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Act was the appointment of a permanent Commission to protection of commons as open spaces. The Select Commake in each case all the inquiries previously made mittee adopted this view. On their report, was passed the (no doubt capriciously and imperfectly) by Committees Metropolitan Commons Act, 1866, which prohibited any of the two Houses. The Commission, on being satis- further Parliamentary inclosures within the Metropolitan fied of the propriety of an inclosure, was to draw up a police area, and provided means by which a common provisional order prescribing the general conditions on could be put under local management. The lords of the which it was to be carried out, and this order was to be manors in which the London commons lay felt that submitted to Parliament by the Government of the day their opportunity of making a rich harvest out of land, for confirmation. It is believed that these inclosure orders valuable for building, though otherwise worthless, was afford the first example of the provisional order system slipping away; and a battle royal ensued. Inclosures of legislation, which has recently attained such large were commenced, and the Statute of Merton prayed in proportions.

aid. The public retorted by légal proceedings taken in Again inclosure moved forward, and between 1845 and the names of commoners. These proceedings—which 1869 (when it received a sudden check) 600,000 acres culminated in the mammoth suit as to Epping Forest, passed through the hands of the Inclosure Commission. with the Corporation of London as plaintiffs and fourteen Taking the whole period of about a century and a half, lords of manors as defendants—were uniformly successwhen Parliamentary inclosure was in favour, and making ful; and London commons were saved. By degrees the an estimate of acreage where the Acts do not give it, the manorial lords, seeing that they could not hope to do result may be thus summarized :

better, parted with their interest for a small sum to some

local authority; and a large area of the common land, From 1709 to 1797


not only in the county of London but in the suburbs, is 1801 to 1842

1,307,964 1845 to 1869


now in the hands of the representatives of the rateAdd for Forests inclosed under Special

payers, and is definitely appropriated to the recreation of Acts.


the public.

Moreover, the Commons Preservation Society was able 4,770,890

to base, upon the uniform success of the commoners in the The total area of England being 37,000,000 acres, we shall law courts, a plea for the amendment of the probably not be far wrong in concluding that about one

law. The Statute of Merton, we have seen, ment of acre in every seven was inclosed during the period in purports to enable the lord of the soil to Statute of question. During the first period, the lands inclosed con inclose a common, if he leaves sufficient passisted mainly of common arable fields ; during the second, ture for the commoners. This statute was constantly many great tracts of moor and fen were reduced to sever vouched in the litigation about London commons; but alty ownership. In the third period, inclosure probably in no single instance was an inclosure justified by related chiefly to the ordinary manorial common; and it

virtue of its provisions. It thus remained a trap to seems likely that, on the whole, England would have lords of manors, and a source of controversy and expense. gained, had inclosure stopped in 1845.

In the year 1893 Lord Thring, at the instance of the As a fact it stopped in 1869. Before the Inclosure Commons Preservation Society, carried through Parliament Commission had been in existence twenty years the feel- the Commons Law Amendment Act, which provided that ing of the nation towards commons began to

in future no inclosure under the Statute of Merton should Open space movement.

change. The rapid growth of towns, and espe be valid, unless made with the consent of the Board of

cially of London, and the awakening sense of Agriculture, which was to consider the expediency of the the importance of protecting the public health, brought inclosure from a public point of view. about an appreciation of the value of commons

The movement to preserve commons as open spaces open spaces. Naturally, the metropolis saw the birth of soon spread to the rural districts. Under the Inclosure this sentiment. An attempted inclosure in 1864 of the Act of 1845 provision was made for the allot

