Evening star., 1934-01-27
BY CHARLES r. SHAEFFER,
Associated Press Financial Writer.

The matter OF listing securities on
the London Stock Exchange differs in
important particulars from the equiva-
lent process on the New York market,
due to conditions entirely outside both
markets and quite beyond their control
In England there long has existed a
code Of laws known as the British
companies act" which prescribes very
completely and upon a national basis
in the organization, the financing and
the administration Of limited liability
companies which seek capital from the
investing public by the sale OF their
securities.
Under this act, provision Is made for
corporate publicity, auditing Of company
accounts and other matters essential
to sound investing.
This situation Is in strong contrast
with conditions in the United States,
which alone of the great commercial
and financial nations Of the world lacks
such q national company law. The
great diversity and frequent laxity
among our 48 State incorporation laws
is we'll known.
Adequate Restraint Lacking.
These statutes plainly fail to provide
any adequate restraint upon the forma-
tion OF bogus corporations, upon the
sale Of unsound securities to the public,
or upon companies mismanaged to the
detriment Of their creditors and share
holders. As a result, the attempt to
protect security investors in these and
other respects has been shunted off
upon laws OF various types regulating
the public sale Of securities, the latest
being the Federal securities act Of 1888.
The New York Stock Exchange, its
members have testified. possesses the
most searching and complete listing
requirements in the world. Yet these
are without any effect upon companies
which do not voluntarily apply to that
exchange to list their securities. Also,
the only power Of that exchange to
enforce its requirements consists in the
threat to strike given securities from
its list, and an actual step Of this sort
would injure, it is said, the very Sc
curity holders in whose behalf it was
taken. by depriving them Of market
for their securities. The English, as
we'll as all other great European nations
have avoided this series of dilemmas
by approaching the problem directly
through their companies act.
Act Is Amended.
Since the armistice. England, like
the United States. has experienced at
times active speculation in securities,
unsound security flotations, great de-
clines in security prices and heavy
losses to the British investing public.
Scandals such as the HAIRY affair. in
which the royal mail steam packet
report was signed without making clear
dividends were paid from surplus. and
the most recent KylSant case have oc-
CURED. The British have sought 10
remedy these evils by amending the
British companies act with the gen.
eral aim of increasing the response
bility Of corporate management and
in other ways directly providing for
greater protection of investors.
The London exchange is completely
free from legislation. Originally, Lon
don stock brokers were nOminally
licensed by the city OF London. but
this arrangement was deliberately
terminated in 1886. AS early as 1893
Parliament. through Sir John Bar
nard's act. forebade short selling. but
this statute was constantly whitfield
away by court decisions. and at length
was entirely repealed in 1860.
A similar disregard both in and out
Of the London Stock Exchange, has
been shown for the Leeman's act Of
1867, forbidding short selling in the
special case Of bank shares. although
the law still stands unrepealed upon
the statute books