limited, section 22 of the 1863 Act having prescribed 4 per cent. per annum as a maximum, but this limitation was repealed by the Companies Clauses Act, 1869, and the repeal was made applicable to companies then already working under the 1863 Act subject to a requirement for getting a fresh sanction from a general meeting in certain cases where the raising of the debenture stock had already been sanctioned by a general meeting before the date of the repeal. The 1869 Act also made the powers of issuing debenture stock under the 1863 Act applicable generally to then existing companies who had power to raise money by mortgage or bond.

FORMS OF MORTGAGE, AND RIGHTS OF MORTGAGEES.The Companies Clauses Consolidation Act, 1845, authorises the use of short statutory forms of mortgage and bond, and regulates the rights of the mortgagees and obligees thereunder. The special Act usually authorises the mortgagees to enforce payment of arrears of interest or principal or of principal and interest due on their mortgages by the appointment of a receiver, subject to a proviso that, where it is principal only that is in arrear, the amount owing must be not less than a prescribed sum. The inclusion of such a power brings into operation machinery provided in the 1845 Act under which a receiver of the revenue of the undertaking mortgaged may be appointed by two justices on the application of the mortgagees. This power is additional to the general power vested in the High Court of Justice under section 25 of the Judicature Act, 1873, to appoint receivers in all cases where it is "just and convenient."

ISSUE OF CAPITAL IN PLACE OF BORROWING.-The Companies Clauses Consolidation Act, 1845, contains provisions authorising the company, with the sanction of a general meeting, in lieu of exercising the whole or some part of its borrowing powers, to raise capital to a corresponding amount by the creation of new shares, or, after having borrowed the money, to continue at interest only a part thereof and to raise part by creating new shares; such shares being considered as part of the general capital but

being, in case the existing shares of the company are at a premium, offered in the first instance to the existing shareholders in proportion to the existing shares held by them respectively. In the case of gas and water companies whose dividends are limited to a prescribed maximum it has become the general practice for the special Act to exclude the operation of these clauses as to conversion of borrowing powers into capital. In the Acts of some few of such companies, however, the clauses are retained, but a special provision is inserted providing that the company shall not have power to raise the money by shares or stock instead of borrowing or to convert into capital the money borrowed unless, in either case, all dividends upon such shares or stock are limited to a rate not exceeding 5 per cent. per annum.

APPLICATION OF AUCTION CLAUSES TO MORTGAGES AND DEBENTURE STOCK.-In the case of some gas companies the provisions as to issue by auction or tender, to which I have already referred as applied to the raising of additional capital by shares or stock, have been made applicable to mortgages and debenture stock to be created by the company.

ISSUE OF DEBENTURES AND DEBENTURE STOCK AT A DISCOUNT.-The issuing of debentures or debenture stock by a parliamentary company at a discount or in consideration of money's worth instead of money, unless there is anything in the special Act to prohibit it, is a legitimate transaction provided that it is perfectly bonâ fide; but in this case, as in the case of shares and stock, the obligation rests upon the directors of making sure that the consideration obtained by the company is adequate to the value of the securities issued.

REBORROWING.-Under section 39 of the Companies Clauses Consolidation Act, 1845, and section 4 of the Companies Clauses Act, 1869, a company may reborrow moneys which have been borrowed in exercise of its borrowing powers, and subsequently paid off, or may borrow for the purpose of paying off moneys borrowed in exercise of its borrowing powers.

REDEEMABLE PREFERENCE AND DEBENTURE STOCK.It has become a common practice during the last few years to include in the special Act of a parliamentary company a provision that any powers it may have of issuing preference stock or debenture stock may be exercised by the issue of such stock in the form of redeemable stock. The redemption of the stock is not permitted to be made a charge against the revenue of the undertaking.