Rural at Epsom and Wimbledon aroused strong ment of a part of the land to be inclosed for opposition; and a Select Committee of the House of field gardens for the labouring poor, and for Commons was appointed to consider how the London recreation. But those who were interested in effecting an commons could best be preserved. The Metropolitan inclosure often convinced the Inclosure Commissioners, Board of Works, then in the vigour of youth, though that for some reason such allotments would be useless. eager to become the open-space authority for London, To such an extent did the reservation of such allotments could make no better suggestion than that all persons become discredited that, in 1869, the Commission prointerested in the commons should be bought out, that posed to Parliament the inclosure of 13,000 acres, with the board should defray the expense by selling parts the reservation of only one acre for recreation, and none for building, and should make parks of what was left. at all for field gardens. This proposal attracted the Had this advice been followed, London would probably attention of the late Mr Fawcett, who, after much have lost two-thirds of the open space which she now inquiry and consideration, came to the conclusion that enjoys. Fortunately a small knot of men, who afterwards inclosures were, speaking generally, doing more harm formed the Commons Preservation Society, took a broader than good to the agricultural labourer, and that, under such and wiser view. Chief amongst them were the late Mr conditions as the Commissioners were prescribing, they Philip Lawrence, who acted as solicitor to the Wimbledon constituted a serious evil. With characteristic intrepidity opposition, and subsequently organized the Commons he opposed the annual Inclosure Bill (which had come to Preservation Society, Mr George Shaw-Lefevre, chairman be considered a mere form) and moved for a Committee of that Society since its foundation, the late Mr John on the whole subject. The ultimate result was the Locke, and the late Lord Mount Temple (then Mr W. F. passing, seven years later, of the Commons Act, 1876. Cowper). They urged that the conflict of legal interests, This measure, introduced by a Conservative Government, which is the special characteristic of a common, might be laid down the principle that an inclosure should not be trusted to preserve it as an open space, and that all that allowed unless distinctly shown to be for the benefit, not Parliament could usefully do, was to restrict Parlia- merely of private persons, but of the neighbourhood mentary inclosure, and to pass a measure of police for the generally and the public. It imposed many checks upon





the process, and, following the course already adopted in was based on any materials which might happen to be at the the case of Metropolitan commons, offered an alternative disposal of the Clerk of the Guardians. All we can say, method of making commons more useful to the nation, therefore, is that the acreage of the remaining common viz., their management and regulation as open spaces. land of the country is probably somewhere between The effect of this legislation and of the changed attitude 1,500,000 and 2,000,000 acres. It is most capriciously of the House of Commons towards inclosure has been distributed. In the Midlands there is very little to be almost to stop that process, except in the case of common found, while in a county of poor soil

, like Surrey, nearly fields or extensive mountain wastes. Only some twenty- every parish has its common, and there are large tracts of four commons, comprising about 26,000 acres, have been heath and moor. In 1866, returns were made to Parliainclosed by Act of Parliament since 1876.

ment by the Overseers of the Poor of the commons within We have alluded to the regulation of commons as open 15 and within 25 miles of Charing Cross.

The acreage spaces. The primary object of this process is to bring within the larger area was put at 38,450 acres, and within

a common under the jurisdiction of some con the smaller at 13,301 ; but owing to the difference of Regula

stituted authority, which may make bye-laws, opinion which sometimes prevails upon the question,

enforceable in a summary way before the magis- whether land is common or not, and the carelessness of trates of the district, for its protection, and may appoint some parish authorities as to the accuracy of their returns, watchers or keepers to preserve order and prevent even these figures cannot be taken as more than approximwanton mischief. There are several means of attaining ately correct. The Metropolitan police district, within which this object. Commons within the Metropolitan police the Metropolitan Commons Acts are in force, approaches in district—the Greater London of the Registrar-General— extent to a circle of 15 miles' radius. Within this district are in this respect in a position by themselves. Under nearly 12,000 acres of common land have been put under the Metropolitan Commons Acts, schemes for their local | local management, either by means of the Commons Acts management may be made by the Board of Agriculture or under special legislation. London is to be congratulated (in which the Inclosure Commission is now merged) with on having secured so much recreation ground on its out the consent either of the owner of the soil or the borders. But when the enormous population of the commoners—who, however, are entitled to compensation capital and its rapid growth and expansion are considered, if they can show that they are injuriously affected. the conclusion is inevitable, that not one acre of common Outside the Metropolitan police district a provisional land within an easy railway journey of the metropolis can order for regulation may be made under the Commons be spared. Act, 1876, with the consent of the owner of the soil

