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the receipt of the bearer, a good discharge. Such a condition is unquestionably Form 211b. valid. See supra, p. 251. The words in brackets are sometimes omitted.

6. The co may at any time give notice by advertisemt in the Times and one other London daily newspaper, of its intention to pay off this debenture, and upon the expiration of six calendar months from such notice being given, the principal monies hby secured shall become payable.

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If desired, the words day of -, or day of, which shall next happen after the can be inserted before the word "expiration," so that the principal moneys may become payable on one of the days fixed for payment of interest. In the absence of express power, a mortgagee cannot be compelled to accept payment before maturity. Browne v. Cole, 14 Sim. 427.

7. The principal monies hby secured shall immediately become payable (a). If the co makes default for a period of six calendar months in the payment of any interest hby secured, and the bearer [or registered holder] hereof, before such interest is pd, by notice in writing to the co, calls in such principal monies; or (b). If an order is made, or an effective resolution is passed for the winding up of the co.

It is now usual to provide that if default is made in paying the interest for say six months, the principal moneys shall become due, or may (as above) be called in by the debenture holder, and the propriety of inserting some such provision is obvious. There seems no reason why the holder of a debenture, especially if it is not secured by mortgage or charge, should be placed in a worse position than an ordinary mortgagee who has agreed not to call in his loan for a definite period, in which case the agreement is always made conditional on the punctual payment of the interest. The above form is better than making the principal payable on default, because it allows the debenture holder, if he thinks fit, to give the company further time. Sometimes less than six months is specified. As regards making the principal payable in the event of a winding up: such a provision is now very common, and while it can do the company no harm, may prevent disputes as to the rights of the debenture holder. According to a recent decision, it only expresses that which the law implies. Hodson v. The Tea Co., 14 C. D. 859; 28 W. R. 458. It may here be mentioned that a provision for accelerating the time for payment of the principal moneys is not a penalty against which equity can relieve. Thompson v. Hudson, L. R. 4. H. L. 1; Wallingford v. Mutual Society, 5 App. Cas. 685.

8. This debenture is transferable by delivery, [or if the debenture is Transfer. to be capable of registration: Except when registered this debenture is transferable by delivery, but the co will at any time upon the request of the bearer (whilst unregistered) register him or his nominee in the register below mentd as the holder of this debenture, and indorse a note of such registration hereon, and the co will also at any time upon the request of the registered holder, his exors or admors, cancel the registration and the note thereof indorsed thereon, and thereupon this debenture will again become transferable by delivery. A fee of 2s. 6d. shall be pd to the co upon every such registration or cancellation. If this clause is inserted, insert also clauses 2, 3, 4, 5, 6 of Form 219a].

9. The bearer for the time being is entled to the full benefit of this debenture, and all persons may act accordingly and shall be deemed to adopt this condition.

Form 211b.

Form 212.

Power to call

debenture instead of debenture to bearer.

A condition as above is very commonly inserted in order to obtain if possible the benefit of the decisions above referred to, pp. 251, 253. If the debenture is to be capable of registration, insert the words " or registered holder” after "bearer."

[If there is to be a trust deed, add :

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10. The holders of the debentures of the above issue are and will be entled pari passu to the benefit of and subject to the provisions contd in an indre dated the day of, and made between the co of the one pt, and A., B., and C. of the other pt [whereby certain ppty of the co was vested in trustees for securing the paymt of the principal monies and interest payable in respect of the sd debentures].

See supra, p. 255, as to trust deeds.

The words in brackets will be varied according to circumstances. Sometimes they are omitted altogether. Sometimes the nature of the property is stated. 11. The principal monies and interest hby secured will be pd at The Bank, Limtd, No. Street, London, or at the registered office of the co.

Upon the request in writing of the bearer hereof the co will issue to him a debenture in either of the forms set forth in the second and third schedules for registered to the indre below mentd. Such debenture shall provide for the paymt of the principal monies and interest hby secured and then remaining unpaid, at the times hby fixed for the paymt thereof respively. Upon or before such issue this debenture must be surrendered to the co, and the person making such request must pay the expense of stamping the new debenture, and such sum, not exceeding ten shillings, for the expense of issuing the same as the co shall prescribe.

Form 213.

Temporary cancellation.

