in reduction of the amount paid on each such share, and to the intent that each such share be henceforth deemed to be paid up to the extent of £4 only, and be liable to a call of £1.

THE A. B. COMPANY, LIMITED, per X. Y., Director.

Form 34, List of Creditors at Date of Reduction

(1867 Act, ss. 11, 13, 14, 17, and 19. But see 1877 Act, s. 4.)

In some exceptional cases the settling of a list has been dispensed with where this was specially craved in the petition and the reporter was satisfied that there were no creditors; but it seems doubtful whether the statutory formality of settling a list can competently be dispensed with.

LIST of Creditors of The A. B. Company, Limited, at (date), referred to in the Petition at their instance for Confirmation Order.

day of

(Place and Date.)—I, C. D., secretary of The A. B. Company, Limited, hereby certify that the foregoing contains a list of the creditors of, and persons having claims upon, the said Company on the (the date fixed by the interlocutor, of which a copy is hereto prefixed), together with their respective addresses, and the nature and amount of their respective debts or claims, and that to the best of my knowledge, information, and belief, the said list is a true and accurate and complete list of such creditors and persons having claims on the date aforesaid, and that there was not at the said date any debt or claim which, if the said date were the commencement of the winding-up of the said Company, would be admissible in proof against the said Company, other than and except the debts set forth in the said list. I am enabled to make this statement from facts within my knowledge as secretary of the said Company, and from information derived from investigation of the affairs, and the books, documents, and papers of the said Company.

C. D., Secretary.

Form 35, Warrant for Repayment of Capital, with relative Circular

To........

No

(1.) CIRCULAR

THE A. B. COMPANY, LIMITED

(Place and Date.)

SIR (or, MADAM),

Repayment of 13s. 4d. per share of Preference Capital.

and

The Court [of Session] has now confirmed the special resolution, passed and confirmed by the Company on last, for the repayment to the holders of the preference shares of paid-up capital to the extent of 13s. 4d. per share; and I beg to annex hereto a warrant for £

being the amount

The warrant can be cashed free at any branch of the Bank [of Scotland] on or after A separate warrant is being sent for the half-year's

dividend on the shares.

Your share certificate, endorsed with reference to the repayment of capital, is herewith returned. (The share certificates would previously have been called in for this purpose.) Kindly sign and return the enclosed receipt therefor. [or, "I also enclose new certificate in your favour for same number of shares of £4, 10s. each, fully paid up, for which please sign and return the accompanying receipt form."]-I am, your obedient Servant, C. D., Secretary.

No..

(2.) WARRANT

THE A. B. COMPANY, LIMITED

Warrant for Repayment of 13s. 4d. per Share of Preference Capital.

To the Bank [of Scotland, Edinburgh].

Pay to

with, the sum of

(Stamp, 1d.) (Place and Date.)

or order, and debit Capital Repayment Account being repayment of 13s. 4d. per share on preference

shares of £1 each, in terms of special resolution passed and confirmed by the

Payable with recourse at any other Office of the Bank, including

London Office.

V. DEBENTURES AND DEBENTURE STOCK

1. A debenture may be simply a personal obligation to pay, or it may be such an obligation coupled with a security. Debenture Stock "is merely borrowed capital, consolidated into one mass for sake of convenience. Instead of each lender having a separate bond or mortgage, he has a certificate entitling him to a certain sum, being a portion of one large loan" (Lindley on Companies, 5th ed., p. 195).

2. The debentures or debenture stock of a company incorporated under the Companies Acts, 1862 to 1900 (differing from those of a company to which the Companies Clauses Acts apply), do not, without express provision, confer on the holders any security on the company's assets. Debenture or debenture stock holders, without security or with a security invalidly constituted, rank only as ordinary creditors (Clark v. West Calder Oil Co., 9 R. 1017).

3. The security of the holders of debentures or debenture stock must be validly completed, according to the nature of the subject (Clark, supra). This is almost invariably done by vesting the security subjects in trustees.

4. In England, a company incorporated under the Companies Acts may give a floating charge over its assets; but such a charge by a company registered in Scotland over its assets in Scotland is invalid (Clark, supra). It may be that a Scottish company can give a valid floating charge over its assets situated in England or in any other country where such a charge is recognised (see Scottish Provident Institution, 16 R. 112), and such a charge is sometimes given for what it is worth. The cases are so rare, however, that it is thought unnecessary to give forms here.

