Form 158a. Heading.-Very commonly a heading as above is used. Sometimes several of the particulars are omitted. Consideration. It is not essential to express the consideration in a debenture, but if in any case it is deemed desirable to do so, the instrument will commence as follows:-" In consideration of the sum of 1007. to the above-named company (or to The Company, Limited), by - —, of the said company will, &c.," or "The Company, Limited, in consideration of -7. paid to it by of will, &c." Will Pay-As to the expression "will," see supra, p. 221. Instead thereof, "undertakes," "promises," or "binds itself " to pay are sometimes used. Ex parte City Bank, 3 Ch. 153; Crouch v. Credit Foncier, L. R. 8 Q. B. 374; Norton v. Florence Public Works Co., 7 C. Div. 332. Interest. If the bearer should not present the debenture for payment at maturity, interest would not be subsequently payable. Interest would however be payable if the company made default, but not, in the absence of express contract, at a higher rate than 5 per cent. per annum. In re Roberts, Goodchap v. Roberts, 14 C. Div. 49 ; 28 W. R. 870 ; In re European Central Co., 4 C. Div. 33 ; 25 W. R. 92. Bearer. Sometimes debentures are made payable "to A. or to the bearer hereof." Debentures to Order.-Sometimes a debenture is made "to order," e.g., " to the said A. B. or order." In re General Estates Co., Ex parte City Bank, 3 Ch. 760; Enthoven v. Hoyle, 21 L. J., C. P. 100; 13 C. B. 373. But where the instrument is capable of being held to be a promissory note [infra, p. 251], it seems inexpedient to make it "to order." The person to whose order it is made payable might, by indorsing the instrument, and then parting with it, unknowingly incur a serious liability; for, if it should be held to be a promissory note, he would, as indorsee, be liable to pay to the holder for the time being the monies secured thereby, if the company made default. No doubt he might avoid liability, by indorsing sans recours; but where an instrument purports to be a debenture, the notion that it is in truth a promissory note might not occur to the holder. Stamp.-See supra, p. 241. Coupons. If thought fit, a coupon in Form (2), supra, p. 239, can be used, but in such case it will be desirable to insert the special condition there given. Language. Where a company is likely to find a foreign market for its debentures, they are sometimes printed in several languages on the same sheet, and the seal is affixed at foot with an attestation clause in each language. Conditions. If thought fit, the debenture can refer to the conditions as "subjoined." Form 158b. The conditions within referred to: 1. Annexed to this debenture are coupons, each providing for the payment of a half-year's interest, and such interest will be payable only on presentation and delivery of the coupon referring thereto. If coupons in Form (2), supra, p. 239, are used, the special conditions there mentioned will be inserted here. 2. The bearer of this debenture and the bearer of each of the coupons annexed hereto, will be entitled to the principal monies and interest specified in such instruments respectively, free from any equities between the company and the original or any intermediate holder thereof respectively. This condition is perhaps implied by the debenture being "to bearer." Supra, p. 222. 3. If the principal monies hereby secured shall become payable before the day of the person presenting this debenture for payment Form 158b. must surrender therewith such of the said coupons as shall represent the interest payable after the day when such principal monies shall have become so payable; the company, nevertheless, paying to such person the interest for the fraction of the current half-year up to that day. If Clauses 5 and 6 are not inserted, the above can be omitted. 4. The delivery to the company of this debenture and of each of the said coupons, shall be a good discharge for the principal monies and interest therein respectively specified, and the company shall not be bound to inquire into the title of the respective bearers of such instruments, or to take notice of any trust affecting such monies, or be affected by express notice of the right, title or claim of any other person to such monies or instruments. It is more convenient to make the delivery of the instrument, rather than the receipt of the bearer, a good discharge. Such a condition is unquestionably valid. Sce supra, p. 222. 5. The company may at any time give notice by advertisement in the Times and one other London daily newspaper, of its intention to pay off this debenture, and upon the expiration of six calendar months from such notice being given, the principal monies hereby secured shall become payable. day of If desired, the words " day of, or which shall next happen after the" can be inserted before the word "expiration," so that the principal monies may become payable on one of the days fixed for payment of interest. 