PUBLIC UTILITY COMPANIES (CAPITAL ISSUES) ACT, 1920. -Temporary powers of an exceptional character have been given to companies by the Public Utility Companies (Capital Issues) Act, 1920, with respect to the raising of capital for undertakings for the supply of gas, water, hydraulic power, and electricity, and tramway undertakings (including light railways constructed wholly or mainly on public roads). It is to continue in force for 5 years from May 20th, 1920, and no longer, unless Parliament otherwise determines. It provides that where a company are authorised by special Act (including in that expression a Provisional Order having the force of an Act) to raise capital by the issue of stock (including in that expression shares) or the borrowing of money for any of the undertakings just mentioned, or where the powers of a company to raise capital for such an undertaking are limited by a special Act, the company shall be at liberty, notwithstanding anything in the special Act, to do any of the following things with the consent of the appropriate Government Department (that is, in relation to gas, water, and hydraulic power, the Board of Trade, and, in relation to electricity and tramways, the Minister of Transport), which consent may be given subject to such terms and conditions as appear to the department to be expedient. The things thus authorised are:

(a) To offer such stock for public subscription at a fixed price lower than the nominal amount of the stock; all allotments being made as nearly as possible pro rata but power being reserved to the Government Department, where the amount to be raised does not exceed twenty thousand pounds, to dis

pense with this limitation if it is likely to prejudice the success of the issue or the realisation of the best price obtainable;

(b) Where the special Act authorises the creation and issue of ordinary stock, to create and issue redeemable or irredeemable preference stock instead ; (c) Where the special Act authorises the creation and issue of irredeemable preference or debenture stock, to create and issue redeemable preference or debenture stock;

(d) Where the special Act authorises the creation and issue of debenture stock or the borrowing of money to a limited extent, to create and issue debenture stock or borrow money to an extent not exceeding half the share capital for the time being issued and paid up;

(e) To pay a higher rate of dividend or interest on preference stock or debenture stock or money borrowed than that authorised by the special Act.

The Act stipulates that, where application is made for the consent of a Government Department to the variation of the powers of a company in any of the ways just mentioned, notice shall be given to the local authorities of the areas concerned, and the Department shall consider any representations made. It is further stipulated that preference stock shall not be issued under the authority of the Act so as to produce more money than the amount authorized by the special Act to be raised; that the consent of the Department shall not have effect until a report has been presented by the Department to Parliament and laid on the table of each House for twenty-one days, and the consent shall be withheld if either House during that period presents an address to His Majesty with that object; that preference stock issued under the authority of the Act shall not affect any preference or priority as to dividends or capital enjoyed by any preference stock existing at the date of such issue, except with the sanction of three-fourths of the votes of the holders of that stock present (personally or by proxy) at a meeting of those stockholders specially

convened for the purpose; that debenture stock issued under the authority of the Act shall not affect any priority as to interest or capital enjoyed by any debenture stock existing at the date of issue except with the sanction of three-fourths of the votes of the holders of such stock; and that the conditions contained in a schedule to the Act shall apply in respect of redeemable preference or debenture stock issued in pursuance of the Act. These scheduled conditions provide for regulation of the terms of issue and redemption of the stock, and stipulate that the company shall not redeem any of the stock out of revenue except that they may, if they think fit, at any time during a period of ten years from the creation and issue of the stock redeem out of revenue, to an amount to be approved by the appropriate Government Department, any such stock created and issued for the purpose of defraying abnormal reparation expenditure due to circumstances arising out of the war, such redemption out of revenue being effected either by annual repayments or by way of a sinking fund.

I have thought it advisable to set out the effect of the provisions of this Act, but I must again emphasize its temporary character.

APPLICATION OF CAPITAL MONEYS.-Having thus dealt with the raising of capital moneys by a parliamentary company it is appropriate now to deal with the purposes to which they may be applied. Section 65 of the Companies Clauses Consolidation Act, 1845, provides as follows:

"All the money raised by the company, whether by subscriptions of the shareholders or by loan or otherwise, shall be applied, firstly, in paying the costs and expenses incurred in obtaining the special Act and all expenses incident thereto, and, secondly, in carrying the purposes of the company into execution.'

Besides incorporating this, it is the usual practice for the special Act of a company to include a general provision that all moneys raised under it (whether by shares, stock, debenture stock, or borrowing, and including premiums obtained) shall be applied only to the purposes of the Act to which capital is properly applicable. In cases where