It is not at all uncommon now, where debentures are secured by a trust deed, besides giving subscribers the option of taking their debentures in one of several forms [supra, p. 258], to set out the forms in schedules to the trust deed, and insert on each debenture a clause as above. That clause is intended for use where three forms are given.

The bearer of this debenture may at any time deposit the same at the co's office at in the county of and thereupon the co will cancel the same and will issue to the depositor a certificate recording the deposit and cancellation, and the name of the depositor and some other person, and on presentation of such certificate at the co's office in London the co will issue to the person named in the certificate or his nominee a new debenture, similar to that so deposited, but the stamp duty and the expenses incidental to such issue must be pd by the person to whom the new debenture is issued.

Occasionally a clause as above is inserted in debentures in order to avoid the dangers incident to transmission from one part of the world to another. Sometimes instead of providing for the cancellation of the debenture, the condition provides for an indorsement by the company's local agent to the effect that the debenture is registered to A. B., and declares that its negociability shall be suspended until the person specified in the indorsement attends at the company's office and in the presence of a director signs his name below the indorsement.

The uncalled capital hby charged shall be deemed to be exclusively Form 213a. applicable to the redemption of the debentures of the above issue, and Uncalled whenever any pt thereof shall be called and pd up the same shall be capital. carried to the credit of the redemption fund and applied in redeeming debentures as hereinafter provided.

The bearer or registered holder hereof may at any time before the Form 214. principal monies hby secured have been pd off direct the co to issue to Power to him fully pd up shares in the capital of the co equal in nominal amount exchange for to such principal monies, and in satisfon and discharge thereof, and the co shall, upon the surrender of this debenture, comply with such direction.

shares.

day of

At any time before the number of the preference shares of the co upon the request in writing of the registered holder hereof and upon the exchange surrender of this debenture, issue to him of the sd preference shares for shares. credited as fully pd up, and will pay to him the interest for the fraction (if any) of the current half-year up to the day of surrender.

(if and so long as a sufficient Form 214a. remain unissued) the co will, Power to

debentures

Sometimes it is desired to give debenture holders power to convert their debentures into shares as above. On conversion, a contract would have to be registered under s. 25 of the Act of 1867. See supra, pp. 13, 37.

This is to certify that the paymt of the principal monies and interest Form 215. secured by this debenture in accordance with the tenor thereof is guaranteed by The Given, &c.

Co, Limtd.

Sometimes a company which desires to raise money by the issue of debentures procures some other company to guarantee the principal and interest or the interest thereby secured. The guaranteeing company usually receives a commission for so doing, and takes a mortgage or charge by way of counter security. It must of course be seen that the transaction is intra vires the company. The best mode of giving the guarantee is by a trust deed, by which the guaranteeing company covenants with a trustee for the debenture holders. The guarantee should be confined to debentures upon which a certificate under the seal of the guaranteeing company is placed.

Guaranteed debenture.

This is to certify that the above debenture is one of the 3,000 like Form 216. debentures numbered inclusive, secured by the indre Trustee's

therein referred to.

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Occasionally where there is a trust deed the trustees indorse a certificate on the debentures, as above, but this practice is more common in America than here. See the Railway Companies Securities Act, 1866,

Form 217.
Debenture
to bearer.
Drawings.

The debenture and coupon will be in the same terms as Form 211. The conditions will be as follows:

The conditions within referred to, &c.

1. This debenture is one of a series, &c. [Form 211b, Clause 1. And if the words in brackets are used, insert after the word "another" the words "save as hereinafter provided."]

day of

2. One hundred of the sd debentures will be redeemed by the sd co on the day of 18-, and on each succeeding and day of redeemed or pd off.

until the whole of the sd debentures have been

The days fixed for redemption are usually the same as those fixed for payment of interest.

3. The parlar debentures to be redeemed on each occasion will be determined by half-yearly drawings, which the sd co will cause to be made at its registered office for the time being.

4. Such drawings will be made in the presence of a notary public of London not less than twenty-one or more than sixty days before the respive half-yearly days on which the debentures are to be redeemed. And the principal monies hby secured shall become payable on the

day of

or day of

which shall first happen after this debenture shall have been drawn for redemption.