6. If the company makes default for a period of six calendar months in the payment of any interest hereby secured, the bearer hereof may at any time thereafter, before such interest is paid, by notice in writing to the company call in the principal monies hereby secured. And in case such notice is duly given, or if an order of some court of competent jurisdiction is made, or a special or extraordinary resolution is passed for the winding up of the company, the principal monies hereby secured shall immediately become payable. any It is now not uncommon to provide that if default is made in paying the interest for say six months, the principal monies shall become due, or may (as above) be called in by the debenture holder, and the propriety of inserting some such provision is obvious. There seems no reason why the holder of a debenture, especially if it is not secured by mortgage or charge, should be placed in a worse position than an ordinary mortgagee who has agreed not to call in his loan for a definite period, in which case the agreement is always made conditional on the punctual payment of the interest. The above form is better than making the principal payable on default, because it allows the debenture holder, if he thinks fit, to give the company further time. Sometimes less than six months is specified. As regards making the principal payable in the event of a winding up: such a provision is not uncommon, and while it can do the company no harm, may prevent disputes as to the rights of the debenture holder. According to a recent decision, it only expresses that which the law implies. Hodson v. The Tea Co., 14 C. D. 859; 28 W. R. 458. It may here be mentioned that a provision for accelerating the time for payment of the principal monies is not a penalty against which equity can relieve. Thompson v. Hudson, L. R. 4 H. L. 1; Wallingford v. Mutual Society, 5 App. Cas. 685. Form 158b. 7. The principal monies and interest hereby secured will be paid at The Bank, Limited, No. Street, London, or at the registered office of the company. Form 159. Debenture to bearer. Drawings. The debenture and coupon will be in the same terms as Form 158. The conditions will be as follows: The conditions within referred to. 1. This debenture is one of a series of 1,000 debentures of 207. each, numbered 1 to 1,000 inclusive, and issued or about to be issued by the within-named company. 2. One hundred of the said debentures will be redeemed by the said company on the 18, and on each succeeding day of have been redeemed or paid off. The days fixed for redemption are usually the same as those fixed for payment of interest. 3. The particular debentures to be redeemed on each occasion will be determined by half-yearly drawings, which the said company will cause to be made at its registered office for the time being. 4. Such drawings will be made in the presence of a notary public of London not less than twenty-one or more than sixty days before the respective half-yearly days on which the debentures are to be redeemed. And the principal monies hereby secured shall become payable on the day of or day of which shall first happen after this debenture shall have been drawn for redemption. 5. Public notice of the day and time fixed for each drawing will be given by the company at least ten days previously, by advertisement in a London daily newspaper, and the bearer of this debenture will be entitled to attend at any such drawing. 6. Forthwith after each drawing, notice will be given by advertisement in a London daily newspaper of the numbers of the debentures drawn for redemption. 7. The numbers of the debentures from time to time drawn will be recorded in a book to be kept for that purpose by the company, and to be open for the inspection of the bearer of this debenture. 8. If the bearer of this debenture shall so require, the notary public present at any such drawing as aforesaid shall make a statutory declaration as to the result thereof. This clause is not often used. 9 to 15 [same as clauses 1 to 7 of Form 158b, omitting, if thought fit, Clause 5 and inserting in Clause 6 the words "or if the company commits a breach of any of these conditions," before the words order."] 