Evidence on Limited Liability Partnerships. 83 EVIDENCE ON LIMITED LIABILITY out special authorisation, (14) to agreed ad PARTNERSHIPS. THE large parliamentary volume published on this subject, with the evidence submitted to the Mercantile Law Commissioners, has been read, we believe, by very few of our brethren; and it may therefore be useful, as the Session of Parliament proaches, to notice the substance of the answers which have been transmitted to the Commissioners on the question of Limited Liability Partnerships. ap vance; in certain cases creditor of partnership may recal profits received since his debt was contracted, but not beyond six years. 16. Shares transferable, but liability of transferer at the time of transfer to continue. 18. No compulsory dissolution on loss. 19. French law of non-interference by limited partner too strict. 20. Registration of deed of settlement, of names of acting partners, and if liable for calls, of the limited partners also. 21, 22. No compulsory publicity of accounts. J. S. A. 3, 11. Companies with very large capitals (say 1,000,000l.) to require sanction of Board of Trade. Act of Parliament unnecesThe communications made by witnesses sary, Lastly, present Joint-Stock Companies' in the United Kingdom are to the following Registration Act contains impracticable re effect : No. 5. Anderson, James Andrew, late manager of the Union Bank of Scotland, Glasgow. P. P. 12 General law of unlimited liability should not be changed or modified. J.S.A. 2. In enterprises of too great magnitude for private adventure (except banking and insurance companies), liability may be limited at the discretion of Parliament, or, under certain limitations, of the Board of Trade. No. 41. Armitage, George, woollen cloth manufacturer and merchant, Huddersfield. (Selected by the Chamber of Commerce of Huddersfield). P. P. 1, 5. No limitation of liability. 16. General registry of partnerships, annual. J. S. A. 3, 11. Limitation of liability of all or any partners only by special Act of Parliament, (14) to double amount subscribed. 20. Registration of names and amount of shares, annual. No. 51. Ashworth, Henry, spinner and manufacturer, Manchester. (Selected by the Chamber of Commerce of Manchester). P. P. Present unlimited responsibility to be in no degree changed. J.S.A. Exception in favour of limited liability allowable where large masses of capital, beyond individual means, required for large public undertakings. No. 38. Babbage, Charles, late Lucasian Professor, Cambridge. Favourable to alterations permitting limitation of liability. No. 69. Baker, Thomas, of the firm of Baker, Ruck, and Jennings, solicitors, Lime Street, London. P. P. and J.S. A. 3. Liability of non-acting partners may be limited in any business (except, perhaps at first, banking and insurance), with quirements. No. 59A. Barber, James Henry, manager of the Sheffield Banking Company, Sheffield. 3, 8, 10, 12. That joint-stock banks have been advancing, and private banks receding, must be chiefly owing to feeling of confidence on part of depositors and public, arising from unlimited responsibility of shareholders, with which feeling limitation of liability would do away. When joint-stock banks fail the shareholders are the parties who ought to bear the loss. No. 11. Baxter, David, merchant, Dundee. (Selected by the Chamber of Commerce of Dundee). P. P. 1. The principle of limited liability in associations for mercantile purposes should not be admitted. J. S. A. 12. Power of conferring charters of limited liability should not be in Board of Trade; Parliament alone should confer it, and for national or local public purposes only. No. 34A. Report by Chamber of Commerce, Belfast. Approves American Special Partnerhips Act preferable to the continental commandite partnership law, because, under former, special partners' capital to be paid up at once. tracts in partnership articles to refer disputes to arbitration should be enforced. Con No. 47. Bousfield, Charles, merchant, Leeds. (Selected by the Chamber of Commerce of Leeds. P. P. 1. Liability not to be limited in any partnership for trade. J. S. A. 11. For draining or other like objects, Board of Trade may be empowered to confer limited liability. Lastly. All partnerships to be registered. No. 35. Bristow, James, director of the Northern Banking Company, Belfast. (A Vice-President of and selected by Chamber of Commerce, Belfast.) 1, 2. Unfavourable to any limitation to liability of partners. 3. If admitted at all, to be strictly confined to enterprises not likely to be undertaken by few individuals. 11. Charters confirming limited liability may be granted when approved of by Board of Trade. No. 39. Brooke, John, of the firm of John Brooke and Sons, woollen cloth manufacturers 84 Evidence on Limited Liability Partnerships. and merchants, Huddersfield. (Selected by the J. S. A. 3. If more than six partners, a capital of 30,000l. at least to be paid into Bank of England, and not withdrawn till registration certified. Liability of all shareholders may be limited to a fixed multiple (say three times) the capital paid up. 14. Provision for surplus fund out of profits. 