51

8.—12

would not, I think, venture to dispense with an affirmative clause. The clauses in different Bills would vary in character ahd in form, according to the views of the respective promoters; Committees would arrive at different decisions; the uniformity, which is one of the objects of "The Companies Clauses Consolidation Act, 1845 " (as expressed in the preamble), would be lost. 2. Therefore, if Standing Order 167 is not maintained, I think it should not be simply repealed, but a substituted Standing Order should be passed, allowing (not requiring) the insertion of an affirmative clause in Bills, and indicating the conditions to be imposed. 3. The present Standing Order restricts railway companies only; a new permissive Standing Order might, I think, apply to all companies. 4. The limitation on the rate of interest might, I think, be left wholly or in part for the Committee on the Bill, who might decide according to the nature of the undertaking, and other circumstances. 5. The Standing Order then might be expressed somewhat as follows : In any Bill authorizing the creation of share capital, and incorporating " The Companies Clauses Consolidation Act, 1845," provision may be made to the effect that, notwithstanding anything in that Act (of 1845), the company may pay interest to shareholders on sums called for and paid, on the following conditions, but not otherwise —namely : (a.) That the rate of interest may be agreed on between any shareholder and the company, but so as not to exceed the rate of [five] per cent, per annum, or such lower rate, if any, as the Committee on the Bill think fit to prescribe in the Bill, (b.) That such payment of interest shall not begin until [two-thirds] at least of the share capital authorized by the Bill has been in good faith issued and accepted, being held by persons legally liable for it (the usual proof to be given). (c.) That such payment of interest shall not be continued after the completion and opening for public traffic or other user of the railway or other works authorized by the Bill, nor in any case for more than [five] years from the passing of the Bill, or such less period as the Committee on the Bill think fit to prescribe in the Bill. 6. Where a Bill contains such a clause, section 24 of the Act of 1845 should, I think, be repealed by the Bill. 7. The terms of the Standing Order would have to be adapted to Scotland. 8. Other Standing Orders affected would be Nos. 3, 56, 57, 153. 9. Standing Order 3.—Notice of the intention of the promoters to seek power to pay interest out of capital would have to be inserted in the Gazette notice for the Bill. 10. Standing Order 56.—1n the estimate of the expense of the undertaking there should, I think, be a separate item for the aggregate amount of such interest sought to be allowed. 11. Standing Order 57. —That amount should not, I think, be treated as comprised in the estimate with reference to the deposit. 12. Standing Order 153.—N0r be treated as part of the capital of a railway company with reference to the amount of loan capital. 13. I think that the Bill itself should also distinguish the share capital to be raised for interest, and separate accounts thereof should be kept and be laid before meetings of the company. 14. Further questions would have to be considered with respect to —(1) Bills pending at the time of the change in the Standing Order ; (2) Eailway Acts theretofore passed. 15. Those Acts could not be relaxed except by general Act of Parliament. 16. Having regard to that consideration (among others), I think it may be doubted whether the required substitute for Standing Order 167 would not be better provided by a Bill for amending the Act of 1845 than by Standing Order. sth May, 1882. Feancis S. Beilly.

Enclosure 4 in No. 3. [Extract from the Times, 7th June, 1883.] Debate in House of Commons, Wednesday, 6th June.— Standing Oedeb 167. Sir A. Otway rose to move an amendment to Standing Order 167, which prohibits railway companies from paying interest out of capital. The amendment was to the effect that a Committee on a Eailway Bill should be allowed to empower the payment of interest out of capital, subject to the following conditions : (1) That the interest do not exceed 4 per cent.; (2) that it be only allowed until the railway be completed ; (3) that no such interest be allowed until the issue by the Board of Trade of a certificate that two-thirds of the share capital has been issued and accepted; (4) that no interest be allowed on calls in arrear; (5) that the interest so to be paid be stated in the Bill, and be not deemed capital in their Standing Order 153 ; (6) that notice of power to pay such interest be given in all prospectuses or advertisements of the company ; (7) that the halfyearly accounts of the company show the amount so paid in interest; and, lastly, that penalties be imposed for the unlawful payment of such interest, and that any contract for the payment of prohibited interest be made void. The right honourable gentleman said it would be well to consider the history of the Standing Order. Before the passing of " The Companies Clauses Act, 1845," the payment of interest out of capital was only allowed if there were provisions authorizing it in the special Acts. In 1837 there were only three such Acts, in 1844 there were seven, in 1845 twenty-six, and in 1846 ninety-two. The Order was made in 1847. The Order was passed in consequence of the railway mania, which caused great distress to many persons who had invested their savings in railway speculations. Now that there was no such danger to be apprehended as existed at that time, it was well to consider whether it was necessary to continue without modification the prohibition contained in the Standing Older. A correspondence had passed in the early part of the year between his predecessor and the President of the Board of Trade, in which it was stated on both sides that some modification of the Standing Order was desirable. He was not