5. Public notice of the day and time fixed for each drawing will be given by the co at least ten days previously, by advertisemt in a London daily newspaper, and the bearer of this debenture will be entled to attend at any such drawing.

6. Forthwith after each drawing, notice will be given by advertisemt in a London daily newspaper of the numbers of the debentures drawn for redemption.

7. The numbers of the debentures from time to time drawn will be recorded in a book to be kept for that ppose by the co, and to be open for the inspection of the bearer of this debenture.

8. If the bearer of this debenture shall so require, the notary public present at any such drawing as afsd shall make a statutory declon as to the result thereof.

[Add other conditions as in Form 211b, inserting in Clause 7 the words "(c) for if the co commits a breach of any of these conditions."]

Since the observations of the Master of the Rolls in Sykes v. Beadon, 11 C. D. 170, doubts have been felt whether such a scheme of redemption is not open to objection as amounting to a lottery. But the general opinion appears to be that it is not, even where the debentures are issued at a discount and made redeemable at par, and accordingly the practice of providing for redemption in accordance with the result of periodical drawings continues. And see the observations in Wallingford v. Mutual Society, 5 App. Cas. 658. However, it may be that a scheme of redemption which provided for the payment of a premium to the holders of drawn debentures is open to objection, although even in that case it might be contended that the premium was only a fair compensation for the prospective loss of interest at a high rate.

If it is desired in any case to make the redemption of debentures contingent

on the profits of the company, the following clauses can be introduced into the Form 217. conditions, which will require to be slightly modified.

1. The said company will, on the 1st day of November, 1884, and on every succeeding 1st day of November, until the whole of the said debentures shall have been redeemed or paid off, apply a sum equal to one moiety of the net profits of the said company, for the year ending on the 30th day of June, immediately preceding such 1st day of November, in the redemption at par of so many of the said debentures as such sum shall be sufficient to redeem.

2. Nevertheless, if, in any such year, the net profits shall be less than -1. there shall not be any drawing or redemption in respect of such year.

3. The certificate in writing of the auditor or auditors for the time being of the company shall as against the bearer hereof be conclusive evidence as to the amount of the net profits of the company in any year, or of there being none.

Such a debenture will be in the same terms as Form 211, omitting all refer- Form 218. ence to registration, and substituting the words "to [A. of ], or order," for "the bearer."

The conditions to be as follows:

1 & 2. [As in Form 211b.]

3. This debenture is (save as herein otherwise provided) to be deemed as regards transfer, transmission, and in all other respects, to possess the incidents of a promissory note originally made payable to the person or persons within named, or order, and all persons may act accordingly.

4. The co is to be entled to assume that every indorsemt on this debenture is authentic, and that where any indorsemt purports to be made by some person in a representative character, such person sustained such character when the indorsemt was made and was duly authorised to make the same.

5. The indorsemt hereof is not to impose any liability on the person indorsing the same.

6. The co will recognise the person who, having regard to these conditions, for the time being appears to be entled to this debenture, as the absolute owner thereof and of the principal moneys thereby secured, and the receipt of such person shall be a good discharge to the co for such principal moneys, and all persons may act accordingly.

7, 8, 9, 10, 11. [As in Form 211b, and Clauses 3, 4, 6, 7, and 11, substituting in 7 "holder" for "bearer."]

Sometimes debentures are made payable to order, as above. See In re General Estates Co., Ex parte City Bank, 3 Ch. 760; Enthoven v. Hoyle, 21 L. J. C. P. 100; 13 C. B. 373.

Prior to the Bills of Exchange Act, 1882, there was grave doubt whether an instrument under a company's seal could operate as a promissory note, but that Act provides, in effect (s. 91), that a company's promissory note may be under the common seal.

Accordingly a debenture containing an unconditional contract to pay" to the bearer," or, "to A., or order," might be held to be a promissory note, and to be negotiable accordingly. Nevertheless there seems to be little probability of such a determination. See British India Steam Co. v. Commissioners of Inland Revenue, 7 Q. B. D. 165, where a "debenture" payable to order, though not under seal, was held to be chargeable with duty as a debenture, and not as a promissory note. In these circumstances it is commonly deemed desirable to insert in a debenture "to order" clauses as above, so as to show the intention, and protect the company.

Debentures to order.

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