16. Shares transferable with registration. 18. No compulsory dissolution on loss. 22. Registration of names, not of accounts. No. 12. Brown, Joseph, merchant, Dundee. (Selected by the Chamber of Commerce of Dundee.) P. P. and J. S. A. 3. Liability of non-acting partners may be limited, without special authorisation, in any business (14) to declared contribution; dividends to be received to be retained. 16. Shares transferable when paid up in full. 18. No compulsory dissolution on loss. 20. In public companies compulsory registration of contract of co-partnery in legal form, (21) not of accounts. No. 32. Brown, William, M. P., of the firm 'of Brown, Shipley, and Co., merchants, Liverpool. (Selected by the Chamber of Commerce of Liverpool.) 1. A change from present system of unlimited liability would be injurious when private capital is equal to the undertaking. Cases of extreme risk, as in mining, &c. and extensive railroads, &c., where individual capital not sufficient, should be exceptions. 11. Limited liability should be obtained from Parliament only; the power placed in Board of Trade difficult and onerous. No. 68. Burroughs, Jeremiah, merchant, Addle Street, London. P. P. 2, 3, 19. Liability of all or any of the partners may be limited in any business, without special authorisation. 14. Capital to be paid up; profits accruing to commandite partners to be withdrawn only every three years. 16. Shares not transferable 18. Compulsory dissolution, or further liability, after loss of two-thirds of capital. 19. Limited partner to be free to take active part. 20, 22. Registration and publication of capital, and share of profit. 21. No compulsory publicity of ac be limited in any business without special authorisation, (4) but so that at the time of failure each limited partner shall be liable to pay his full subscription without reference to previous payments or receipts; (12) in banks issuing notes payable to bearer (which should not be permitted), any partner to be liable without limitation on the notes. 16. Shares transferable with registration. 18. No com pulsory dissolution on loss. 20. Registration of partners' names and limited contributions, (21) not of accounts. J. S. A. 6 and 11. May be formed without special authorisation, but registering officer should ascertain that each partner understands the partnership agreement. No. 4. Cotton, William, a director of the Bank of England, London. P. P. No material alteration of the law as to liability of partners. J. S. A. In undertakings of public import ance, limitation of liability should be provided for by act or charter. No. 61. Cross, William, late manager of the Liverpool Borough Bank, and now a partner in the firm of A. Dennistoun and Co., merchants, Liverpool. P. P. and J. S. A. 3, 19. Liability of all or any partners may be limited in any business without special authorisation; (11, 20) to be clearly set forth on all documents or bills of the company; perfect publicity of names and subscribed capital. 18. No compulsory dissolu tion on loss. 21. No compulsory publicity of accounts. No. 66. Council of the Chamber of Commerce of Dublin. P. P. 3. Liability may be limited where not more than two partners, one at least being un limited, and each silent partner bringing in not less than 1,000l., in private trade or manufacture only, not banks, insurance, or other undertakings of a public or joint-stock charac ter, (14) to declared contribution; profits drawn out in previous two years to be liable to be refunded. 4, 20. Registration and publication of firm, names of all partners, business, contributions of limited partners, and the term of partnership; the "firm" to indicate limitation. 16. Shares not transferable. 18. Capital lost to be replaced out of profits, or by new investment. 19. No restriction or interference by limited partners, except in purchasing or selling, receiving or giving payments, or writ ing name of firm. 21. No compulsory publicity of accounts. J. S. A. 11. For great public purposes may obtain limitation of liability by grant of Board of Trade on merits of each case. 21. Publicity of accounts. No. 52. Ede, Edward, merchant, Manchester. (Selected by the Chamber of Commerce of Manchester.) P. P. and J. S. A. 1. Unlimited responsi bility should not be altered. 11. All should be on one common principle as to liability. No. 27. Ellis, William, manager of the Indemnity Marine Insurance Company, London. Evidence on Limited Liability Partnerships. P.P. and J.S.A. 1-5. Liability of partners, whose names do not appear in the firm, may be limited, provided they make known to all parties with whom they contract the extent of their liability. 14. Past distributions of profits, which appear to have been justified, not to be disturbed. 