5. In issuing debentures or debenture stock, the company's borrowing powers must be carefully kept in view.

6. Where security is given for debentures or debenture stock, a register of mortgages must be opened, in compliance with sec. 43 of the Companies Act, 1862. In the case of a public issue by a new company, it is necessary to attend to the provisions of the Act of 1900 as to prospectuses and also to comply with sec. 6 of the same Act. The provisions of that Act as regards the registration of mortgages and charges do not apply to Scottish companies (sec. 34).

STAMP DUTIES

The stamp duty payable in respect of registered debentures or debenture stock is 2s. 6d. per cent. on the amount secured (Stamp Act, 1891, schedule, voce "Marketable Security" and "Mortgage "). Where a company is taken bound to pay off its debentures or debenture stock at a premium, stamp duty must be paid in respect of the premium (Rowell (1897), 2 Q.B. 194). But where the company has merely power and is not bound to redeem at a premium, the premium escapes duty (Knight's Deep (1900), 1 Q.B. 217).

A trust deed for securing debentures is not treated as a collateral security, and if the debentures are duly stamped, the trust-deed will be adjudicated if impressed with the 10s. deed stamp. A trust-deed to secure debenture stock is, however, liable to the ad valorem stamp duty as a mortgage; but the debenture stock certificates do not require to be stamped.

Where the ad valorem stamp duty has been impressed, in the case of debenture stock, on the trust-deed, and, in the case of debentures, on the debentures themselves, the separate conveyances of the security subjects to the trustees have hitherto been adjudicated in Scotland on being im

pressed with the deed duty of 10s. In the case of the British Oil and Cake Mills, Ltd., 19th Feb. 1903, 10 S.L.T., p. 183, 19 T.L.R. 262, it was held by the English Court of Appeal that where a company had in a debenture stock trust-deed bound itself to convey in security property which it had contracted to purchase, but which at the date of the trustdeed had not been conveyed to it, the conveyances afterwards granted of such property to the trustees were liable as auxiliary" or "additional" securities to the ad valorem duty of 6d. per cent.

The manner of authenticating the coupon should be provided for by minute of directors' meeting; the secretary is usually authorised to sign the coupons at the time of issuing the debenture, and the number of the debenture, which is borne upon the coupon, is sufficient reference to the date of issue.

The coupons representing the interest for the period of the loan are printed on a perforated sheet issued with, and sometimes attached to, the debenture. Where the debenture contains an option for the company to make repayment, or for the debenture-holder to require repayment, at an intermediate date, it is customary to issue coupons up to that date only, along with the debenture, and to issue a Talon in the following form for the supply of further coupons, should the option referred to not be exercised:

Form 2, Talon for additional Interest Coupons

Talon for fresh supply of coupons for

per cent. Debenture No.

The holder of this debenture will receive in exchange for this talon a fresh supply of coupons when those above have all fallen due.

Where a talon is issued the clause as to interest in the debenture itself may read thus: "Provided always and declaring that we shall not be bound to make payment of said interest except upon deliverance of the proper coupons for the same issued herewith, or to be issued in exchange for the talon issued herewith." Coupons for interest on a marketable security, whether issued with the security or subsequently, are exempt from stamp duty (Finance Act, 1894, sec. 40). As a general rule, debentures and debenture stock are marketable securities (see Texas, &c., Co., 26 S.L.R. 51).

It is convenient to print on each debenture columns for noting the registration of transfers, thus:

Form 3, Provision for the noting of Registration of Transfers

The stamp duty on such a minute is 6d., whether the Company's seal is or is not impressed. The usual practice is not to use the seal, but merely to have the minute signed by the secretary or a director.

day of

The date of repayment of the principal sum due under the within-written debenture is hereby postponed, so that the same shall not become due and exigible until the 19 and interest on the said principal sum for such extended period at the rate of per centum per annum shall be paid [on re-delivery of the respective coupons issued herewith]. (If the interest is not payable by coupon, the bracketed words may be omitted, and the following substituted: "half-yearly at the terms within specified.")

(Exempt from stamp duty (Stamp Act, 1891), voce "Receipt," Exemption 11.) Received from The A. B. Company, Limited, the within principal sum of sterling, all interest due having been paid.

Dated the

Capital £ which

Form 6, Form of Debenture Stock Certificate

THE A. B. COMPANY, LIMITED

Incorporated under the Companies Acts, 1862 to 1900.

are [Five per cent. Cumulative Preference] Shares and

are [Ordinary] Shares.

each, of