Form 219. Registered debenture. Form 219a. Conditions. 1. The day of Co, Limtd (hereinafter called the co), will, on the [or on such earlier day as the principal monies hby secured become payable in accordance with the conditions indorsed hereon], pay of or other the registered holder [supra, p. 255] for the time being hereof, the sum of 7. to 2. The co will in the meantime pay to such registered holder interest thereon at the rate of p. c. p. a., by half-yearly payments on the day of in each year, the first of such day of next. 3. This debenture is issued subject to the conditions indorsed hereon. Given, &c. The conditions within referred to: 1. This debenture is one of a series of 200 like debentures issued or about to be issued by the co. 2. A register of the debentures will be kept at the co's registered office, wherein there will be entered the names, addresses, and descriptions of the [in incorporating this clause in Form 211b insert here the word "regis tered"] holders, and parlars of the debentures held by them respively [and such register will at all reasonable times during business hours be open to the inspection of the registered holder hereof and his leg. per. reps., and any person authorised in writing by him or them]. The words in brackets are sometimes omitted. 3. The registered holder will be regarded as exclusively entled to the benefit of this debenture and all persons may act accordingly, and the co shall not be bound to enter in the register notice of any trust or to recognise any right in any other person save as hercin provided. There seems no need to provide for the somewhat remote contingency of lunacy nor for bankruptcy, since the trustee may exercise the right to transfer to the same extent as the bankrupt but for his bankruptcy. Section 50 of the Bankruptcy Act, 1883. Apart from express stipulations a co, by registering a transferee, may be estopped from questioning his title. Higgs v. Northern Assam Tea Co., L. R. 4 Ex. 387; Webb v. Commissioners of Herne Bay, L. R. 5 Q. B. 642; Romford Canal Co., 24 C. D. 85. 4. Every transfer of this debenture [in incorporating this in Form 211b insert here the words "when registered"] must be in writing under the hand of the registered holder or his leg. per. rep. The transfer must be delivered at the registered office of the co with a fee of 2s. 6d., and such evidence of identity or title as the co may reasonably require, and thereupon the transfer will be registered. Sometimes the last paragraph of this clause is omitted and the following inserted: "The transfer shall be made only in the register and shall be signed by the transferor-or, if he is absent, by his attorney thereunto duly authorised, and upon every transfer a fee of 2s. 6d. shall be paid to the company, and such Form 219a. evidence of identity or title as the company may reasonably require, must be adduced." 5. In the case of joint registered holders the principal monies and interest hby secured shall be deemed to be owing to them upon a joint account. Having regard to section 61 of the Conveyancing and Law of Property Act, 1881, this clause is probably unnecessary. 6. No transfer will be registered during the seven days immediately preceding the days by this debenture fixed for payment of interest. 7. The principal monies [as in Form 211b, condition 3] and the receipt of the registered holder for such principal monies and interest shall be a good discharge to the co. 8. The co may at any time give notice in writing to the registered holder hereof, his exs or ads, of its intention [Same as Clause 6, supra, Form 211b]. · If thought desirable this can be omitted or the following substituted :"At any time after the day of next, (1) the registered holder of this debenture may give the company notice in writing to pay off the principal moneys hereby secured, and (2) the company may give the registered holder hereof notice in writing of its intention to pay off such principal moneys. And at [or on the -day of - -, which shall first happen after] the expiration of six calendar months from any such notice being given, the principal moneys hereby secured shall become payable." Sometimes it is desired to give the debenture holder power to call in the moneys at stated intervals, thus :- 'The registered holder for the time being hereof, may, upon giving not less than six calendar months' previous notice in writing to the company, require payment of the principal moneys hereby secured on the 1st day of July in any of the following years, namely, 1885, 1890, and 1895, and such principal moneys shall become payable accordingly." 9. [Same as Clause 7, supra, Form 211b, substituting "registered holder" for "bearer."] 10. [Same as Clause 11, supra, Form 211b.] 11. A notice may be served by the co upon the holder of this debenture by sending it through the post in a prepaid letter addressed to such person at his registered address. 12. Any notice served by post shall be deemed to have been served at the expiration of 24 hours after it is posted, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the post-office. Perpetual 1. The Co, Limtd (hereinafter called the co), will, when the debentures. principal monies hby secured become payable, in accordance with the conditions indorsed hereon, pay to the bearer, or when registered to the registered holder of this debenture the sum of —1. T Form 220. Another form sometimes used is:-" The - Company, Limited, being indebted to the person to whom this debenture is issued, in the sum of £ upon the terms that such sum is to be repayable only in the events and subject as hereinafter expressed, will when, &c." 2. The co [interest as in Form 211, adding the words] and any further coupons issued in respect of such interest. 3. The co hby charges [Form 211]. 4. This debenture is issued [Form 211]. · debentures, all bearing [Add coupons and conditions as follows] :1. This debenture is one of a series of even date. The debentures of the sd series, and the debentures of any subsequent series containing a similar charge, are all to rank pari passu in point of charge as a floating security on the ppty charged thereby [if any limit, provide accordingly, supra, note to Condition 1 of Form 211]. 2. Annexed to this debenture are coupons, each providing for a half-year's interest [and if so, and also a voucher for fresh coupons], and such interest will be payable only on presentation of the coupon referring thereto. After the day of - [10 years after date], and every succeeding period of 10 years the bearer, or if registered the registered holder, on production of this debenture for indorsemt, [or, the bearer of the appropriate voucher will, on presentation thereof] will be entled to the issue of fresh coupons for a further period of 10 years. The voucher will be as follows:-"The Company, Limited. Debenture No.. Voucher for fresh coupons to be presented at the office of the company [situation] on or at any time after the of," and it will be printed so that it can be detached immediately after the last coupon of the series. 