PUBLIC RECORD OFFICE
Į
C.O.
Reference :-
885
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
7 & 8 Vict.
c. 110.
7 & 8 Vict.
c. 113.
9 & 10 Vict.
c. 75.
14 & 19 Vict. c. 138.
19 & 20 Vict. c. 47.
20 & 21 Vict c. 14.
20 & 21 Vict. c. 49.
21 & 22 Vict. c. 91.
2
On referring to the Acts relating to joint stock companies and joint stock banking companies, my Lords observe that a distinction was drawn by the Legislature in the earlier enactments between the two descriptions of undertakings. An Act was passed in 1844 for the regulation of joint stock companies generally, and in the same year another Act was passed for the regulation of joint stock banks in England.
In the year 1846 an Act was passed extending the provisions of the last-mentioned Act to Scotland and Ireland.
"The Limited Liability Act, 1855," applies only to joint stock companies formed under 7 & 8 Vict. o. 110.
The Joint Stock Companies Act of 1856, excepts from its operation banking and insurance companies.
Thus far legislation relating to banking in the United Kingdom was kept distinct from that relating to joint stock companies for other description of business.
A further Act was, however, passed in the year 1857 for the regulation of joint stock companies construed as one with the Act of the preceding year and which may be cited with it as the "Joint Stock Companies Acts, 1856-1857."
In the same session an Act entitled "Joint Stock Banking Companies Act, 1857," was passed which repeals the 2nd section of " Joint Stock Companies Act, 1856," and incorporates with its enactments the "Joint Stock Companies Acts, 1856 and 1857 " except that it does not permit banks to be registered with limited liability.
This latter restriction was removed by an Act passed in 1858 except as regards banks of issue in the United Kingdom.
From the foregoing recital of enactments it would seem that the intention of Parliament had been, in the first instance, to provide a different system of legislation for joint stock banking companies in the United Kingdom from that applicable to other joint stock companies, and it may be presumed that by the later legislation which removed that distinotion (with exception of banks of issue in the United Kingdom) Parliament had in view only joint stock banking companies in England, Scotland, and Ireland, which formed the subject of the Acts of 1844 and 1856.
A more extended view of the operation of these Acts was, however, taken by the "Agra and United Service Bank (Limited)" which, having obtained a charter under the Act of 1844, reciting a deed of settlement which purported to recognize a power of carrying on the business of banking beyond the limits of the United Kingdom was afterwards registered under the Limited Liability Acts.
My Lords understand also that proposals have been made for the establishment of other banke under the Joint Stock Banking Companies Acts, for the purpose of carying on the business of banking abroad or in the Colonies under the control of Boards of Directors in London.
The "London and Colonial Bank (Limited)," now advertised, is, however, as far as this Board is aware, one of the first establishments which have been organised under the Joint Stock Banking Companies Acts for the avowed object of carrying on the business of banking in Her Majesty's possessions beyond the limits of the United Kingdom; and my Lords apprehend that very serious considerations may arise from that proceeding as affecting legislation for local purposes under powers conferred by Parliament on many of Her Majesty's Colonies and possessions.
In the case of a bank established for the purpose of carrying on business in a foreign country, as in that of the London and Brazilian Banking Company, the same questions would not arise whatever may be the propriety or legality of an undertaking of this nature, promoted under the assumed authority of Acts of the Imperial Parliament; the authority of those Acts cannot extend beyond the limits of the British Empire, and persons carrying on business in a foreign country under the direction of a company incorporated in London must be subject to the laws of the country in which the business is transacted.
But in the case of a British possession the authority of the Crown and of Parliament may still have force, notwithstanding the concession of the right of separate legiala- tion.
As, for example, it has been held that even after Parliament had conferred on the East India Company the power of granting charters of incorporation to banking com. panies in India, the inherent right of the Crown to grant similar charters was not thereby restrained. A company incorporated, therefore, under the laws of this country may possess the rights of an incorporated body in British possessions although governed by independent legislatures in a more extended sense from that which it could obtain in a country out of the limits of Imperial legislation.
3
It becomes important in this view to ascertain how far the Acts of Parliaments See on this referred to authorise the incorporation of banking companies for the purpose of point the carrying on business beyond the limits of the United Kingdom.
case relating to the bank
As the "London and Colonial Banking Company (Limited)" propose to confine their proposed to operations, in the first instance, to Canada, the condition of the legislation affecting be ema banks in that country will afford the best illustration of the questions to be con- sidered.
blished under the title of
"The Me-
The Act 3 & 4 Viot. o. 35. for the Union of Upper and Lower Canada confers powers diterranean on the Legislature there, which may be applied to the regulation of the trade of Bank.” banking to an extent, at least, which may not be inconsistent with the prerogative of the Crown or the rights of the Imperial Parliament. In virtue of these powers the Parliament of Canada passed an Act some years ago for the regulation of the issue of promissory notes by which the privilege of issue was reserved under certain restric- tions to banks incorporated by Royal Charter or by local enactment.
Since the passing of that enactment many Acts have been passed by the Canadian Parliament for the incorporation of local banks on the principle of the liability of the shareholders to half the amount of the subscribed capital, the concession of limited liability to this extent being accompanied by various restrictions for the security of the public regarding the management" of the banks and the nature and extent of the business to be carried on by them.
The position of banks incorporated by Royal Charter in reference to Canadian legislation has on several occasions formed the subject of communication between the Home and Local Governments on the occasion of an application from the North American Bank for a renewal of its charter, the term of which was about to expire. It was represented by the Canadian Government that a general revision of the banking regulations of the Colony was contemplated at the termination of the period to which the privileges of the local incorporated banks were restricted, and in deference to a . wish expressed to that effect my Lords (in concurrence with the views of the Secretary of State for the Colonies) recommended that the term of the renewed charter granted by the Queen in Council to the North American Bank should be restricted to the same date. On two subsequent occasions Her Majesty's Government refused compliance with applications for the grant of charters to London companies for banking in Canada in consequence of a disinclination expressed by the Canadian Government to an inter- ference with their independent control over the banks in the Colony.
In these proceedings Her Majesty's Government has been governed by the policy of allowing colonies possessing representative institutions free power of regulating their
own concerns.
of
This policy would be seriously prejudiced in the case of banks if the enactments above referred to enable companies to obtain the privileges of a corporation for banking in colonies without the sanction of the local Governments and without con- forming to the principles by which the Colonial Legislatures may have been governed in the establishment of their own banking institutions.
purpose As the London and Colonial Bank (Limited) has been associated for the transacting any kind of banking business in the Colonies, it is obvious that the issue of notes may be included in such business; and supposing that the power of issuing notes in a colony may be derived from the Imperial enactments referred to, it is possible that claims might be preferred on the part of the bank inconsistent with Colonial regulations. In the matter of the duration of the corporation, the establishment of this bank would be opposed to the expressed wish of the Canadian Government, and in regard to the limitation of liability in a more restricted degree than that which has been allowed by the Canadian enactments in the case of other banks, and without the restrictions imposed by those enactments, the constitution of this bank would be at variance with the course of legislation adopted in the Colony.
My Lords think it desirable, in order that they may be enabled to consider fully the course which should be followed in this matter, that the true legal force of the enactment of 1858 should in the first instance be ascertained, and they desire that the solicitor will prepare a case for the opinion of the Attorney and Solicitor General ou the following points :-
1. Whether the effect of the Acts referred to has been to authorise the establishment
of banks of the character of the London and Colonial Bank.
2. If the statutes do not apply to such a bank, whether any and what means are
open for restraining the promoters?
0
16278.-170.
A 2