CHAPTER III. MANAGEMENT AND ADMINISTRATION OF COMPANIES AND third part of 25 & 26 Vict. Object of the IN this part of the Act are found the only administhe Act. trative provisions that are obligatory on companies. 4. 89, part 3. They are few in number, and may be conveniently divided into provisions for the benefit of creditors, and provisions for the benefit of shareholders. Provisions for benefit of .creditore. Registered ffice of company. The provisions for the benefit of the creditor are as follows: Section 39 requires the company to keep a registered office, to which all communications may be sent and notices addressed, and imposes on the company a penalty of 57. a day if it carries on business before it has complied with the provisions with respect to a registered office. Section 40 enacts that due notice of the situation of the office is to be given to the registrar. A form of notice is given in the Appendix, and any officer of the company will justly incur great blame who, by neglecting to give due notice, subjects the company to which he belongs to payment of the penalty. The next two sections relate only to limited com panies, and they should never be absent from the mind of any director or officer of such a company. of name by pany. They provide for the publication to the world of Publication the fact of a company being framed with limited lia- limited combility, by enacting that every limited company shall s. 41. paint or affix, and shall keep painted or affixed, its name on the outside of every office or place in which the business of the company is carried on, in a conspicuous position, in letters easily legible; and shall have its name engraven in legible characters on its seal; and shall have its name mentioned in legible characters in all notices, advertisements, and other official publications of such company, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of such company, and in all bills of parcels, invoices, receipts, and letters of credit of the company. non-publica S. 42. The penalty for non-compliance with the above pro- Penalty on vision is most serious. A limited company which does tion of name. not paint or affix, and keep painted or affixed, its name in manner directed by the Act, is liable to a penalty of 51., and to a further penalty of 51. for every day of default; and every director and manager who knowingly and wilfully authorises or permits such default is liable to the like penalty: and if any director, manager, or officer of the company, or any person on behalf of the company, uses or authorises the use of any seal purporting to be a seal of the company, or issues or authorises the issue of any notice, advertisement, or other official publication, or signs or Register of mortgages. S. 43. authorises to be signed any bill of exchange, promissory note, endorsement, cheque, order of money or goods, or issues or authorises to be issued any bill of parcels, invoice, receipt, or letter of credit of the company, with respect to which the provisions of the preceding section have not been complied with, he is liable to a penalty of fifty pounds, and further is personally liable to the holder of any such bill of exchange, promissory note, cheque, or order for money or goods, for the amount thereof, unless the same is duly paid by the company. The inspection of the register of members, and the apparent property of a company, affords the creditor a considerable test of its solvency or insolvency, but that test is incomplete unless he has the means of ascertaining the extent of its incumbrances. Accordingly, the 43rd section provides that every limited company shall keep a register of all mortgages and charges specifically affecting property of the company, and shall enter therein a short description of the property mortgaged or charged, the amount of charge created, and the names of the mortgagees or persons entitled to such charge: if any property of the company is mortgaged or charged without such entry as aforesaid being made, every director, manager, or other officer of the company who knowingly and wilfully authorises or permits the omission of such entry incurs a penalty not exceeding fifty pounds: the register of mortgages must be kept for inspection by any creditor or member of the company at all reasonable times; and if such inspection is refused, any 1 officer of the company refusing the same, and every director and manager of the company authorising or knowingly and wilfully permitting such refusal, incurs a penalty not exceeding five pounds, and a further penalty not exceeding two pounds for every day during which such refusal continues; and in addition to the above penalty as respects companies registered in England and Ireland, any judge sitting in chambers, or the vice-warden of the stannaries in the case of companies subject to his jurisdiction, may by order compel an immediate inspection of the register. of assets and by certain S. 44. Certain companies, supposed to stand towards their Statement members and customers in a peculiarly fiduciary re- liabilities lation, that is to say, banking companies, if limited, companies. insurance companies (a), and deposit, provident, or benefit societies are required, before they commence business, and also on the first Monday in February and the first Monday in August in every year during which they carry on business, to make a statement in a form set out in the first schedule to the Act, of their capital, liabilities, and assets. A copy of such statement must be put up in a conspicuous place in the registered office of the company, and in every branch office or place where the business of the company is carried on. The penalties for default are very severe. Not only is the company liable to (a) As to statements and returns by Life Assurance Companies not under the Friendly Societies Acts, see 33 & 34 Vict. c. 61, amended by 34 & 35 Vict. c. 58; 35 & 36 Vict. c. 41; infra, App. III. Promissory notes and bills of exchange. S. 47. MANAGEMENT OF COMPANIES. a penalty not exceeding five pounds for every day during which such default continues, but every director and manager of the company who knowingly and wilfully authorises or permits such default incurs a like penalty. Every member and every creditor of companies of the last-mentioned description is entitled to a copy of the above-mentioned statement on payment of a sum not exceeding sixpence. This requirement of a statement of account was made by 21 & 22 Vict., c. 91, the Act which admitted banking companies to the privilege of limited liability. It may be doubted whether such enactments are of much value. An honest company is too anxious to produce its accounts. A dishonest company can readily, without incurring any penalty, make a summary of account that will mislead any person except a professional accountant. Considerable uncertainty prevails at common law as to the proper manner of executing promissory notes and bills on behalf of a company. To facilitate the execution of such instruments, section 47 enacts "that a promissory note or bill of exchange shall be deemed to have been made, accepted, or endorsed on behalf of any company under this Act, if made, accepted, or endorsed in the name of the company by any person acting under the authority of the company, or if made, accepted, or endorsed by or on behalf or on account of the company, by any person acting under the authority of the company." It will be observed that this section is not im |