AUTHORITIES.- MARSHALL. Elementary and Practical Treatise and of persons representing two-thirds in value of all on Landed Property. London, 1804.— MAITLAND. Domesday the interests in the common. And under an Act passed Book and Beyond. Cambridge, 1897. --Borough and Township. in 1899 the council of any urban or rural district Cambridge, 1898.—SEEBOHM. The English Village Community. may, with the approval of the Board of Agriculture 1880. —SHAW-LEFEVRE. English Commons and Forests

. London,

London, 1883.-WILLIAMS, JOSHUA. Rights of Common. London, and without recourse to Parliament, make a scheme for 1894.-HUNTER. The Preservation of Open Spaces. London, 1896. – the management of any common within its district, pro “The Movements for the Inclosure and Preservation of Open vided no notice of dissent is served on the Board by the Lands,” Journal of the Royal Statistical Society, vol. lx. part ii.,

June 1897. Returns to House of Commons, 1843, No. 325 ; 1870, lord of the manor or by persons representing one-third

No. 326 ; 1874, No. 85. Return of Landowners, 1875. Annual in value of such interests in the common as are affected by Reports of Inclosure Commission and Board of Agriculture. Revised the scheme. There is yet another way of protecting a Statutes and Statutes at large.

(R. H*.) common. A parish council may, by agreement, acquire an interest in it, and may make bye-laws for its regulation Como, chief town of the Italian province of Como, under the Local Government Act, 1894. It is probable that and situated at the south-western extremity of the lake of in future commons outside the Metropolitan police area will the same name. Next to Milan, Como has made more rapid be managed chiefly under the Acts of 1894 and 1899. They progress than any Lombard city since 1875. Its populaundoubtedly proceed on right lines. For, with the growth tion, which numbered 25,560 in 1881, was 38,902 in of efficient local government, commons naturally fall to be 1901, while the population of the province was 576,276 protected and improved by the authority of the district. in 1901, having increased by 61,226 since 1881. The

It remains to say a word as to the extent of common density of the population is 2.16 per square kilometre. land still remaining open in England and Wales. In 1843 In Como and its immediate neighbourhood many large

it was estimated that there were still 10,000,000 silk-weaving establishments have been founded. In conStatistics.

acres of common land and common-field land. sequence of the construction of a funicular railway from In 1874 another return made by the Inclosure Com- Como to Brunate Hill, 716 metres above the city, a new mission made a guess of 2,632,772. These two returns quarter and climatic station have grown up at Brunate. were made from the same materials, viz., the Tithe Com- Between 1881 and 1900, 179 kilometres of new railways mutation Awards. As less than 700,000 acres had been were built in the province of Como, besides two funicular inclosed in the intervening period, it is obvious that the railways and an electric tramway. A further electric line two estimates are mutually destructive. In July 1875 | is in course of construction. The making of provincial another version was given in the Return of Landowners and State roads has kept pace with the growth of railway (generally known as the Modern Domesday Book), communication. At the same time, the navigation of the compiled from the valuation lists made for the purposes three lakes of Como, Maggiore, and Lugano, both by of rating. This return put the commons of the country steam and sailing vessels, has notably increased. Å (not including common fields) at 1,524,648 acres. It is telephone system, 310 miles in length, connects Como impossible to view any of these returns as accurate. with the chief communes of the province. In 1900 the Those compiled from the Tithe Commutation Awards industrial establishments of the province of Como numare based largely on estimates, since there are many bered 870, of which nearly one-half are devoted to various parishes where the tithes had not been commuted. On branches of the silk industry. There are, besides, cotton the other hand, the valuation lists do not show waste and industries, paper-making, iron-working, telegraph cables, unoccupied land (which is not rated), and consequently the lime-kilns, and cement factories. The number of workinformation as to such lands in the Return of Landowners men and workwomen employed in the silk industry is

