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Act was the appointment of a permanent Commission to make in each case all the inquiries previously made (no doubt capriciously and imperfectly) by Committees of the two Houses. The Commission, on being satisfied of the propriety of an inclosure, was to draw up a provisional order prescribing the general conditions on which it was to be carried out, and this order was to be submitted to Parliament by the Government of the day for confirmation. It is believed that these inclosure orders afford the first example of the provisional order system of legislation, which has recently attained such large proportions.

Again inclosure moved forward, and between 1845 and 1869 (when it received a sudden check) 600,000 acres passed through the hands of the Inclosure Commission. Taking the whole period of about a century and a half, when Parliamentary inclosure was in favour, and making an estimate of acreage where the Acts do not give it, the result may be thus summarized :

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Add for Forests inclosed under Special

Acts.

Acres.

2,744,926 1,307,964 618,000 100,000

4,770,890

The total area of England being 37,000,000 acres, we shall probably not be far wrong in concluding that about one acre in every seven was inclosed during the period in question. During the first period, the lands inclosed consisted mainly of common arable fields; during the second, many great tracts of moor and fen were reduced to severalty ownership. In the third period, inclosure probably related chiefly to the ordinary manorial common; and it seems likely that, on the whole, England would have gained, had inclosure stopped in 1845.

Open space

as

As a fact it stopped in 1869. Before the Inclosure Commission had been in existence twenty years the feeling of the nation towards commons began to change. The rapid growth of towns, and espemovement. cially of London, and the awakening sense of the importance of protecting the public health, brought about an appreciation of the value of commons open spaces. Naturally, the metropolis saw the birth of this sentiment. An attempted inclosure in 1864 of the commons at Epsom and Wimbledon aroused strong opposition; and a Select Committee of the House of Commons was appointed to consider how the London commons could best be preserved. The Metropolitan Board of Works, then in the vigour of youth, though eager to become the open-space authority for London, could make no better suggestion than that all persons interested in the commons should be bought out, that the board should defray the expense by selling parts for building, and should make parks of what was left. Had this advice been followed, London would probably have lost two-thirds of the open space which she now enjoys. Fortunately a small knot of men, who afterwards formed the Commons Preservation Society, took a broader and wiser view. Chief amongst them were the late Mr Philip Lawrence, who acted as solicitor to the Wimbledon opposition, and subsequently organized the Commons Preservation Society, Mr George Shaw-Lefevre, chairman of that Society since its foundation, the late Mr John Locke, and the late Lord Mount Temple (then Mr W. F. Cowper). They urged that the conflict of legal interests, which is the special characteristic of a common, might be trusted to preserve it as an open space, and that all that Parliament could usefully do, was to restrict Parliamentary inclosure, and to pass a measure of police for the

protection of commons as open spaces. The Select Committee adopted this view. On their report, was passed the Metropolitan Commons Act, 1866, which prohibited any further Parliamentary inclosures within the Metropolitan police area, and provided means by which a common could be put under local management. The lords of the manors in which the London commons lay felt that their opportunity of making a rich harvest out of land, valuable for building, though otherwise worthless, was slipping away; and a battle royal ensued. Inclosures were commenced, and the Statute of Merton prayed in aid. The public retorted by legal proceedings taken in the names of commoners. These proceedings-which culminated in the mammoth suit as to Epping Forest, with the Corporation of London as plaintiffs and fourteen lords of manors as defendants were uniformly successful; and London commons were saved. By degrees the manorial lords, seeing that they could not hope to do better, parted with their interest for a small sum to some local authority; and a large area of the common land, not only in the county of London but in the suburbs, is now in the hands of the representatives of the ratepayers, and is definitely appropriated to the recreation of the public.

Merton.

