Annexed to the form of application will be a form of receipt as follows:

To be signed by the bankers or secretary, and retained by the applicant.

An applicant for shares is bound from the time when notice of allotment is given or posted. Household Fire Insurance Co., 4 Ex. Div. 216. Until notice of allotment is given or posted there is no contract, and the applicant may withdraw. Pellatt's case, 2 Ch. 527. But an unstamped allotment letter may be sufficient. In re Whitley Partners, Steel's case, 49 L. J. Ch. 176; 42 L. T. 11. And if the withdrawal of his application does not reach the company until after the notice of allotment has been posted, it is ineffectual. Harris's case, 7 Ch. 587; Stevenson v. McLean, 5 Q. B. D. 357. Where notice of allotment is duly posted the applicant is bound, even though the notice never reaches him. Household Fire, &c., Co. v. Grant, ubi supra. If no allotment is made the company is bound to repay the deposit, but the deposit is not a trust fund. Moseley v. Cressey's London Co., 1 Eq. 405; 14 W. R. 246.

Where A. applies on behalf of B. but without authority, and B. repudiates the allotment, A. is liable in damages to the company, and the measure may be the par value of the shares. Re National Coffee Pal., 32 W. R. 236 (Aug. 1883).

RULES OF LONDON STOCK EXCHANGE.

A company desiring a special settling day and quotation of its shares in the official list, must bear in mind the following rules of the committee of the London Stock Exchange:

129. The committee will appoint a special settling day for transactions in the Special settling shares of a new company, provided that no allegation of fraud be substantiated; days. that there has been no misrepresentation or suppression of material facts; that sufficient scrip or shares are ready for delivery; and that no impediment exists

to the settlement of the account.

130. The secretary of the share and loan department shall give one week's Documents notice to the Stock Exchange of any application for a special settling day for required. transactions in the shares of a new company, previously to such application being submitted to the committee, and shall require the production of the following documents, viz. :—

The prospectus, the Act of Parliament, the articles of association, or a certificate that the company is constituted upon the cost-book system, under the Stannary laws.

The original applications for shares, the allotment-book, signed by the chairman and secretary to the company, and a certificate verified by the statutory declaration of the chairman and the secretary, stating the number of shares applied for and unconditionally allotted to the public, the amount of deposits paid thereon, and that such deposits are absolutely free from any lien.

Quotations of shares of a

[Formerly the preceding paragraph was as follows:—

"The original applications for shares, together with the allotment-book, signed by the chairman and secretary to the company, and a certificate signed in like manner, stating the number of shares applied for and unconditionally allotted, and the amount of deposits paid thereon." It has been altered with a view to preventing such frauds as were practised by the promoters of the Eupion Gas Company, Limited, The Queen v. Aspinall, 2 Q. B. Div. 48. See Report of the Select Committee on Loans to foreign States, 1875: Evidence of Mr. Scott, p. 19, Question 403.]

The banker's pass-book, and a certificate from the bankers, stating the amount of deposits received.

131. The committee will order the quotation of a new company in the official list, provided that the company is of bonâ fide character, and of sufficient magnew company. nitude and importance; and that the requirements of Rule 130 have been complied with, and that the prospectus has been publicly advertised, and agrees substantially with the Act of Parliament or the articles of association, and in the case of limited companies contains the memorandum of association; that it provides for the issue of not less than one-half of the nominal capital, and for the payment of 10 per cent. upon the amount subscribed, and sets forth the arrangements for raising the capital, whether by shares fully or partly paid up, with the amounts of each respectively, and also states the amount paid or to be paid, in money or otherwise, to concessionaires, owners of property, or others on the formation of the company, or to contractors for works to be executed, and the number of shares (if any) proposed to be conditionally allotted; that two-thirds of the whole nominal capital proposed to be issued have been applied for and unconditionally allotted to the public (shares reserved or granted in lieu of money payments to concessionaires, owners of property, or others, not being considered to form part of such public allotment); that the articles of association restrain the directors from employing the funds of the company in the purchase of its own shares, and that a member of the Stock Exchange is authorised by the company to give full information as to the formation of the undertaking, and be able to furnish the committee with all particulars they may require.