55,000. In 1860 Como possessed 3000 hand looms ; in | and fig trees. The climate is in general warm, but not 1899, 11,000, while 3500 machine looms had been torrid nor unsuitable for Europeans. The dry season lasts introduced. Since one machine loom is equal to three from May to October, the rest of the year being rainy. hand looms, the weaving potentiality of Como has been The natives, who form practically the whole of the populamultiplied sevenfold in thirty years. The importance of tion, are of Malagasy, Negro, and Arab blood. The more this development is the more noteworthy in view of the important localities are Dzaudai, a small island off Mayotte, fact that, while Como possesses 3500 steam looms, only where are the government headquarters ; M'sapéré, on the 2000 exist in the rest of Italy. The Como factories yield opposite mainland, which is the chief centre of trade in the products of an estimated annual value of 60,000,000 lire. island; Bambao, in Anjouan; Fomboni, in Moheli; and Most of the Como silk is exported, especially to London Movoni, in Great Comoro. and to the Levant.

Mayotte was occupied as a colony in 1843, and has The mountainous character of the province of Como long been completely subject to the French, who, howand the excessive subdivision of landed property retard ever, have experienced some trouble in the other islands, the introduction of improved methods of agriculture. The over which they extended a protectorate in 1886. The Agricultural Unions, however, have succeeded in promoting administration, as regulated by the decree of September the use of artificial manure and in increasing the pro- 1899, is under a governor of the whole group, who ductivity of the soil. The most important improvements himself administers Mayotte, but governs the other three have taken place in regard to the raising of silk-worms by islands through administrators. At Mayotte there are a the introduction of a system of selecting the eggs, and by tribunal of first instance and a paymaster. Each island modifications of the peasants' houses. Industrial progress has its own local budget. That of Mayotte, which alone and agricultural improvements have combined in producing receives a subvention from France, shares more than half in the province an unusual degree of prosperity. The the totals, which in 1901 were estimated to balance at spirit of initiative and the activity of the inhabitants about £20,000. Mayotte also appropriated £1055 in found expression in 1899 in the Silk and Electrical the 1901 colonial budget of France, and in consequence Exhibition, organized to celebrate the first centenary of of a destructive cyclone in 1898 borrowed £20,000, to the invention of the electric pile by Alessandro Volta, a be paid in 20 years, without interest. Great Comoro has a native of Como. The Exhibition, opened in May 1899, debt of £38,000. Mayotte produces sugar, vanilla, rice, was destroyed by fire in the followiny July, but was coffee, cacao. For the rest, Anjouan is the most favourable rebuilt and reopened within a few weeks by its original to cultivation, especially of vanilla, but the cocoanut is organizers. An International Electrical Congress took gathered. In Great Comoro copra is prepared and zebras place in connexion with the Exhibition. The distinction are reared.

The only industrial establishments in the group gained as early as the ninth century in building and are sugar-works and saw-mills. Trade statistics are only architecture by the Magistri Comacini still excites the issued for Mayotte, but this term may include the whole emulation of the inhabitants of the region, who, as group.

In 1898 imports totalled £28,300 (France specialists in the art of building, emigrate to all parts of £21,200). In 1898 exports totalled £19,320 (France Europe. The spirit of reverence for historical buildings £47,890). The movement of the vessels of the Messageries and local artistic memories has led to the restoration Maritimes at Mayotte reaches 5000 tons for vessels with during the last few years of Como Cathedral, and of the cargoes. At present it is rather because of their strategic churches of Sant' Abbondio, San Fedele, San Carpoforo, than their commercial value that the Comoros are of and other minor monuments of the province. (L. BI.) importance. A coaling station has been established among

them. Como, a lake of North Italy, lying at the foot of the

See HENRIQUE. Les Colonies Françaises. Paris, 1889.-LEE. Rhætic Alps, directly north from Milan. Area, according French Colonies. Foreign Office Report, 1900. L'Année Coloniale, to Marinelli, 564 square miles; maximum depth, 1358 ft. ; Paris, 1900.

