FORM XI.

PROSPECTUS OF ISSUE OF DEBENTURES.

The following skeleton prospectus may be found of some use by way of reminder.

The Company, Limited.

Issue of 10,000l. six per cent. debentures of 507. each, to be paid off 1st February, 1881.

[Here the names of the directors and other officers of the company are usually given.]

Subscriptions [or applications] are invited for 10,000l. in 6 per cent. debentures of 501. each. These debentures are issued in order to provide funds for, &c.

The Company [position and prospects].

The debentures will be issued at par for sums of 507. each, made payable "to bearer," and carrying interest from the at the rate of 6 per cent. per annum, payable

and -th of

at the

day of -
half-yearly, on the -th of
bankers of the Company, upon presentation of coupons
annexed to the debentures.

The terms of subscription for each debenture are as follows:

Provisional certificates will be issued on payment of the amount due on allotment, and exchanged for definitive debentures on completion of the payments.

[For form of certificate, see infra, p. 463.]

per

Instalments may be paid in advance, on allotment, or on any of the above dates, under discount at the rate of cent. per annum. Where no allotment is made the deposit will be returned in full.

In case a less number of debentures is allotted than is applied for, the excess of the deposit will be applied in or towards payment of the future instalments due upon such number as may be allotted. Failure to pay any instalment when due, will render the allotment liable to cancellation, and the previous payments to forfeiture.

Forms.

Forms.

Applications in the annexed form should be filled up and sent to the company'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 company.

By order of the Board of Directors.

No.

Secretary,

Street, London, E.C., January 1st., 1876.

[Form of letters of application to be subjoined to prospectus.]

No.

The A. Company, Limited.

Issue of 10,000l. six per cent. debentures.

To the directors of the A. Company, Limited.

Gentlemen,

I beg to apply for debentures of the above issue in the terms of the prospectus issued by you, dated, &c., on which I have paid the required deposit of 107. per debenture; and I undertake to accept the same or any less number you may allot to me, and to make the remaining payments in respect thereof at the dates specified in the said prospectus.

Names
Address
Occupation
Date

Your obedient servant,

* If you desire to pay in full on allotment, the words "the dates specified in the said prospectus" should be struck out, and the words "on allotment under discount" substituted.

FORM XII.

PROVISIONAL CERTIFICATE OF TITLE TO DEBENTURES.

The following is a provisional certificate in the ordinary form.

It is

a negotiable instrument by the law merchant. Rumball v. Metropolitan Bank, 2 Q. B. Div. 194.

Issue of 10,000l. 6 per cent. debentures of 501. each.

THIS IS TO CERTIFY that the above-named company have received the sum of 207. upon each of the said debentures, and that on payment of the remaining instalments as below mentioned, the bearer will be entitled to receive debentures of the said issue, each for 501.

The remaining instalments on each debenture are to be paid at the bankers of the company as follows :—

On the th June next 10l. per debenture.

On the

On the

th July next 107. per debenture.

th July next 107. per debenture.

Failure to pay any instalment when due will render the previous payments liable to forfeiture.

The remaining instalments may be paid in full under discount at the rate of per cent. per annum on any day on which an instalment falls due.

London,

For the company,

Secretary.

Street, E.C., 1st, 1877.

Annexed to the above certificate, will be receipts for future instalments, as follows.

Drawing of 6 per cent. debentures issued in July, 1875. Notice is hereby given, that the undermentioned debentures were this day drawn in accordance with the conditions indorsed thereon at the offices of the company in the presence of and, directors of the company, and of Mr. -(notary

Forms.

public), and will be paid at par on and after the

day of

next, between the hours of 10 A.M. and 4 P.M., at the bank of Messrs. Lombard Street, E.C., with the interest then due, on presentation of the debenture with the remaining coupons:

Numbers of debentures drawn

390

602

692

696

740

806

N.B. Interest on the above debentures will cease on the

Fifth half-yearly drawing in respect of the issue of £debentures of 18-. Notice is hereby given that the 250 debentures amounting in the aggregate to 7,000l., the numbers and amounts of which are hereunder specified, were this day drawn in accordance with the conditions indorsed thereon, and will be paid off at par at the

Bank,

Threadneedle Street, E.C., on and after the next.

Limited, No.

day of

FORM XV.

TRUST DEED for SECURING MORTGAGE DEBENTURE STOCK
ISSUED by a COMPANY INCORPORATED UNDER the ACTS
OF 1862 and 1867.

Until quite recently companies registered under the Acts of 1862 and 1867, seldom or never issued mortgage debenture stock. It is, however, a convenient mode of raising money, and is gradually being adopted. The following precedent will show how the stock should be secured, and also how the conditions of issue should be framed.

Of course, instead of making the stock redeemable at the end of ten years, the period can be extended to fifteen or twenty years; or the stock may be made a "perpetual mortgage debenture stock." The advantage which such a stock possesses over preference shares is that it gives the holder a first charge on the assets as against other creditors, whereas the holders of preference shares can, at the utmost, only be given a preference in the distribution of surplus assets after payment of all creditors.

It may be made a condition of issue if desired that the company shall have power to redeem the stock or any part of it on giving six months' notice.

A company which has debentures outstanding, sometimes finds great difficulty in providing for their payment at maturity: if instead of debentures perpetual stock is issued, the difficulty and danger will be avoided. Endeavours are often made to induce the holders of mortgage debentures to exchange them for preference shares; but not uncommonly without success; though unwilling to take shares, such persons might be ready to take perpetual mortgage debenture stock. As to another mode of securing this stock, see infra, p. 474, note, and supra, p. 63.

the

day of

Forms.

between Parties.

THIS INDENTURE, made the
Company, Limited (hereinafter called the company),

and E. F.,

of the one part, and A. B., of — C. D., of of of the other part: WHEREAS [Here will follow recitals Recitals. showing the company's title to the property intended to be comprised in the security]: AND WHEREAS,* by a special resolution of the company, duly passed and confirmed at extraordinary general meetings thereof, held respectively on the of it was resolved that a mortgage debenture stock of the nominal amount of 100,000. be and the same was thereby created: and that the said stock

and day of

day

(*) In this case the stock is supposed to have been created by special resolution, and the conditions of issue and trust deed approved in like manner; but in most cases the general powers of the directors would enable them to create and issue mortgage debenture stock without the sanction of a special resolution, and in such case the above recital would of course be modified.

H H