Issue of new shares within 12 months of special settling. Caution to

In cases where fully paid shares have been granted in lieu of money pay. ments, an official certificate will be required that the contract providing for the issue of such shares has been filed with the registrar of joint-stock companies, as prescribed by the 25th Section of “The Companies Act, 1867.”

132. A company issuing, or promising to issue, new shares within twelve months after the first settling-day appointed by the committee, unless under special circumstances, shall be liable to exclusion from the official list.

133. The committee particularly caution brokers against giving the sanction of their names to the bringing out of any company without due inquiry as to brokers of new the bona fides of its objects, the character of its promoters, directors, and concompanies. cessionaires, and of the other persons connected therewith. Members disregarding this caution are liable to be dealt with in such manner as the case may require.

DEBENTURES.

INTRODUCTORY NOTES.

COMPANIES formed under or subject to the Act of 1862 very com- Issue of debenmonly issue debentures:

1. For the purpose of securing the repayment of money borrowed.

2. In payment for property purchased, or services rendered, or money due.

tures common.

as a covenant.

Formerly a debenture was generally framed as a covenant by the As to debencompany with the person to whom it was issued to pay to him, his ture operating executors, administrators, or assigns, the principal money therein mentioned with interest, and was expressed to be given under the common seal.

The right to sue for the recovery of money secured by an instrument Chose in so framed, being a chose in action, was only assignable subject to the action. rules which prevailed as to the assignment of a chose in action. But Objections to instruments so circumstanced were obviously not capable of being readily such instru and safely dealt with. However good the credit of the company issuing them might be, dealings could not safely take place without investigation

of title, inquiries, assignments, notices, and legal advice.

ments.

The inconveniences of such a form having been felt, and serious loss Improvements. having been incurred by investors; Athenæum Life Assurance Society v. Pooley, 1 Giff. 102; 3 De G. & J. 294; In re Natal Investment Co., 3 Ch. 355; efforts were made to improve the form, and these efforts have been so far successful, that debentures can now be framed in a manner that facilitates investment by affording a convenient and attractive security easily and safely dealt with. In the result, many millions are now invested in such debentures, and companies that have obtained on easy terms a debenture loan of from 10,000l. and upwards, are to be numbered by hundreds.

debentures.

The following are the principal kinds of debentures now generally The several used: 1. Debentures to bearer. 2. Registered debentures. 3. Deben- forms of tures to bearer capable of registration. 4. Registered debentures with coupons to bearer.

And debentures of each kind may be framed as :

(a.) Mortgage debentures, ie., debentures secured by mortgage or charge; or (b.) Unsecured debentures, i.e., debentures not secured by mortgage or charge.

"To bearer."

Rights of bearer.

As assignee.

And also as (c.), determinable debentures; or (d.), perpetual deben

tures.

In framing a debenture to bearer the object is, as far as possible, to endow it with the characteristics of a negotiable instrument, and in particular

1. To make it transferable, free from equities, between the company and the person to whom it is issued.

2. To avoid the necessity for any written assignment.

3. To render the delivery of the debenture and any interest coupon a good discharge to the company.

4. To enable the bearer to sue the company in his own name.

5. To ensure a good title to any person who acquires the debenture bona fide for valuable consideration, notwithstanding any defect in the title of the person from whom he acquires the debenture.

The bearer of a debenture may acquire rights against the company.

A. As assignee of the original contract.

B. By virtue of an independent contract between himself and the company.

C. By estoppel.

As to A. Prima facie the bearer of a debenture, expressed to be payable to bearer, is (if he be not the original holder of the debenture) regarded as the equitable assignee of the contract contained in it. In re Blakely Co., 3 Ch. 154; Re Agra and Masterman's Co., 2 Ch. 395. Accordingly, as such assignee, he is entitled to the benefit of any valid stipulations in that contract. Now the following points are well settled

(a.) A stipulation that a debenture shall be transferable free from equities is valid.

