue of the personal status there by acquired it enjoys certain capacities, which are regulated by the territorial law, i.e., ' it has forced upon it the character of the juridical persons of the same type which are domestic in the foreign state.' "Supporters of the restrictive system usu ally admit some relaxation of its severity in