The Sun.
London, England, 1851-12-31 00:00:00

JOINT-STOCK COMPANIES.

We believe that, during the last session of Parlia-
ment, a measure was prepared and actually printed,
authorising in:Alreland the establishment of joint-
stock companies with limited liabilities—a phrase
well understood by lawyers, and one which we
suspect, before long, will be equally well under.
stood by the public generally. The reason
which induced the Government to sanction such
an attempt was sufficiently obvious, namely, to
promote the application of English capital for the
development of the great natural industrial resources
of Ireland, on a system which at once combined the
great requisites of safety and convenience. We do
not know why that measure was not proceeded with,
for it was understood that if it had been successful
in its passage through Parliament, a similar measure
would also have been introduced at an early period of
next session for this country. Perhaps the law-
officers of the Crown were of opinion that a question
of such general importance ought not to be treated
merely in reference to one portion of the empire, and
that it would be better to wait until they saw a
fitting opportunity of introducing, with a reasonable
prospect of success, some measure which would deal
with the whole and complicated question of Joint-
stock Company law.
A curious and an interesting article might be written,
detailing the attempts which have been made by Par-
liament, at different periods, from the Bubble Act. 6th
George 1., c. 18, to the recent Registration arid Joint
Stock Companies' Winding-up Acts, to check alto-
gether, or to regulate the growth of these associations
or qugsi corporations. Going back a little further, we
might also mention the contention in the 3d institute,
that, under the statute of monopolies, the inventor of
an engine to do as much work in a day as might
employ many labouring bands was not entitled to
accept a patent, " because to deprive industrious
manufacturers of their ordinary means of sdbsistence
was considered a great inconvenience." How such a
law would have suited an age which has been benefited
by the ingenuity and skill d Watt, Rennie, and
Stephenson, we need hardly say. But Lord Bacon
appears to have entertained a notion some-
what of the seine kind, for he says, " care must be
taken that monopolies, which are the cankers of all
trading, be not admitted under specious colours of
public good," and:Lord Eldon, speaking of the Joint-
Stock Company mania of 1825, says—" Perhaps it
might be of little consequence that our ancestors
struggled so strenuously against the powers of the
Crown to grant monopolies, for in the present day it
was in the power of individuals to monopolise not
only in the gold-mines of Mexico, which, for any-
thing he knew, might be useful enough, but in every
article of consumption ; and the time seemed to be
approaching when people would neither be allowed
to eat, drink, or wear clean linen, except upon the
terms these companies thought fit to impose. He
would ask whether it was consistent with public
credit that matters should remain in this state ? It
might be worth considering, in the event of peeu-
wary difficulties in which this country might be in-
volved, and in the event of the clashing of the in-
terests of these companies and those of the country
at large, how" far this state of things would be allowed
to continue. Many of the evils here described by
Lord Eldon have since been remedied by the Legis-
lature and by judicial decisions. The case of Van
Sandau. v. Moore, which rendered it almost impos-
sible for individual shareholders to exercise their
common law right of dissolving partnership, con-
ferred upon these associations the quality of perpe-
tuity; the Registration Act next has conferred upon
theta a distinct corporate existence; and the Wind-
ing-up Acts, by a bold -innovation on equity proce-
dure, have provided means by which their affairs can
be readily dissolved and wound up—we wish we could
add, with cheapness and justice.
That great public good may be effected by small
cont6butions of money, forming, when collected to-
gether, a large aggregate capital, the daily experience
of our great railway and other public companies
abundantly proves, and the Legislature having given
them a well-defined legal status, the next question is,
whet'ner it would not be better to proceed one step
further, and to borrow from our continental neigh-
bour-3 that principle of limited responsibility, which,
under the name of Societes en Commandite, has been
found to work remarkably well. Our attention has
been called pointedly to this subject, because we see
that several companies have recently been started with
a foreign domicile, but appealing, nevertheless, to
the speculative tendencies of English capitalists. The
associations to which we allude believe that, by the
clever trick of having a foreign domicile and a board
of foreign directors, with an agency or board of super-
vision in this country, they will be enable clto avoid
the provisions of the Joint-Stock Companies' Regis.
tration Act. The prospectus of one states, " that the
liability of each shareholder is limited i
to the amount of
his shares, and these shares being paid up n. full on al-
lotment, and being to bearer, are not subject to any
call or registration—and no deed has to be signed."
Every lawyer is well acquainted with the various
clever contrivances which have been suggested to
avoid the usury and the naortrnam laws, both by indi-
viduals and by companies, and how rigorously our
Courts have always discountenanced such attempts.
In the same manner, we have no hesitation in
asserting that our Courts will view this neew contri-
vance to avoid the Registration Act. But perhaps
these companies are not aware that there are
already two decisions expressly against them. In the
Madrid and Valencia Railway Company, ex parts
James, a company was formed for making a railway
in Spain, with a board of directors both at Madrid
and London ; the locale or domicile of the company
being in Spain, and its affairs to be regulated by the
commercial code of Spain ; two-thirds of the capital to
be subscribed by English shareholders, and the re-
maining one-third by Spanish shareholders, and
it was held that such a company was within the
scope of the Joint- Stock Companies Winding-up
Act, 1848, as far as regarded:the English subscribers.
In the Dendre Valley Railway and Canal Company,
an Anglo-Belgian company, constituted a sociite
anon/me, with domicile at Brussels, with a board of
directors there and in London, was held on the peti-
tion of an English shareholder, to be within
the operation of the Winding-up Acts. These
cases are on all-fours with the case to which
we allude, and we point out the fact,
merely for the purpose of showing that there is a
growing inclination in this country in favour of the
principle of limited liability, and also for the pur-
pose of suggesting whether it would not be better for
the Government at once to meet that inclination, by
, some carefully-prepared and comprehensive measure,
rather than to leave such associations to have re-
course to expedients which would not stand for an
in, itant in any court of law or equity. It has been
sak I that it is doubtful whether the Registration Act
appis,ss to companies formed for foreign or colonial
objects'. Registration, as the first
_step in the consti-