Moreover, the Commons Preservation Society was able to base, upon the uniform success of the commoners in the law courts, a plea for the amendment of the Amendlaw. The Statute of Merton, we have seen, ment of purports to enable the lord of the soil to Statute of inclose a common, if he leaves sufficient pasture for the commoners. This statute was constantly vouched in the litigation about London commons; but in no single instance was an inclosure justified by virtue of its provisions. It thus remained a trap to lords of manors, and a source of controversy and expense. In the year 1893 Lord Thring, at the instance of the Commons Preservation Society, carried through Parliament the Commons Law Amendment Act, which provided that in future no inclosure under the Statute of Merton should be valid, unless made with the consent of the Board of Agriculture, which was to consider the expediency of the inclosure from a public point of view.

The movement to preserve commons as open spaces soon spread to the rural districts. Under the Inclosure Act of 1845 provision was made for the allot- Rural ment of a part of the land to be inclosed for commons. field gardens for the labouring poor, and for recreation. But those who were interested in effecting an inclosure often convinced the Inclosure Commissioners, that for some reason such allotments would be useless. To such an extent did the reservation of such allotments become discredited that, in 1869, the Commission proposed to Parliament the inclosure of 13,000 acres, with the reservation of only one acre for recreation, and none at all for field gardens. This proposal attracted the attention of the late Mr Fawcett, who, after much inquiry and consideration, came to the conclusion that inclosures were, speaking generally, doing more harm than good to the agricultural labourer, and that, under such conditions as the Commissioners were prescribing, they constituted a serious evil. With characteristic intrepidity he opposed the annual Inclosure Bill (which had come to be considered a mere form) and moved for a Committee on the whole subject. The ultimate result was the passing, seven years later, of the Commons Act, 1876. This measure, introduced by a Conservative Government, laid down the principle that an inclosure should not be allowed unless distinctly shown to be for the benefit, not merely of private persons, but of the neighbourhood generally and the public. It imposed many checks upon

the process, and, following the course already adopted in the case of Metropolitan commons, offered an alternative method of making commons more useful to the nation, viz., their management and regulation as open spaces. The effect of this legislation and of the changed attitude of the House of Commons towards inclosure has been almost to stop that process, except in the case of common fields or extensive mountain wastes. Only some twentyfour commons, comprising about 26,000 acres, have been inclosed by Act of Parliament since 1876.

We have alluded to the regulation of commons as open spaces. The primary object of this process is to bring a common under the jurisdiction of some conRegulastituted authority, which may make bye-laws, tion. enforceable in a summary way before the magistrates of the district, for its protection, and may appoint watchers or keepers to preserve order and prevent wanton mischief. There are several means of attaining this object. Commons within the Metropolitan police district the Greater London of the Registrar-Generalare in this respect in a position by themselves. Under the Metropolitan Commons Acts, schemes for their local management may be made by the Board of Agriculture (in which the Inclosure Commission is now merged) without the consent either of the owner of the soil or the commoners-who, however, are entitled to compensation if they can show that they are injuriously affected. Outside the Metropolitan police district a provisional order for regulation may be made under the Commons Act, 1876, with the consent of the owner of the soil and of persons representing two-thirds in value of all the interests in the common. And under an Act passed in 1899 the council of any urban or rural district may, with the approval of the Board of Agriculture and without recourse to Parliament, make a scheme for the management of any common within its district, provided no notice of dissent is served on the Board by the lord of the manor or by persons representing one-third in value of such interests in the common as are affected by the scheme. There is yet another way of protecting a common. A parish council may, by agreement, acquire an interest in it, and may make bye-laws for its regulation under the Local Government Act, 1894. It is probable that in future commons outside the Metropolitan police area will be managed chiefly under the Acts of 1894 and 1899. They undoubtedly proceed on right lines. For, with the growth of efficient local government, commons naturally fall to be protected and improved by the authority of the district. It remains to say a word as to the extent of common land still remaining open in England and Wales. In 1843 it was estimated that there were still 10,000,000 Statistics. acres of common land and common-field land. In 1874 another return made by the Inclosure Commission made a guess of 2,632,772. These two returns were made from the same materials, viz., the Tithe Commutation Awards. As less than 700,000 acres had been inclosed in the intervening period, it is obvious that the two estimates are mutually destructive. In July 1875 another version was given in the Return of Landowners (generally known as the Modern Domesday Book), compiled from the valuation lists made for the purposes of rating. This return put the commons of the country (not including common fields) at 1,524,648 acres. It is impossible to view any of these returns as accurate. Those compiled from the Tithe Commutation Awards are based largely on estimates, since there are many parishes where the tithes had not been commuted. On the other hand, the valuation lists do not show waste and unoccupied land (which is not rated), and consequently the information as to such lands in the Return of Landowners

