The Sun.
London, England, 1856-07-23 00:00:00

Lig! LIABILITY.-LA TV OF PART.
NERSIIIP.

lhlAsmeasurti , according to a good Ministerial antlio-
much tot complicated, and conceals the great prin-
race mmends it to one party and has excited
ciple -stility of another--" limited liability"— under
the fierc3hi... --,iiot-stock Companies Bill." It is for the
its title of " ,-egulationofjoint-stock companies and
ii a Iporation aim 'is intended to supersede the pre-
other associations, ant. -hject. It is carefully and sys-
eent enactments on the at, ,ded into five parts. The
tematically drawn and is dir. d incorporation of corn-
first treats of the constitution at. d, Of "the manage-
panies and associations ;" the secoi ." the third, of
ment and administration of them ; '-s.tion-offica ;"
" winding-up ;" the fourth, of the " regist,
acts aint]
and the fifth relates to the " repeal of form,
temporary provisions." The bill has 117 cla.us,
w;
with the schedules, it fills 54 pages. It repeals, . "
some reservation as to insurance oompanies, the 7th ann.
Bth Vict., e. 110, the 10th and 11th Viet, c. 78—the
Joint-Stock Companies' Reghitration;,-tTpcorpora,tion,
and Regulation Acts ; the 18th and 19th-Vict., c. 133,
the Limited Liability Act of 1855, with e;rebervation as
to any <o npanies completely registered under the B.h of
her present Majesty. It repeals also the 11th Viet., C.
45, and the 12th and 13th Vict., c.lo3,:being the Wind
ing-up Act, so far as concerns companies registered under
this act. It is intended to comprise, therefore, the
whole law on joint-stock companies and associations, and
is a consolidating, repealing, and amending act. Its chiel
and numerous provi,ions are a re-enactment, witl,
amendments, of the existing acts for incorporating joint
stock companies, for allowing companies to be forrnee
with limited liability, and for winding them up.
short title will be "The Joint-stock Companies Ac
1856."

It commences by excluding from its operation associa-
tions for banking and insurance, thus virtually enacting
one law fur banking and insurance companies, and an.
other law fer other and similar associations, while it is
desirable that all should be regulated by one law and on
one principle.
By the first part of the act seven or more persons asso-
ciated for any lawful purpose may by subscribing their
names to a memorandum of association, and otherwise
complying with the requisitions of the act in respect of
registration, form themselves into an incorporated corn
pany, with or without limited liability. Fewer than
seven persons, therefore, cannot under this act form a
partneraWis on the limited liability principle, and it ex:
pressly prohibits all companies once registered from carry.
ing on business after the number of shareholders is
reduced below Seven. Companies, accordingly, may be
wound up whentver the shareholders are reduced in
numper to less than seven. With this restriction, and
the restriction mentioned as to banking and insurance,
it enables individuals to form companies for any lawful
purposes, on the principle of limited liability to the
shareholders, and bestows on them, subject, however, to
many intricate and onerous regulations, all the powers
of incorporated companies.
Immediately after this limited permission then comes
a prohibition. As not fewer than seven persons can
form a company, so not more than twenty persons will
be able after Nov. 3, 1856, to carry on business of any
kind haying gain for its object, unless they are regis-
tered as a company under this act, or be authorised by
an act of Parliament, or letters patent, or be engaged in
working mines under the stannaries jurisdiction ; and
persons so carrying on business will be severally
liable for the payment of the whole debts of the
partnership. The memorandum of association by sub-
' scribing which any number of persons above seven may
form a company, and which is consequently the ba4is
of the whole, is to contain the following things :—The
name of the proposed company ; the part of the king-
dom in which the registered office of the company is to
be established ; its object ; whether the liability of the
shareholders be limited or unlirnited ; the amount of its
nominal capital; the number of shares and amount of
each share ; and if the company be limited, this word
is to be the last in its title, thus, " Eastern Steam
Packet Company, Limited." For the memorandum of
association there is a prescribed form in the schedule,
and this memorandum, when registered, will bind the
company and the shareholders as if each shareholder
bad subscribed his name and fixed his seal to the me-
morandum. It will consequently be a very important
document, to which all persons engaged in forming com-
persica will have to give the closest attention.
It is impossible to advert to all the minute regulations
of this extensive act. The above are its leading provi-
sions. We must content ourselves with saying, that in
the first part, " the constitution and incorporation of the
companies," it prohibits companies from assuming the
names of existing companies, requires each subscriber of
the memorandum to take at least one share in the com-
pany, permits articles of association to be annexed to
the memorandum prescribing regulations for the com-
pany, but they must contravene the voluminous regula-
tions for the management of companies annexed by sche-
dule to the bill. The articles of association, of which
the form is prescribed, will, like the memorandum, bind
the company and shareholders, as if each shareh&der
bad subscribed it, and, like it, will require the attention
of all associates. Memorandums and articles are to be
registered, and certain fees are to be paid for the regis-
tration, and, when registered, the registrar is to certify
that the company is incorporated, and if it he limited
be is expressly to state it. When registered, the com-
pany will have the power to issue shares, &e. There
follows numerous regulations concerning the registra-
tion of shareholders, with which the first part of the act
concludes.

