Form 152.

Ordinary certificate.

Incorporated under the Companies Acts, 1862 and 1867.
Capital 100,000/., divided into 5,000 shares of 201. each.

No.

207. shares.

is the holder of

shares,

THIS IS TO CERTIFY that A. B., of numbered to inclusive, in the above-named company, subject to the articles of association thereof, and that the sum of paid up upon each of the said shares.

of

-7. has been

Given under the common seal of the said company, this day

The common seal of the said company was hereunto affixed in the presence of

Directors.

Secretary.

Seal of the

Company.

Occasionally an abstract of the clauses contained in the articles of association which regulate the right of transfer [supra, p. 102], and give the company a lien [supra, p. 108], is indorsed on the certificate.

Form 153.

No.

The

Company, Limited.

Certificate of preference shares.

Capital 100,0007., divided into 5,000 preference shares of 107. each, and 5,000 ordinary shares of 107. each.

THIS IS TO CERTIFY that A. B., of
above-mentioned preference shares, numbered, &c., in the

Limited, subject to the articles of association thereof, and that upon each of the said shares the full amount of 101. has been paid up.

Given, &c.

No.

The Company, Limited.

Capital, 100,0001. stock.

THIS IS TO CERTIFY that A. B., of

is the holder of the sum of Certificate of

-7. stock of the above-named company, subject to the articles of association thereof.

Given, &c.

stock.

No.

The Company, Limited.

Form 155.

Another form

Capital 50,0007., divided into 4,000 ordinary shares of 107. each, and 1,000 10 per cent. preference shares of 107. each, which preference of certificate of shares were created by the under-mentioned special resolution of the preference above-named company.

THIS IS TO CERTIFY that A. B., of, &c., is the holder of said preference shares, numbered to

of the inclusive, in the abovenamed company, subject to the articles of association thereof, and that the sum of -7. has been paid up upon each of the said shares.

Given, &c.

shares.

THIS IS TO CERTIFY that the bearer of this warrant is entitled to fully paid up shares of 7., each in the above-named company. Given, &c.

As to share warrants, see supra, pp. 106, 196.

By S. 33 of the Act of 1867: "There shall be charged on every share warrant a stamp duty equal to three times the amount of the ad valorem duty which would be chargeable on a deed transferring the share or shares or stock specified in the warrant, if the consideration for the transfer were the nominal value of such share or shares or stock."

For the ad valorem duty on transfers, see the Schedule to the Stamp Act, 1870, under" Conveyance or Transfer on Sale." It is as follows:

Where the amount or value of the consideration for the sale does not
exceed £5
Exceeds £5 and does not exceed £10

£ s. d.

00 6

0 1 0

Form 156.

Form of share warrant.

Form 156.

So that the proper stamp for a share warrant issued in respect of one 107. share will be 38.

By S. 127 of the Stamp Act, 1870, it is provided that: "If a share warrant is issued without being duly stamped, the company issuing the same, and also every person who, at the time when it is issued, is the managing director or secretary, or other principal officer of the company, shall forfeit the sum of 507,"

It is not uncommon to annex to a share warrant a series of coupons numbered consecutively. When they are exhausted fresh coupons are issued. They require no stamp. Where such coupons are issued it is desirable in the conditions [supra, p. 196] to provide that the delivery of a coupon shall be a good discharge to the company for the corresponding dividend.

DEBENTURES.

INTRODUCTORY NOTES.

COMPANIES formed under the Act of 1862 very commonly issue Issue of debendebentures:

1. For the purpose of securing the repayment of money borrowed. 2. In payment for property purchased, or services rendered, or money due.

tures common.

ture operating

as a covenant.

Formerly a debenture was generally framed as a covenant by the As to debencompany with the person to whom it was issued to pay to him, his executors, administrators, or assigns, the principal money therein mentioned with interest, and was expressed to be given under the common seal.

The right to sue for the recovery of money secured by an instrument Chose in so framed, being a chose in action, was only assignable subject to the action. rules which prevailed as to the assignment of a chose in action, e.g. :

(a) It was only assignable subject to the equities subsisting between
the company and the person to whom the debenture was issued.
Hence before taking an assignment the intending assignee was
obliged to make inquiries of the company, whether the debenture
was valid and in full force, or whether the company claimed to
set up any equities.

(b) The assignee could only sue in the name of the assignor.
(c) The assignee was obliged to give notice of the assignment to the
company, because where two or more persons claim to be assignees
of the same chose in action they are, as between themselves,
entitled to priority in the order of time at which they respectively
give notice of their claims to the debtor.

d) The holder of such an instrument could not give a better title to
his assignee than he himself possessed. Thus if a debenture was
stolen or lost, and was subsequently assigned to a bona fide pur-
chaser without notice of the theft or loss, the assignee did not
acquire any title to the monies thereby secured as against the real
owner. Hence a purchaser could not safely take an assignment
without investigating the title of the vendor, nor could the
company prudently pay the holder without requiring him to show
his title.

But instruments so circumstanced were obviously not capable of being Objections to readily and safely dealt with. However good the credit of the company

such instruments

Improvements.

The several forms of debentures.

issuing them might be, dealings could not safely take place without investigation of title, inquiries, assignments, notices, and legal advice.

And it may here be observed, that although rule (b) has to some extent been abrogated by the Judicature Act, the other rules remain in force. The inconveniences of such a form having been felt, and serious loss having been incurred by investors: Athenæum Life Assurance Society v. Pooley, 1 Giff. 102 ; 3 De G. & J. 294; In re Natal Investment Co., 3 Ch. 355; efforts were made to improve the form, and these efforts have been so far successful, that debentures can now be framed in a manner that facilitates investment by affording a convenient and attractive security easily and safely dealt with. In the result, many millions are now invested in such debentures, and companies that have obtained on easy terms a debenture loan of from 50,000l. and upwards, are to be numbered by hundreds.

The following are the several kinds of debentures now generally used:

1. Debentures to bearer.

2. Registered debentures.

3. Registered debentures with coupons to bearer.

And debentures of each kind may be framed as :

1. Mortgage debentures, i.e., debentures secured by mortgage or charge.

2. Unsecured debentures, i.e., debentures not secured by mortgage or charge.

"To bearer."

Character

istics of negotiable instrument.

Convenience of.

AS TO DEBENTURES TO BEARER:

In framing a debenture to bearer the object is, as far as possible, to endow it with the characteristics of a negotiable instrument.

The following are the most important characteristics of a negotiable instrument, e.g., a promissory note to bearer :

(a.) A purchaser to whom it is delivered (before it becomes due) takes it free from equities between the person to whom it was originally issued and the maker.

(b.) No assignment in writing is necessary, for the contract is annexed to the instrument the delivery of which passes the right to sue.

(c.) The holder of the instrument can sue in his own name.

(d.) The delivery of the instrument constitutes a perfect and complete transfer of the contract without giving notice to the debtor, i.e., to the maker.

(e.) Any person who takes the instrument bonâ fide and for a valuable. consideration, acquires a good title, even though the person transferring it to him have no title, e.g., have stolen it or found it.

Such an instrument is in fact as easily and safely dealt with as cash; an investor has no need to make any inquiries, or to give any notices, or procure any assignment to be executed, for the delivery of the instrument gives him a valid and complete title.