was based on any materials which might happen to be at the disposal of the Clerk of the Guardians. All we can say, therefore, is that the acreage of the remaining common land of the country is probably somewhere between 1,500,000 and 2,000,000 acres. It is most capriciously distributed. In the Midlands there is very little to be found, while in a county of poor soil, like Surrey, nearly every parish has its common, and there are large tracts of heath and moor. In 1866, returns were made to Parliament by the Overseers of the Poor of the commons within 15 and within 25 miles of Charing Cross. The acreage within the larger area was put at 38,450 acres, and within the smaller at 13,301; but owing to the difference of opinion which sometimes prevails upon the question, whether land is common or not, and the carelessness of some parish authorities as to the accuracy of their returns, even these figures cannot be taken as more than approximately correct. The Metropolitan police district, within which the Metropolitan Commons Acts are in force, approaches in extent to a circle of 15 miles' radius. Within this district nearly 12,000 acres of common land have been put under local management, either by means of the Commons Acts or under special legislation. London is to be congratulated on having secured so much recreation ground on its borders. But when the enormous population of the capital and its rapid growth and expansion are considered, the conclusion is inevitable, that not one acre of common land within an easy railway journey of the metropolis can be spared.

AUTHORITIES.-MARSHALL. Elementary and Practical Treatise on Landed Property. London, 1804.- MAITLAND. Domesday Book and Beyond. Cambridge, 1897.-Borough and Township. Cambridge, 1898.-SEEBOHM. The English Village Community. 1880.-SHAW-LEFEVRE. English Commons and Forests. London, London, 1883.-WILLIAMS, JOSHUA. Rights of Common. London, 1894.-HUNTER. The Preservation of Open Spaces. London, 1896."The Movements for the Inclosure and Preservation of Open Lands," Journal of the Royal Statistical Society, vol. lx. part ii., No. 326; 1874, No. 85. Return of Landowners, 1875. June 1897. Returns to House of Commons, 1843, No. 325; 1870, Reports of Inclosure Commission and Board of Agriculture. Revised Statutes and Statutes at large. (R. H*.)

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Annual

Como, chief town of the Italian province of Como, and situated at the south-western extremity of the lake of the same name. Next to Milan, Como has made more rapid progress than any Lombard city since 1875. Its population, which numbered 25,560 in 1881, was 38,902 in 1901, while the population of the province was 576,276 in 1901, having increased by 61,226 since 1881. The density of the population is 2.16 per square kilometre. In Como and its immediate neighbourhood many large silk-weaving establishments have been founded. In consequence of the construction of a funicular railway from Como to Brunate Hill, 716 metres above the city, a new quarter and climatic station have grown up at Brunate. Between 1881 and 1900, 179 kilometres of new railways were built in the province of Como, besides two funicular railways and an electric tramway. A further electric line is in course of construction. The making of provincial and State roads has kept pace with the growth of railway communication. At the same time, the navigation of the three lakes of Como, Maggiore, and Lugano, both by steam and sailing vessels, has notably increased. A telephone system, 310 miles in length, connects Como with the chief communes of the province. In 1900 the industrial establishments of the province of Como numbered 870, of which nearly one-half are devoted to various branches of the silk industry. There are, besides, cotton industries, paper-making, iron-working, telegraph cables, lime-kilns, and cement factories. The number of workmen and workwomen employed in the silk industry is

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55,000. In 1860 Como possessed 3000 hand looms; in 1899, 11,000, while 3500 machine looms had been introduced. Since one machine loom is equal to three hand looms, the weaving potentiality of Como has been multiplied sevenfold in thirty years. The importance of this development is the more noteworthy in view of the fact that, while Como possesses 3500 steam looms, only 2000 exist in the rest of Italy. The Como factories yield products of an estimated annual value of 60,000,000 lire. Most of the Como silk is exported, especially to London and to the Levant.

