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We believe that the above principles, if adopted, would in the great majority of cases afford a satisfactory working rule on which the diplomatic or consular repre- sentatives of this country might safely be instructed to act, but exceptional cases are certain to arise, and therefore liberty should be reserved to the Secretary of State to depart from the above rules in cases where he thinks it necessary, and the diplomatic and consular representatives should be directed to refer to the Secretary of State for his instructions any case where, in their opinion, the adoption of the above rule would work substantially against British commercial or other interests.
Compulsory registration at the consulates of companies carrying on business in the Ottoman Empire was established by articles 163-170 of the Ottoman Order in Council, 1910. We are informed that this registration was instituted for adminis- trative purposes, and has no necessary connection with diplomatic protection, but it serves a very useful purpose in securing information upon which the decision as to the grant of diplomatic protection can be based, and we therefore recommend that the system should be extended to all countries where His Majesty exercises extra- territorial jurisdiction, and that a corresponding system of voluntary registration should be introduced in all other foreign countries.
When in such other countries a company which has not registered itself applies for diplomatic protection it should be required to do so, and to furnish the same documents and information as is required from British companies in a country where registration is compulsory.
We also recommend that, in addition to the documents required to be filed under the articles of the Order in Council above referred to, there should be filed annually a list of the names and addresses of the directors, specifying their nationality and the number of shares they hold.
Annex.
C. J. B. HURST.
H. A. PAYNE.
II. FOUNTAIN.
THOS. WORTHINGTON.
Memorandum by Mr. Payne (Companies Department, Board of Trade) as to the Registration in England of Companies for the purpose of carrying on Business in Foreign Countries under Foreign Control.
THE present practice of the Registrar of Joint Stock Companies is, with certain exceptions which are not material to the present question except in one case referred to below, to register any company, provided that the papers are in proper form and do not disclose any illegal objects. In the case of a company, the objects of which include the acquisition or ownership of ships, the application for registration is brought to the notice of the Board of Trade by the registrar if the application appears to be made on behalf of foreigners or if the documents disclose any probability of a contravention of section 1 of "The Merchant Shipping Act, 1894," the effect of which is to require that a body corporate must be established under and subject to the laws of some part of His Majesty's dominions, and must have its principal place of business in those dominions to be capable of owning a British ship.
It is stated in Lord Justice Buckley's book on "The Companies (Consolidation) Act, 1908," 9th edition, p. 4, that to be capable of registration here the company must be one which contemplates management and business in this country, and the case of "General Company for the Promotion of Land Credit" (5 Ch. 363, L.R. 5 H.L., 176) is quoted as an authority for the statement. In that case the company was one which embraced very general objects, some of which might possibly have been, but were not in fact, carried on in this country. Its directors were all foreigners, although one gave an English address, and the articles of association contained provisions for the issue of share warrants to bearer, which were not contemplated by the company law of this country at the time the company was registered.
The question for decision in the case was whether a winding-up order could be made against the company on the ground that it was just and equitable that it should be wound up, and it was held that such an order could be made. It was not necessary to decide the question as to whether the registration of the company was legitimate, and no decision on the point was given, although some expressions which were used
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in the course of the judgments suggest that the Registrar of Joint Stock Companies might have refused to grant a certificate of incorporation. The strongest expression of this kind in the judgments in the House of Lords was used by Lord Cairns in the following sentence :—
"It is not necessary to decide that, but it appears to me that the Registrar of Joint Stock Companies might well have refused to grant a certificate of incorporation upon the score of the irregularity which I have mentioned in the articles of association."
The irregularity referred to related to the provisions in the articles for the issue of bearer shares and not to the fact that the company was foreign in its nature.
On the other hand, Lord Hatherley in bis judgment stated that, so far as the memorandum of association went, there did not appear to him to be anything on the face of the memorandum which prevented the company being registered under the Act of Parliament because it was in the form prescribed, signed by the number of persons prescribed, and stating the number of shares which they held; and the mere circum- stance that the seven persons who applied for the registration lived at Brussels would not in itself necessarily operate to prevent the operations of the company from being carried on in England, if such were the object and purport of the association. He further said that, on the facts in the particular case, he thought for the registrar to decline to register the company would have been a very hazardous course for him to take, and one which at all events he was not called upon to take.
In the most recent textbook on companies, "Stiebel's Company Law and Precedents," it is submitted that, notwithstanding the case of General Company for the Promotion of Land Credit, it is perfectly competent for a company which has no intention of carrying on business here, but intends to carry on and manage its business entirely abroad, to register here, and it is stated that this view has been taken in the cases of "Capital Fire Insurance Association" (1882, 21 C.D., 209) and "Attorney- General v. Jewish Colonisation Association" (1901, 1 K.B., 130).
The first of the two cases cited is not a satisfactory authority, for at the time of registration the company had apparently a bona fide intention to carry on business in this country, although after registration the actual business of the company was in fact carried on abroad. There were also English as well as foreign directors.
There is no direct decision on the point in " Attorney-General v. Jewish Colonisation Association," which dealt with a question of death duties. In that case the company had, besides its registered office in England, offices in Paris, with branches at St. Petersburgh and Buenos Ayres. The general and extraordinary meetings of the company were held in London. By the articles of association the affairs and business of the company were to be under the general control of a council of administration, the meetings of which council were to be held at such places in Europe as the council should determine. The whole of the business of the company was transacted by the council in Paris. The books of the company, other than the register of members, were kept in the offices in Paris, St. Petersburgh, and Buenos Ayres, according to French methods and in the French language, and the common seal of the company was kept at its principal office in Paris. The following passage may be cited from the judgment of A. L. Smith, M.R. :—
That it is an English company I do not doubt, subject to English law, and the fact that there was a council of administration which carried on the business of the company outside of England does not, in my judgment, render the company any the less an English company and subject to English law."
It is accordingly suggested that it is at least doubtful whether the statement in Buckley that to be capable of registration here a company must be one which contemplates management and business in this country could be upheld.
It may also be pointed out that the law, as stated in Buckley, does not depend in any way on the nationality of the directors or shareholders of the company, and it seems clear that this question is not material, except possibly as evidence of where the management of the company would be. The result would accordingly be, if the statement in Buckley is correct, that it would not be possible for a body of Englishmen living in Constantinople to register an English company under their management for the purpose of carrying on business in Turkey.
In one case of a shipping company, which was referred to the Board of Trade by the Registrar of Joint Stock Companies because the papers appeared to disclose that
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