828 REPOET— 1887. 



Capital of trading' companies might thus be from time to time reduced out 

 of reserve or depreciation, and right to profits reserved to holders of shares 

 thus paid oiF. 



Paid-up capital and application thereof not sufficiently regarded by borrowers : 



Position, stability, and success of company ought to be ground of credit, not 

 uncalled liability alone. 



Limitation of powers of borrowing : 



Eegard to be had to amount paid up as well as to amount uncalled. 

 Inexpedient to encourage borrowing to extent now prevalent. 



Abortive and fraudulent companies : 



Analogy of companies incorporated by charter or special Act. 

 Provisional registration accompanied by deposit liable to forfeit. 

 Probably to require more considerable fees on registration advantageous. 

 No company to be completely registered or to commence business with limited 

 liability until specified proportion of its capital subscribed and paid up. 

 Compulsory publication of detailed accounts suggested, not expedient, probably 

 unfair to skill and power of administration by exposure. 



Reckless trading of limited companies : 



Companies often go on long after an individual trader would stop. 



Inexpedient in interest of shareholders, public, and traders. 

 Reserve Uability : exigible only on liquidation, benefits direct and indirect. 



Could thus dispense with Schedule B, at present virtually illusory. 



Summary of suggested amendments : 



I. IxCErTION OF COMPAXT, 



1. Provisional registration : accompanied by deposit proportional to amount of 



capital. 



2. Application for provisional registration to set forth. 



(1) full names of promoters, directors, and officials with written evidence 



that they accept office. 



(2) Proportion of nominal capital to be subscribed and paid as condition of 



complete registration. 



3. Complete registration. 



(1) Certificate to be lodged by all parties named in provisional register that 



minimum amount of capital subscribed, and stipulated proportion paid. 



(2) Registration to be complete only on issue of certificate that stipulations 



complied with and deposit then returned under deduction of ad valore.jyi 

 stamp duty. 



II. Admixistration of Company. 



1. Flexibility of memorandum by vote of large majority and sanction by court. 



2. Powers of borrowing to be specified, and restricted with relation both to 



uncalled liability and to amount paid up. 



3. Where shares not fully paid, interest only to be paid on capital actually 



paid up ; but dividend to be made per share. 



III. WiNDixG UP OP Company. 



1. Reserve liabilitj' to be allocated to every share of from 10 to 30 per cent. 



available only on winding-up. 



2. No liability except that reserve to attach to shares duly transferred. 



3. Liability for reserve to attach to holdei-s of shares sold within a year of 



liquidation. 