The mountainous character of the province of Como and the excessive subdivision of landed property retard the introduction of improved methods of agriculture. The Agricultural Unions, however, have succeeded in promoting the use of artificial manure and in increasing the productivity of the soil. The most important improvements have taken place in regard to the raising of silk-worms by the introduction of a system of selecting the eggs, and by modifications of the peasants' houses. Industrial progress and agricultural improvements have combined in producing in the province an unusual degree of prosperity. The spirit of initiative and the activity of the inhabitants found expression in 1899 in the Silk and Electrical Exhibition, organized to celebrate the first centenary of the invention of the electric pile by Alessandro Volta, a native of Como. The Exhibition, opened in May 1899, was destroyed by fire in the following July, but was rebuilt and reopened within a few weeks by its original organizers. An International Electrical Congress took place in connexion with the Exhibition. The distinction gained as early as the ninth century in building and architecture by the Magistri Comacini still excites the emulation of the inhabitants of the region, who, as specialists in the art of building, emigrate to all parts of Europe. The spirit of reverence for historical buildings and local artistic memories has led to the restoration during the last few years of Como Cathedral, and of the churches of Sant' Abbondio, San Fedele, San Carpoforo, and other minor monuments of the province. (L. BI.)

Como, a lake of North Italy, lying at the foot of the Rhætic Alps, directly north from Milan. Area, according to Marinelli, 561 square miles; maximum depth, 1358 ft.; altitude above sea-level, 653 ft.; temperature at the bottom, 42°8 Fahr. During the day a southerly wind, the Breva, blows pretty constantly, and during the night a northerly wind, the Tivano. The difference between "high" water and "low" water levels amounts to as much as 16 ft. Its shores are thickly studded with silk factories.

Comoro Islands, a group of islands belonging to France, situated half-way between Madagascar and the African continent, to the north of the Mozambique Channel. The following table of the area and population of the only four of any size gives one of the sets of figures offered by various authorities :

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and fig trees. The climate is in general warm, but not torrid nor unsuitable for Europeans. The dry season lasts from May to October, the rest of the year being rainy. The natives, who form practically the whole of the population, are of Malagasy, Negro, and Arab blood. The more important localities are Dzaudai, a small island off Mayotte, where are the government headquarters; M'sapéré, on the opposite mainland, which is the chief centre of trade in the island; Bambao, in Anjouan; Fomboni, in Moheli; and Movoni, in Great Comoro.

Mayotte was occupied as a colony in 1843, and has long been completely subject to the French, who, however, have experienced some trouble in the other islands, over which they extended a protectorate in 1886. The administration, as regulated by the decree of September 1899, is under a governor of the whole group, who himself administers Mayotte, but governs the other three islands through administrators. At Mayotte there are a tribunal of first instance and a paymaster. Each island has its own local budget. That of Mayotte, which alone receives a subvention from France, shares more than half the totals, which in 1901 were estimated to balance at about £20,000. Mayotte also appropriated £1055 in the 1901 colonial budget of France, and in consequence of a destructive cyclone in 1898 borrowed £20,000, to be paid in 20 years, without interest. Great Comoro has a debt of £38,000. Mayotte produces sugar, vanilla, rice, coffee, cacao. For the rest, Anjouan is the most favourable to cultivation, especially of vanilla, but the cocoanut is gathered. In Great Comoro copra is prepared and zebras are reared. The only industrial establishments in the group are sugar-works and saw-mills. Trade statistics are only issued for Mayotte, but this term may include the whole group. In 1898 imports totalled £28,300 (France £21,200). £21,200). In 1898 exports totalled £49,320 (France £47,890). The movement of the vessels of the Messageries Maritimes at Mayotte reaches 5000 tons for vessels with cargoes. At present it is rather because of their strategic than their commercial value that the Comoros are of importance. A coaling station has been established among them.