(P. L.) altitude above sea-level, 653 ft. ; temperature at the Company. — Joint stock enterprise derives its bottom, 42°8 Fahr. During the day a southerly wind, vitality from the co-operative principle, by which a multithe Breva, blows pretty constantly, and during the night tude of small investors create a fund to be used in furthera northerly wind, the Tivano. The difference between

ance of some commercial undertaking for the common “high ” water and “low” water levels amounts to as benefit of all. The natural growth and expansion of this much as 16 ft. Its shores are thickly studded with silk fruitful principle was checked until the middle of the ninefactories.

teenth century by the notorious risks attaching to unlimited a

liability. In the case of an ordinary partnership, though to France, situated half-way between Madagascar and the their liability is unlimited, the partners can generally tell African continent, to the north of the Mozambique Channel.

what risks they are incurring. Not so the shareholders The following table of the area and population of the only business to a board of directors, and they may easily find

of a company. They delegate the management of their four of any size gives one of the sets of figures offered by themselves committed by the fraud or folly of its members various authorities :

to engagements which in the days of unlimited liability

meant ruin. Failures like those of Overend and Gurney, Area (square miles). Population.

and of the Glasgow Bank, caused widespread misery and

alarm. It was not until limited liability had been grafted Mayotte


9,000 Great Comoro

on the stock of the co-operative system that the real

50,000 Moheli


potency of the principle of industrial co-operation beAnjouan

12,000 came apparent. We owe the adoption of the limited

liability principle to the clear-sightedness of Lord SherTotal .


80,000 brooke —then Mr Robert Lowe—and to the vigorous

advocacy of Lord Bramwell. We owe it to Lord Bramwell The islands are of volcanic formation and bristle with also that the principle was made a feasible one. The mountains, the highest of which is Coratola (8500 feet). practical difficulty was how to bring home to persons dealThe soil is very fertile, and covered with forests of cocoanut I ing with the company notice that the liability of the share



90 145

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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, pro 4. 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 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. The 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, was 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 Nemorandum 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 requisitions of this Act in respect of registration, form an the shareholders among themselves. They regu- tion.

of Associaincorporated 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 Associa- companies formed under the Companies Act, chooses. It has furnished in the schedule to the Companies

1862, to the charter or deed of settlement 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






panies, who is to retain and register them. The stamp duty instance, it is commonly prescribed how and when the charged on the company's capital must at the same time directors may make calls, to what amount they may be paid.

The Memorandum and Articles of Association borrow, in what circumstances they may forfeit shares, thereupon become public documents, and any person may or veto transfers, or invest funds, and what shall coninspect them on payment of a fee of one shilling. This stitute a quorum of the board. Whenever, indeed, specific has important consequences, because every person dealing directions are desirable they may properly be given by the with the company is presumed to be acquainted with its articles. But superadded to and supplementing these constitution, and to have read its memorandum and specific powers there is usually inserted in the articles a articles. The articles also, upon registration, bind the general power of management in terms similar to those of company and its members to the same extent as if each Clause 58 of the statutory regulations known as Table A. member had subscribed his name and affixed his seal to The powers, whether general or specific, thus confided to them.

directors are in the nature of a trust, and the directors The capital which is required to be stated in the must exercise them with a single eye to the benefit of the Memorandum of Association is what is known as the company. It would, however, give a very erroneous idea

nominal capital. This nominal capital must of their positions and functions to speak of them as Capital.

be distinguished from the subscribed capital, trustees. They have to carry on the company's business, which is the aggregate amount agreed to be paid by to extend and consolidate it, and to do this they must those who have taken shares in the company. Under have a free hand and a large discretion to deal with the the Companies Act, 1900, “minimum subscrip- exigencies of the commercial situation. This large discretion ” may be fixed by the articles, and if it is, the tion the law allows them, so long as they keep within the directors cannot go to allotment less: if it is limits set by the company's Memorandum and Articles. not, then the whole of the capital offered for subscrip- They are not to be held liable for mere errors of judgment, tion must be subscribed.