66 or if an Since the observations of the Master of the Rolls in Sykes v. Beadon, 11 C. D. 170, Form 159. doubts have been felt whether such a scheme of redemption is not open to objection as amounting to a lottery. But the general opinion appears to be that it is not, even where the debentures are issued at a discount and made redeemable at par, and accordingly the practice of providing for redemption in accordance with the result of periodical drawings continues. And see the observations in Wallingford v· Mutual Society, 5 App. Cas. 658. However, it may be that a scheme of redemption which provided for the payment of a premium to the holders of drawn debentures is open to objection, although even in that case it might be contended that the premium was only a fair compensation for the prospective loss of interest at a high rate. Sometimes an issue of debentures is divided into series of different amounts, and Form 160. in such case the debentures and coupons will be as in Form 158, and the conditions as follows: The conditions within referred to :— 1. This debenture is one of an issue of 100,0001. in debentures by the within-named company. The said debentures are divided into three series, called respectively, Series A., Series B., and Series C. Series A., to which this debenture belongs, consists of 500 debentures for 1007. a-piece; Series B. consists of 600 debentures for 50l. a-piece; and Series C. consists of 1000 debentures for 201. a-piece. 2. A proportionate number of the debentures of each series will be drawn for at each of the periodical drawings hereinafter provided for. 3. The sum of 10,000l. will be applied by the company in the redemption of debentures of the said issue on the 1st day of November, 1877, and on each succeeding 1st day of November until the whole of the said debentures shall have been redeemed or paid off. 4. The particular debentures to be redeemed on each occasion will be determined by annual drawings which the company will cause to be made at its registered office for the time being. 5. Such drawings will be made in the presence of a notary public of London not less than twenty-one, or more than sixty days before the 1st day of November in each year. 6 to 16 [same as clauses 5 to 15 of Form 159, omitting, if thought fit, clause 13.] If it is desired in any case to make the redemption of debentures contingent on the profits of the company, the following clauses can be introduced into the conditions, which will require to be slightly modified. 1. The said company will, on the 1st day of November, 1877, and on every succeeding 1st day of November, until the whole of the said debentures shall have been redeemed or paid off, apply a sum equal to one moiety of the net profits of the said company, for the year ending on the 30th day of June, immediately preceding such 1st day of November, in the redemption at par of so many of the said debentures as such sum shall be sufficient to redeem. 2. Nevertheless, if, in any such year, the net profits shall be less than 7. there shall not be any drawing or redemption in respect of such year. 3. The certificate in writing of the auditor or auditors for the time being of the Debenture with annual drawings. Form 160. company shall, as against the bearer hereof, be conclusive evidence as to the amount of the net profits of the company in any year or of there being none. [Such a clause as this is convenient, in order to prevent disputes.] Form 161. The on the Registered debenture. Conditions. Debenture to Registered Holder. Title: See supra, p. 243. Company, Limited (hereinafter called the Company), will, day of [or on such earlier day as the principal monies hereby secured shall become payable in accordance with the conditions. indorsed hereon], pay to or other the registered holder of [supra, p. 225] for the time being hereof, his executors or administrators, the sum of 1. And the company will in the meantime pay to him or them interest thereon at the rate of per cent. per annum, by half-yearly payments in each year, the first day of and day of on the If the interest is to be payable by coupon to bearer, the above clause will be as in Form 158a, and coupons will be attached, and the conditions modified as below mentioned. This debenture is issued upon and 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 company. 2. The company will cause a register of the debentures to be kept, wherein shall be entered the names, addresses, and descriptions of the holders of the debentures, and the number of the debentures held by them respectively. 3. The registered holder for the time being of this debenture may by instrument in writing transfer the same. The instrument of transfer must be left at or sent to the registered office of the company, and thereupon (subject to the following conditions) the transfer will be registered, and the name of the transferee entered in the register as holder of this debenture. 4. Every instrument of transfer shall be signed both by the transferor and the transferee, and before registering the same the company may require the production of this debenture. 5. Until a transfer of this debenture is registered, and the name of the transferee entered in the register as the holder thereof, the transferor shall be deemed to remain the holder thereof. 6. No transfer will be registered during the fourteen days immediately preceding the days by this debenture fixed for payment of interest. 7. No transfer of this debenture shall be made to an infant or person |