See HENRIQUE. Les Colonies Françaises. French Colonies. Foreign Office Report, 1900. Paris, 1900.

Paris, 1889.-Lee. L'Année Coloniale, (P. L.)

Company.-Joint stock enterprise derives its vitality from the co-operative principle, by which a multi

tude of small investors create a fund to be used in furtherance of some commercial undertaking for the common benefit of all. The natural growth and expansion of this fruitful principle was checked until the middle of the nineteenth century by the notorious risks attaching to unlimited

liability. In the case of an ordinary partnership, though their liability is unlimited, the partners can generally tell what risks they are incurring. Not so the shareholders of a company. They delegate the management of their business to a board of directors, and they may easily find themselves committed by the fraud or folly of its members to engagements which in the days of unlimited liability meant ruin. Failures like those of Overend and Gurney, and of the Glasgow Bank, caused widespread misery and alarm. It was not until limited liability had been grafted on the stock of the co-operative system that the real potency of the principle of industrial co-operation became apparent. We owe the adoption of the limited liability principle to the clear-sightedness of Lord Sherbrooke then Mr Robert Lowe-and to the vigorous advocacy of Lord Bramwell. We owe it to Lord Bramwell also that the principle was made a feasible one. practical difficulty was how to bring home to persons dealing with the company notice that the liability of the share

The

3. The objects for which the proposed company is to be established.

4. A declaration that the liability of the members is limited.

5. The amount of capital with which the company proposes to be registered, divided into shares of a certain fixed amount.

No subscriber of the memorandum is to take less than one share, and each subscriber is to write opposite his name the number of shares he takes.

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 should add to its name the word "Limited "-paint it up on its premises, and use it on all its invoices, bills, promissory notes, and other documents. The proposal was adopted by the Legislature and has worked successfully. The best evidence of the influence which the introduction of limited liability has exercised is to be found in the returns of companies registered under the Act of 1862. That Act contemplates three classes of companies-(1) companies limited by shares, (2) companies limited by guarantee, (3) unlimited companies. The number of companies limited by shares which were registered from the commencement of the Act to the year 1901 is 60,000; of companies limited by guarantee, 1300; of unlimited companies, 140. The companies limited by shares show a progressive increase from 689 in 1863 to 4675 in 1897; the unlimited companies. registered in 1863 were 8 in number, in 1897 they were nil. The unlimited company is practically an extinct species. The company limited by shares has become the normal type: it is incomparably the most important, and as such it is chiefly dealt with in this article.

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Companies Limited by Shares. - The Companies Act, The Companies Act, 1862, was intended to constitute a comprehensive code of law applicable to joint stock trading companies for the whole of the United Kingdom. Recognizing the mischief of large trading concerns being carried on by fluctuating bodies, the Act begins by declaring that no company, association, or partnership, consisting of more than twenty persons, or ten in the case of banking, shall be formed after the commencement of the Act for the purpose of carrying on any business which has for its object the acquisition of gain by the company, association, or partnership, or by the individual members thereof, unless it is registered as a company under the Act, or is formed in pursuance of some other Act of Parliament or of letters patent, or is a company engaged in working mines within and subject to the jurisdiction of the Stannaries. Broadly speaking, the meaning of the Act is that all commercial undertakings, as distinguished from literary or charitable associations, shall be registered. "Business" has a more extensive signification than "trade." Having thus cleared the ground the Act goes on to provide in what manner a company may be formed under the Act. The machinery is simple, and is described as follows:

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'Any seven or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requisitions of this Act in respect of registration, form an incorporated company with or without limited liability " (§ 6). The fact that six of the subscribers are mere dummies, clerks, or nominees of the seventh, will not affect the validity of the company; so the House of Lords decided in Salomon v. Salomon and Co. (1897, A. C. 22). The Memor- document to be subscribed-the Memorandum andum of of Association corresponds, in the case of Associa companies formed under the Companies Act, 1862, to the charter or deed of settlement in the case of other companies. The form of it is given in the schedule to the Act, and varies slightly according as the company is limited by shares or guarantee, or is unlimited. (See the 2nd schedule to the Act, forms A, B, C, D.) It is required to state, in the case of a company limited by shares, the five following matters :

tion.