3. The principal monies hby secured will only become payable [as in Form 211b., Condition 7]. [Add clauses, et seq., of Form 211b, modified so as to suit a debenture to bearer capable of being registered.] Companies frequently experience inconvenience in providing for the renewal of terminable debentures, e. g., the money market or the affairs of the company may happen to be temporarily depressed just when a loan to pay off debentures is required. Moreover a large class of investors require a permanent security, and for that reason dislike terminable debentures. Accordingly a considerable number of companies in good credit have taken to issuing perpetual debentures [and perpetual debenture stock, infra, p. 279,] and the public have invested largely therein. " Although called "perpetual the debentures are made payable in certain events (see condition 3) but the meaning is that they may happen to continue for an unlimited period. Some companies which issue perpetual debentures modify condition 3 by adding the words "or (c) if the company gives six months' notice by advertisement in the Times of its intention to pay off this debenture, but so that in such case a bonus of £10 shall be paid along with such principal moneys." And in some cases it is desirable so to provide, e. g., where the issue is to be limited in amount, for the company might otherwise find its operations inconveniently fettered. In the absence of a power to pay off it might be necessary to reconstruct. See further, supra, p. 258. as to perpetual debentures. As in Form 211 omitting the charge but adding the following conditions to Form 221. 211 b.: Profit or ture. 1. The principal monies and interest hby secured are to be payable income debenonly out of the profits of the co in manner hereinafter provided. 2. The co is to apply the net profits made during the financial year or other periods comprised in the accounts, submitted to the ordinary general meeting of the members of the co in each year as follows :— : First In paying to the debenture holders of this series pari passu all interest then due and payable to them respively in respect of such debentures: Secondly: Of the surplus one half may be applied in paying dividends on the share capital of the co or otherwise in such manner as the co in general meeting shall from time to time determine. Thirdly The other half shall be carried to the credit of the redemption fund to be established as hereinafter provided. 3. The co will establish a redemption fund and all monies carried to the credit thereof will be invested in such investmts as the directors think fit, with full power from time to time to vary and to realise the same as occasion may require. And whenever the redemption fund amounts to -7., the co will apply the same in the redemption at par of so many of the debentures as it shall be competent to redeem. The certificate [see note to Form 217]. 4. The parlars, debentures, &c. [add provisions for drawings, &c., as in Form 217]. It is not by any means uncommon to issue debentures payable out of profits only, e. g., to shareholders or unsecured creditors upon the reconstruction of an insolvent company, and upon a scheme of arrangement in bankruptcy whereby the assets are made over to a company. See supra, Form 25. And sometimes a vendor agrees to accept such debentures in part satisfaction of his purchase-money. If desired the interest is made non-cumulative so that if the profits of any one year are insufficient to pay the interest, there will be no claim on subsequent profits for the deficiency. Occasionally the interest only, and not the principal, is made payable out of profits, e.g., sometimes instead of providing for redemption by means of drawings, provision is made for the payment of dividends thereout to the debenture holders pari passu on account of principal. The interest payable out to debentures of the above issue is to be payable only out of the net profits from time to time made by the company, and is to be a first charge on such profits, and the company will not at any time divide any profits among its members without first paying all interest then due on the debentures, and providing for the payment of all interest to become due thereon at any time within six calendar months after such division. Sometimes when the assets of a company or bankrupt are taken over by a new company debentures are issued to the creditors or others for the amount of their claims, but charged only on the assets so taken over, subject to any prior increase, and without any personal liability being imposed on the new company. In such case the debentures (or a trust deed) provide for the realization of the assets by the new company [e. g., see clauses in Form 713, infra], and for the division from time to time of the net proceeds, less a commission to the new company, among the debenture holders, pari passu. Such a scheme is often found attractive, because the creditors get a tangible security of large nominal amount. Form 221. A similar scheme is sometimes adopted where it is desired to acquire the securities of a foreign company or government, with a view to some compromise or arrangement. Form 222. Prospectus of issue of debentures. The following skeleton prospectus may be found of some use by way of reminder. The Co, Limtd. Issue of 100,0007. six p. c. debentures of 501. each, to be paid off 1st February, 1896. [Here the names of the directors and other officers of the company are usually given.] Subscriptions [or applicons] are invited for 100,0007. in six p. c. debentures of 501. each. These debentures are issued in order to provide funds for, &c. The Co [position and prospects]. The debentures will be issued at par for sums of 507. each, made payable "to bearer" [with power to register at any time], and carrying interest from the day of at the rate of six p. c. p. a., payable and th of —, at the bankers of the half-yearly, on the ―th of co, upon presentation of coupons annexed to the debentures. On applicon . On allotmt On the th June, 18 On the th July, 18 On the th July, 18 : Provisional certificates will be issued on paymt of the amount due on allotmt, and exchanged for definitive debentures on completion of the paymts. [For form of certificate, see infra, p. 277.] Instalmts may be pd in advance, on allotmt, or on any of the above dates, under discount at the rate of is made the deposit will be returned in full. p. c. p. a. Where no allotmt In case a less number of debentures is allotted than is applied for, the excess of the deposit will be applied in or towards paymt of the future instalmts due upon such number as may be allotted. Failure to pay any instalmt when due, will render the allotmt liable to cancellation, and the previous paymts to forfeiture. Applicons in the annexed form should be filled up and sent to the co's bankers, Messrs., accompanied by a deposit of 107. upon each debenture applied for. The form of debenture can be seen at the office of the co. By order of the Board of Directors. No., Street, London, E.C., January 1st, 1884. [Form of letters of application to be subjoined to prospectus.] Secretary. |