Preliminary. 3. Definition of insurance company.-For the purposes of this act a company that carries on the business of insurance(1) in common with any other business or businesses shall be deemed to be an insurance company. (1) The business of insurance.]—This general term embraces all kinds of insurance, marine, fire, title, &c., as well as life. A guarantee society would probably be deemed an insurance company, although not so named. The marginal note summarizes this section as being the "Definition of an Insurance Company." But the section does not define distinctly what is to be deemed the business of insurance. 4. Prohibition of partnerships exceeding certain number.-No company, association, or partnership consisting of more than ten persons(1) shall be formed, after the commencement of this act, for the purpose of carrying on the business of banking, unless it is registered as a company under this act, or is formed in pursuance of some other Act of Parliament, or of letters patent; and no company, association, or partnership consisting of more than twenty persons shall be formed, after the commencement of this act, for the purpose of carrying on any other business that has for its object the acquisition of gain by the company, association, or partnership, or by the individual members thereof, unless it is registered as a company under this act, or is formed in pursuance of some other Act of Parliament, or of letters patent, or is a company engaged in working mines within and subject to the jurisdiction of the Stannaries. (1) The act therefore extends to— 1. Banking Companies having more than ten partners. 2. Other Companies having more than twenty partners. And it excepts 1. Companies formed in pursuance of some other Acts of Parliament. 2. Companies formed by Letters Patent. 3. Mining Companies within the jurisdiction of the Stannaries. But, although Mining Companies are specially excepted, the practice is now becoming general, to establish them under the new law of Limited Liability, in preference to the old Cost Book principle, and there can be no question as to the greater convenience and security of the former. Preliminary. 5. Division of act.-This act is divided into nine parts, relating to the following subject matters: The first part, to the constitution and incorporation of companies and associations under this act : The second part, to the distribution of the capital and liability of members of companies and associations under this act: The third part,-to the management and administration of companies and associations under this act: The fourth part,-to the winding up of companies and associations under this act: The fifth part,-to the registration office : The sixth part, to application of this act to companies registered under the Joint Stock Companies Acts: The seventh part,—to companies authorized to register under this act: The eighth part, to application of this act to unregistered companies: The ninth part, to repeal of acts, and temporary provisions. PART I. CONSTITUTION AND INCORPORATION OF COMPANIES AND ASSOCIATIONS UNDER THIS ACT. Memorandum of Association. 6. Mode of forming company.-Any seven or more persons (1) associated for any lawful purpose (2) may, by subscribing their names to a memorandum of association,(3) and otherwise complying with the requisitions of this act in respect of registration, form an incorporated company, with or without limited liability. (4) (1) Seven or more persons.]-These persons must be sui juris. Children under age, married women, and others, who are under disability to make a contract, are not competent to subscribe the Memorandum of Association, or at least the seven persons required to constitute a Company must Part I. Constitution and Incorporation. be persons whom the law recognizes as such. It is possible that some curious and difficult questions may arise upon this. If seven persons form a Company, and afterwards one dies or parts with his share to a minor or a lunatic, the Company will be dissolved, and must forthwith be wound up. To avoid this difficulty, it will be as well to constitute it of eight or ten at least. (2) Associated for any lawful purpose.]-The former Joint Stock Companies Act that preceded the 19 & 20 Vict. c. 47, s. 2, limited Joint Stock Companies to those formed for a commercial purpose, or a purpose of profit; schools, scientific and literary institutions, friendly societies, loan societies, benefit building societies, and mining Companies on the Cost Book principle, as well as banking and assurance Companies, were excepted. But it will be observed that now any seven persons associated for any lawful purpose may form themselves into an incorporated Company. (3) Memorandum of Association.]-This form is given in the schedule, Form C. (*) With or without Limited Liability.]-Unless the company is expressly stated to be "Limited," its liability will be unlimited. It may be presumed that no Company will hereafter be formed but with Limited Liability. 7. Mode of limiting liability of members. The liability of the members of a company formed under this act may, according to the memorandum of association, be limited either to the amount, if any, unpaid on the shares respectively held by them, (1) or to such amount as the members may respectively undertake by the memorandum of association to contribute to the assets of the company (2) in the event of its being wound up. (1) The amount, if any, unpaid on the shares, &c.]