"I am of opinion that there is nothing inequitable in allowing the debtor in an obligation to contract with his creditor that he will not avail himself of such equities." Per Rolt, L. J., In re Blakely Ordnance Co., 3 Ch. 159. And, again

"Generally speaking, a chose in action assignable only in equity must be assigned subject to the equities existing between the original parties to the contract; but this is a rule which must yield when it appears from the nature or terms of the contract that it must have been intended to be assignable free from and unaffected by such equities." Per Cairns, L. J., In re Agra and Masterman's Bank, ex parte Asiatic Banking Corporation, 2 Ch. 397.

And it appears that such stipulation will probably be implied from the mere fact that the debenture is "to bearer." See In re Blakely Ordnance Co., ubi supra, and Natal Investment Co., 3 C. 361. But in such case the debenture should be simply "to bearer," not "to A., his executors, administrators, or assigns, or to the bearer"; for the additional words may be held to neutralise the force of the words "to bearer." Natal Investment Co., 3 Ch. 355. See In re Imperial Land Co. of Marseilles, ex parte Colborne and Strawbridge, 11 Eq. 487.

(b.) A stipulation that company will pay the bearer without requiring him to produce any assignment in writing is valid.

"I am of opinion that there is nothing inequitable in allowing the debtor, in an obligation, to contract with his creditor that he will pay the amount due on the obligation to the assignee of the creditor (whether he be such assignee by instrument in writing, or by mere delivery of the obligation) Per Rolt, L. J., In re Blakely Ordnance Co., 3 C. 159. And see In re Natal Investment Co., 3 Ch. 355. Lord Cairns said, "As I understand these words [or to the holder, for the time being, of this debenture '], they do nothing more than this: in order to save the trouble and expense of assignments by deed, they provide that the company will recognise any person who holds the debenture to be in as good a position as if he had become the assignee by deed, and will not insist upon his proving his title by producing a formal assignment, &c." And Higgs v. Assam Tea Co., L. R. 4 Ex. 394.

(c.) A stipulation that the delivery of the debenture or any interest coupon shall be a good discharge to the company is valid. Crouch v. Crédit Foncier, L. R. 8 Q. B. 385; Re Natal Investment Co., 3 Ch. 355. The maxim " Qui sentit commodum sentire debet et onus applies. Macdonald v. Law Union Co., L. R. 9 Q. B. 328. It must, however, be borne in mind that prima facie such a stipulation "is not a proviso for the benefit of either the assignee or the holder of the debenture: it is a proviso for the benefit of the company itself, in order to absolve the company from the burden of having to look into the title of any person who might present the debenture to them for payment. It does not oblige them to pay to the person who presents the debenture, it merely absolves them from subsequent liability if they do, in point of fact, pay to the person who presents the debenture." Per Lord Cairns, L. C., In re Natal Investment Co., ubi supra.

(d.) That the bearer, as equitable assignee of the contract, can sue in his own name. Re Blakely Ordnance Co.; Re Natal Investment Co.; and Re Agra and Masterman's Bank, ubi supra.

(e.) It is not competent to the parties to the original contract by any stipulation between them contained therein to ensure the title of a bonâ fide holder for value who claims through a person whose title is defective. Crouch v. Crédit Foncier, L. R. 8 Q. B. 375. Nevertheless, as appears below, this advantage can be secured to the holder by independent

contract.

As to B. It appears that a debenture holder may acquire rights Independent against the company by virtue of an independent contract, which will contract. arise upon his acting on the faith of the representations contained in the debenture. For, where a party makes a representation to all the world that he will do or abstain from doing something, with the intention that such representations shall be acted on, there will be a binding contract between such party and any person who acts accordingly. See In re Agra and Masterman's Bank, 2 Ch. 397; In re Imperial Land Co., 11 Eq. 487; General Estates Co., 3 Ch. 762; Re Merchants' Banking