The second part prescribes in detail hOw companies
-ore to bo- manned, requires them to-ffavo -a- registered -
office, to paint up the name of the company, and to have
it engraved in legible characters on the seal mid all no-
tices and documents, and inflicts penalties for nonob-
servance ; it ordains general meetings, permits special
Meetings, defines special resolutions, and requires copies
to be given to every shareholder. Companies must
have permission of the Board of Trade to hold more
_than two acres of land, and must keep minutes of all
their proceedins. A description and definition are
given of the legal instruments of companies, and provi-
sions are made for adapting their proceedings to the
English and the Scotch law of conveyance. The Board
of Trade may order an inspection of the affairs of com-
panies, and companies may appoint inspectors of their
own to examine their own affairs, and the reports of
these inspectors are to be evidence in legal proceedings.
In short, as far as we know, the management of the
companieo is fully provided for; but experience has
taught us with overwhelming proof that all such regu-
lations are, alter a time, found to be inadequate, incom-
plete, and injurious, and therefore fell into desuetude
and become obsolete almost as soon as enacted.

We shall say nothing of the provisions ^far winding.
up—the third part of the act, which carry out more ef-
fectually, and are consequently very numerous, the pro-
visions of the previous acts on the subject. Nor is it
necessary to say more of the fourth part, the " regis•
tration office," than that the formation of the office, and
the appointment of all the persons connected with it,
continue to be placed entirely in the hands of the I3Jard
of Trade. .Every precaution which legal ingenuity can
invent seems to be taken to make trading companies,
whether formed on the principle of limited liability or
unlimited liability, perfectly safe.
We cannot say that the Legislature now or at any
time in making new regulations as to companies, with
which it has occupied itself , off and on for about a
quarter of a century, has meant to place impedi-
ments in the way of the formation of companies to
carry on business; but certainly the effect of sub-
jecting them ,to heaps of cumbrous regulations to
which private business cannot be subjected, places
them in relation to it at a disadvantage. We shall be
surprised if encouragement be really given by this act
to the formation of companies. The Legislature, from
some old and we believe unfounded prejudice—for there
is ne reason why men should not be fully at liberty to
carry on honest business of all kinds by means of con-
venient associations as by single hands—and many rea-
sons why they should,-may have endeavoured to pre-
serve advantages to private traders as against companies;
but .certainly, under such complicated and often-changed
laws as ours, it is surprising that such associations have
flourished at all in competition with tolerably free pri-
vate enterprise. They must be very suitable to the cir-
cumstances of the age, or rather they must now be ne-
cessities of society, to succeed in spite of all the impedi-
ments sometimes, perhaps designedly, laid in their way
by legislation since it began in 1326 to sanction means
to promote their establishment, and the success of pri-
vate enterprise, as general ruled, ara not doubted ; and
when associations, incu.nbered by minute legislation,
flourish in spite of it, they must be very much needed.

• (From the Morning Chronicle.)
The Act for extending the principle of limited liability
in commercial partnerships is now in operation. Briefly
summed up, its provisions may be divided into four cate-
gories—those, namely, to Registration, Management,
Publicity, and Winding-up. For the first object the
mechanism provided by the Act is very simple. A single
sheet, .called a " memorandum," is obtained at the ap-
pointed offices. The names of at least seven copartners
in tho incipient enterprise are inscribed thereon, and
certain blanks filled up indicating the name, locality,
object, character, and capital of the. concern—a sum of
51. sterling is paid, and the registration is complete. The
company is then organised, and may proceed to basiness
forthwith.

The clauses relating to the
.other objects of the mea-
sure run into very elaborate 'detail. The principle on
which the provisions for management is framed is almost
identical with that incorporate in the existing railway
and joint stock companies' acts. Care is taken to secure
for the shareholders the means of obtaining constantin-
sight into the affairs of their undertaking, and of control-
ling in case of need the operations of their directors. By
the " publicity" clauses a similar insight, though unac-
companied with any control, is provided for the general
public, whom the Legislature evidently contemplates in
the light of probable creditors and possible dupes of an
insolvent enterprise.

The scheme for winding up companies formed under
the act does not differ materially from that provided at
present in the case of other associations. Some improve-
meats are introduced as regards the cast or the compli-
city of the legal formalities, and tome slightly more
strin7ent precautions are taken against fraud upon the
shareholders or creditors cf the concern. But, in its
chief features, the old sy,tein is preserved without alte-
ration.
As a general result, it may be said that the new act is
easily and offeciively workable. A new company may
be formed under it with very little difficulty or expense,
and the operations of the iutsnded enterprise can be con-
ducted on a sound basis of profit, with little obstruction
from technical formalities. To protect directors from
encountering trouble and annoyance at the bands of is-
trustful or litigious shareholders was, r o doubt, practi-
cally impossible—aod not less so to shield the share-
holders from suffering loss by the acts of reckless ex
dishonest directors, But if the act does not accomplish