A company may increase still less for being defrauded. That would make their its capital, consolidate it, subdivide it into shares of position intolerable. All that the law requires of them is smaller amount, or convert paid-up shares into stock, and that they should be faithful to their duties as agentsfor this purpose modify its Memorandum of Association ; “honest and diligent.” They must not, for instance, but a limited company cannot reduce its capital either by delegate their duties, or accept a bribe, or make a secret direct or indirect means without the sanction of the Court. profit, or pay dividends out of capital, or misapply the The inviolability of the capital is a condition of incorpora- company's funds. tion—the price of the privilege of trading with limited Where in these or in any other ways directors are liability, and by no subterfuge will a company be allowed guilty of misfeasance or breach of trust in regard to to evade this cardinal rule of policy, either by paying the company or its property, the remedy of dividends out of capital, or buying its own shares, or the company, if it is a going concern, is by returning money to shareholders. But the prohibition action against the delinquent; but where a against reduction means that the capital must not be company is being wound up, the Legislature has proreduced by the voluntary act of the company, not that a vided a summary mode of proceeding under the Windingcompany's capital must be kept intact. It is embarked up Act, 1890, by which the official receiver or liquidator, in the company's business, and it must run the risks of or any creditor or contributory of the company may such business. If part of it is lost there is no obligation take out what is known as a misfeasance summons, to on the company to replace it and to cease paying dividends compel the delinquent director or officer to repay the until such lost capital is repaid. The company may in misapplied moneys or make compensation. Directors who such a case—and no course can be more beneficial to it, circulate a prospectus containing statements which they write off the lost capital and go on trading with the re

know to be false, with intent to induce any person to duced amount. But for this purpose the sanction of the become a shareholder, may be prosecuted under $ 84 of the Court must be obtained by petition.

Larceny Act, 1861. They are also liable criminally for A company being a legal abstraction, invisible and falsification of the company's books, and for this or any intangible, can do nothing in its own person. It must other criminal offence the Court in winding-up may, on the

act through agents. These agents are com- application of the liquidator, direct a prosecution. Directors.

monly called directors, though they are occa A share is an aliquot part of a company's nominal sionally described by other names, such as committee capital. The amount may be anything from 1s. to £1000. men, council, or managers. The first directors of a com The tendency of late years has been to keep the pany are generally appointed by the Articles of Association. denomination low, and so to appeal to a wider Their consent to act must now, under the Companies public. Shares of £100, or even £10, are now the exAct, 1900, be filed with the Registrar of Joint Stock ception. The most common amount is either £l or £5. Companies. Directors other than the first are elected at Shares are of various kinds, -ordinary, preference, dethe annual general meeting, a certain proportion of the ferred, founders, and management. Into what classes acting directors-usually one-third—retiring under the of shares the original capital of the company shall be articles by rotation each year, and their places being filled divided, what shall be the amount of each class, and their up by election. A share qualification is often required, respective rights, privileges, and priorities, are matters for on the well-recognized principle that a substantial stake in the consideration of the promoters of the company, and the undertaking is the best guarantee of fidelity to the must depend on its special circumstances and requirements. company's interests. A director once appointed cannot be A company may issue preference shares even if there is removed during his term of office by the shareholders, no mention of them in the Memorandum of Association, unless there is a special provision for that purpose in the but it is, as a rule, desirable that the Memorandum define Articles of Association, but a company may dismiss a the rights of preference shareholders, as their rights cannot director if the articles—as is usually the case—authorize then be altered or infringed. The preference given may dismissal. The authority and powers of directors are be as to dividends only, or as to dividends and capital. prima facie those necessary for carrying on the ordinary The dividend, again, may be payable out of the year's business of the company, but as a rule they are more profits only, or cumulative. The question for the company particularly defined by the Articles of Association. For l is, what must be offered to attract investors. Founders'


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