1. The name of the proposed company, with the addition of the word "limited " as the last word in such

2. The part of the United Kingdom, whether England,

These five matters the Legislature has deemed of such intrinsic importance that it has required them to be set out in the company's Memorandum of Association. They are the essential conditions of incorporation, and as such they must not only be stated, but the policy of the Legislature has made them unalterable, with certain exceptions. The most important of these five conditions is the third, and its importance consists in this, that the objects defined in the memorandum circumscribe the sphere of the company's activities. This principle, which is one of public policy and convenience, and is known as the "ultra vires doctrine," carries with it important consequences, because every act done or contract made by a company ultra vires, i.e., in excess of its powers, is absolutely null and void. The policy, too, is a sound one. Shareholders contribute their money on the faith that it is to be employed in prosecuting certain objects, and it would be a violation of good faith if the company, i.e., the majority of shareholders, were to be allowed to divert it to something quite different. So strict is the rule that not even the consent of every individual shareholder can give validity to an ultra vires act. The consent of all the shareholders was, till quite recently, equally incompetent to alter the objects defined in the memorandum, as being part of the so-called charter. The inconveniences attending this unalterability of the objects were, however, so sensibly felt that in 1890 the Companies (Memorandum of Association) Alteration Act was passed, qualifying the prohibition against alteration, but only to a limited extent. This Act enables a company to obtain the sanction of the Court to an alteration of the objects in its memorandum when it appears that the alteration is required for certain specified purposes, such as the carrying on of the company's business more economically or more efficiently.

A company's Memorandum of Association was described by Lord Cairns as its charter. The Articles of Association are the regulations for its internal management

of Associa

the terms of the partnership agreed upon by Articles the shareholders among themselves. They regu- tion. late such matters as the transfer and forfeiture of shares, calls upon shares, the appointment and qualification of directors, their powers and proceedings, general meetings of the shareholders, votes, dividends, the keeping and audit of accounts, and other such matters. In regard to these internal regulations the Legislature has left the company free to adopt whatever terms of association it chooses. It has furnished in the schedule to the Companies Act, 1862 (Table A), a model or specimen set of regulations, but their adoption, wholly or in part, is optional; only if a company does not register articles of its own these statutory regulations are to apply. When, as is commonly the case, a company decides to have articles of its own framing, such articles must be expressed in separate paragraphs, numbered arithmetically, and signed by the subscribers of the memorandum. They must also be printed, stamped like a deed, and attested. so perfected, they are to be delivered, with the Memorandum of Association, to the Registrar of Joint Stock Com

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When

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 be paid. The Memorandum and Articles of Association thereupon become public documents, and any person may inspect them on payment of a fee of one shilling. This has important consequences, because every person dealing with the company is presumed to be acquainted with its constitution, and to have read its memorandum and articles. The articles also, upon registration, bind the company and its members to the same extent as if each member had subscribed his name and affixed his seal to them.

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The capital which is required to be stated in the Memorandum of Association is what is known as the nominal capital. This nominal capital must Capital. be distinguished from the subscribed capital, which is the aggregate amount agreed to be paid by those who have taken shares in the company. Under the Companies Act, 1900, a "minimum subscription may be fixed by the articles, and if it is, the directors cannot go to allotment on less: if it is not, then the whole of the capital offered for subscription must be subscribed. A company may increase its capital, consolidate it, subdivide it into shares of smaller amount, or convert paid-up shares into stock, and for this purpose modify its Memorandum of Association; but a limited company cannot reduce its capital either by direct or indirect means without the sanction of the Court. The inviolability of the capital is a condition of incorporation-the price of the privilege of trading with limited liability, and by no subterfuge will a company be allowed to evade this cardinal rule of policy, either by paying dividends out of capital, or buying its own shares, or returning money to shareholders. But the prohibition against reduction means that the capital must not be reduced by the voluntary act of the company, not that a company's capital must be kept intact. It is embarked in the company's business, and it must run the risks of such business. If part of it is lost there is no obligation on the company to replace it and to cease paying dividends until such lost capital is repaid. The company may in such a case—and no course can be more beneficial to it write off the lost capital and go on trading with the reduced amount. But for this purpose the sanction of the Court must be obtained by petition.

