564
II.
MEMORANDUM
ON
THE DIFFERENCES BETWEEN THE PROVISIONS
OF
THE NEW COMPANIES BILL
AND
THE EXISTING LAW IN THE COLONY.
NOTE.
The following memorandum of the chief differences between the provisions of the new Companies Bill and the existing law in the Colony professes neither exhaustiveness nor literal accuracy, and various minor details and qualifications have been omitted advisedly. The existing law is contained in the Companies Ordiu- ance, 1865 (No. 1 of 1865), which in its present form in Sir John Carrington's Edition of the Ordinances is a consolidation of the original Companies Ordinance and of various subsequent ordinances which adopted selected portions of later English legislation. It contains none of the English legislation after 1898, and the legis- lation up to that year was only partially taken over. In particular, the Directors Liability Act, 1890, (53 and 54 Vict. c. 64), was not adopted. The present Bill is based on the Companies (Conso- lidation) Act, 1908, (8 Edward 7, e. 69), and this embodies, inter alia, the Directors Liability Act, 1890, (53 and 54 Vict. c. 64), the Companies Act, 1900, (63 and 64 Viet. c. 48), and the Com- panies Act, 1907 (7 Edward 7, e. 50). In the references at the end of the paragraphs, "Ordinanco" means the Companies Ordinance, 1865, and “Act” means the Cou panies (Consolidation) Act, 1908.
Summary.
The following is a summary of the principal changes intro- duced by the Bill into the existing law. Fuller details, and also other less important changes, are given in the body of the memorandum.
(a.) Annual Summary.--This will contain some useful
additional information in future.
(b.) Annual Balance Sheet --All companies will in future have to file an annual balance sheet of assets and liabilities.
(c.) First Meeting and the Statutory Report.-Seven days before the first meeting the directors must send to every shareholder, and file with the registrar of com- panies, a statutory report" containing full details of the allotment, etc.
(d.) Prospectus.-Provision is made against misleading prospectuses. Minute directions are given as to the information that a prospectus must contain, and in case of misrepresentation the onus is thrown on the directors and promotors to show that they had reasonable ground to believe, and did believe, that the misleading state- ment was true. At present the onus is on the subscriber to show that the director or promoter knew the statement to be false.
(e.) Allotment. Restrictions are imposed in order to prevent allotments being made on insufficient applications and business being commenced without a reasonable capital. (f.) Commissions and Discounts.-Restrictions are imposed on the payment out of capital of commissions or dis- counts for taking or placing shares. This is intended to prevent a practice which was once common in England, of adding large amounts to the price advertised as payable to the vendors, who then arrange the underwriting, giving large blocks to financiers who guarantee that sufficient shares shall be taken to provide working capital.
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