-On this it might be contended that liability cannot be limited without leaving something unpaid upon the shares. The section prescribes but two forms of Limited Liability: first, by limitation to the amount unpaid on the shares; second, by limitation to the amount the members will undertake to contribute to the winding-up. The other more obvious method of having the shares paid up in full is not included, unless it may be deduced from the words "if Memorandum of Association. any." To avoid a possible difficulty, it would be prudent, perhaps, to leave in such cases a nominal margin of unpaid subscription, say of 1s. per share. (2) To contribute to the assets, &c.]-This is an entirely novel form of Limited Liability. The immense facility it gives to fraud will be manifest at a glance. There is not in this even an affectation of honesty. Such a Company does not so much as profess to pay its debts, or perform its contracts; all that is required of the speculator is to undertake to contribute ten shillings towards the assets of the concern, if it fails and is wound-up. Under this astounding provision, a Company may advertise its capital as 100,000%., without subscribing 107. in fact, and the members may be responsible only for half-a-crown apiece to be contributed to the costs of winding-up. 8. Memorandum of association of a company limited by shares.Where a company is formed on the principle of having the liability of its members limited to the amount unpaid on their shares, hereinafter referred to as a company limited by shares, the memorandum of association shall contain the following things; (that is to say,) (1.) The name of the proposed company, with the addition of the word "limited" as the last word in such name: (2.) The part of the United Kingdom, whether England, Scotland, or Ireland, in which the registered office of the company (1) is proposed to be situate: (3.) The objects for which the proposed company is to be established (2): (4.) A declaration that the liability of the members is limited: (5.) The amount of capital (3) with which the company proposes to be registered divided into shares of a certain fixed amount: (+) Subject to the following regulations : (1.) That no subscriber shall take less than one share : (2.) That each subscriber of the memorandum of association shall write opposite to his name the number of shares he takes. (1) The Registered Office of the Company.]-For the purposes of the Memorandum of Association, therefore, it will not be necessary to determine, at the present stage of it, in what particular place the chief office of the Company shall be, but only in which of the three divisions of the United Kingdom. Part I. Constitution and Incorporation. (2) The objects for which the proposed Company is to be established.]-These should be distinctly stated and great care should be taken to include all the objects of the Company; for the protection given by this act will not be ex tended to any transactions not within the objects for which the Company is incorporated. For all such, the ordinary liabilities of a partnership will attach, to the managers certainly, and probably to the shareholders. (3) The amount of capital, &c.]-Formerly, a certain proportion of the capital was required to be subscribed, and also a certain proportion of it to be paid up, before incorporation. Hence it was necessary to reduce the amount of capital to the lowest point. But now there is no requirement for any portion of the capital to be either subscribed or paid, and, therefore, it may be named at whatever sum will give the company the most importance, and obtain for it the largest credit. Seven shares must be subscribed, but no more need to be. It does not follow that because 100,000l. is the nominal capital, the real capital should be 100l. This should be remembered by the promoters of a company, who will probably consider it prudent in all cases to name a large sum, as looking better to the eye, and sounding better to the ear. The liability is limited to the amount of shares taken, not to the amount of capital announced. (4) The amount of shares into which such capital is to be divided, and the amount of each share.]-For the same reason it will be prudent to make the shares very small. The liability is limited to the amount of the share, and the best security will be to have the full amount of the share paid up, for then there can be no further liability. Shares of small amount are not only more readily subscribed, but more easily paid, than larger ones. The former objection to this, the necessity for having a certain portion of the capital actually subscribed, is now removed. A Company will be legally constituted with a nominal capital of 100,000l., in 200,000 shares of 10s. each, if only seven of those shares are taken, and the liability of those seven shareholders may be limited to 10s. each. 9. Memorandum of association of a company limited by guarantee -Where a company is formed on the principle of having the liability |