Directors.

A company being a legal abstraction, invisible and intangible, can do nothing in its own person. It must act through agents. These agents are commonly called directors, though they are occasionally described by other names, such as committee men, council, or managers. The first directors of a company are generally appointed by the Articles of Association. Their consent to act must now, under the Companies Act, 1900, be filed with the Registrar of Joint Stock Companies. Directors other than the first are elected at the annual general meeting, a certain proportion of the acting directors-usually one-third-retiring under the articles by rotation each year, and their places being filled up by election. A share qualification is often required, on the well-recognized principle that a substantial stake in the undertaking is the best guarantee of fidelity to the company's interests. A director once appointed cannot be removed during his term of office by the shareholders, unless there is a special provision for that purpose in the Articles of Association; but a company may dismiss a director if the articles-as is usually the case-authorize dismissal. The authority and powers of directors are prima facie those necessary for carrying on the ordinary business of the company, but as a rule they are more particularly defined by the Articles of Association. For 6

directors may make calls, to what amount they may borrow, in what circumstances they may forfeit shares, or veto transfers, or invest funds, and what shall constitute a quorum of the board. Whenever, indeed, specific directions are desirable they may properly be given by the articles. But superadded to and supplementing these specific powers there is usually inserted in the articles a general power of management in terms similar to those of Clause 58 of the statutory regulations known as Table A. The powers, whether general or specific, thus confided to directors are in the nature of a trust, and the directors must exercise them with a single eye to the benefit of the company. It would, however, give a very erroneous idea of their positions and functions to speak of them as trustees. They have to carry on the company's business, to extend and consolidate it, and to do this they must have a free hand and a large discretion to deal with the exigencies of the commercial situation. This large discretion the law allows them, so long as they keep within the limits set by the company's Memorandum and Articles. They are not to be held liable for mere errors of judgment, still less for being defrauded. That would make their position intolerable. All that the law requires of them is that they should be faithful to their duties as agents"honest and diligent." They must not, for instance, delegate their duties, or accept a bribe, or make a secret profit, or pay dividends out of capital, or misapply the company's funds.

Misfeas

ance.

Where in these or in any other ways directors are guilty of misfeasance or breach of trust in regard to the company or its property, the remedy of the company, if it is a going concern, is by action against the delinquent; but where a company is being wound up, the Legislature has provided a summary mode of proceeding under the Windingup Act, 1890, by which the official receiver or liquidator, or any creditor or contributory of the company may take out what is known as a misfeasance summons, to compel the delinquent director or officer to repay the misapplied moneys or make compensation. Directors who circulate a prospectus containing statements which they know to be false, with intent to induce any person to become a shareholder, may be prosecuted under § 84 of the Larceny Act, 1861. They are also liable criminally for falsification of the company's books, and for this or any other criminal offence the Court in winding-up may, on the application of the liquidator, direct a prosecution. A share is an aliquot part of a company's nominal capital. The amount may be anything from 1s. to £1000. The tendency of late years has been to keep the Shares. denomination low, and so to appeal to a wider public. Shares of £100, or even £10, are now the exception. The most common amount is either £1 or £5. Shares are of various kinds,-ordinary, preference, deferred, founders', and management. Into what classes of shares the original capital of the company shall be divided, what shall be the amount of each class, and their respective rights, privileges, and priorities, are matters for the consideration of the promoters of the company, and must depend on its special circumstances and requirements.

A company may issue preference shares even if there is no mention of them in the Memorandum of Association, but it is, as a rule, desirable that the Memorandum define the rights of preference shareholders, as their rights cannot then be altered or infringed. The preference given may be as to dividends only, or as to dividends and capital. The dividend, again, may be payable out of the year's profits only, or cumulative. The question for the company is, what must be offered to attract investors. Founders'

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