85 being carried on by directors, and the liability of shareholders limited, should not be permitted for trading purposes. They may be useful for undertakings requiring long duration or large permanent outlay. P.P. Commandite partnerships objectionable. No. 33. Gilbart, James William, F.R.S., General Manager of the London and West No. 25. Entwisle, William, Banker, Manchester. (Selected by the Manchester Com-minster Bank, London. mercial Association.) P.P. Unlimited liability should be retained without modification as general rule, with regard to trading associations; special exemp tions by charter or act. J. S. A. 4-6. General enactment to give the right of association for waterworks and other public local works, lodging houses, reading rooms, and the like, to be defined with reference to proportion by which fixed capital exceeds floating capital. 11. Board of Trade to have power only to declare whether an association comes within those authorised by the general law. 14. Liability to be limited to subscribed capital. 16. Shares transferable. 20. Registration of constitution, (21) not of accounts, except in insurance offices. No. 63. Fane, Cecil, one of the Commis- Farrer, James William, late a J.S.A. 3. Limited responsibility to be made applicable to partnerships of more than six, shares being not less than 50%. for any business, subject to periodical inspection. 16. Shares transferable. 18. Inspectors to express opinion as to winding up or continuing. 19. Some limited partners to be permitted to take part in the business. 20. Registration of description and terms, names, and constitution of partners. 21. Accounts to be inspected and distributed half-yearly. No. 8. Freshfield, James, jun., of the firm of J. C. & H. Freshfield, Solicitors, Bank Buildings, London. No limitation of liability of partners in trade towards the public. J.S. A. Corporations, or societies of shareholders with transferable shares, the business Joint Stock Banks. 9. General enactment fixing conditions on compliance with which shareholders should have limited liability without reference to Treasury. 10. The general principles might be :-fixed amount of paid-up capital; liability for three or four times the capital; restriction against incurring debt beyond a certain multiple of paid-up capital. 12. Prohibition against any business but banking, against investments in foreign securities, advances on land and other dead securities, rediscounting bills of exchange, and limitation of loans to one person or firm. 13. No difference between banks issuing and not issuing notes. 16. If commandite partnerships introduced, ample information should be given by them to every customer, otherwise than by registration or publication in Gazette. No. 5A. Report of Chamber of Commerce Glasgow. (April 2, 1851.) Adverse to limitation of responsibility, except in special cases of national importance. No. 1. Gurney, Samuel, of the firm of Overend, Gurney, & Co., Billbrokers, London. P. P. Liability of members of firms of limited numbers should be unlimited. J. S. A. Limitation of liability expedient, when the object is one for which a private firm would be incompetent-except banking. No. 22. Hankey, Thomson, jun., M.P., a Director and late Governor of the Bank of England, London. Every facility should be given for arrangements regarding partnerships not inconsistent with honesty. The only enactment requisite is, that every association of more than a very limited number of partners be publicly registered, and liability of each partner specified; and where no such registration, each partner to be responsible without limit. French system of "sociétés anonymes" may be advantageously introduced. No. 50. Hawes, William, Chairman of the Committee of Merchants and Traders for the Amendment of the Law of Debtor and Creditor, London. P. P. 1, 3. No limitation of liability. J. S. A. 3, 12. For banking or insurance no limitation of liability. 11. For a new or useful purpose, requiring very considerable capital, to be entitled to a charter with limited liability on complying with regulations of a general Act, and assent of Board of Trade to the object within the scope of the Act. Arbitration clauses to give right to compulsory reference. No. 40. Hesp, Edward Lake, Solicitor, Huddersfield. (Selected by the Chamber of Commerce of Huddersfield.) 86 Evidence on Limited Liability Partnerships. P. P. 2. Liability of non-acting partners may be limited in partnerships of not more than (say) six. 17. To be formed for (say) five years only at a time for any business except banking and insurance. 2, 20. Names of all the partners, amount of limited partners' capital, the term, and any other important provision, to be registered and advertised. 2. Limited partners' capital to be paid up at once. Profits annually withdrawn to be limited to 8 or 10 per cent.; liability to continue till dissolution published, or (perhaps) till three years after notice. 2, 16. Shares not transferable. 18. When three-fourths of capital lost, dissolution optional to, but not compulsory on, limited partners. 21. Publicity of accounts not advised. J. S. A. 2, 11. Limitation of liability, to be obtained only (as at present) by special application to the Crown or Parliament. 8. Observations against limitation of liability of shareholders in joint-stock banks. No. 26. Holland, Charles, Merchant, Liverpool. (Selected by the Chamber of Commerce of Liverpool). P. P. 3. Liability of non-acting partners may be limited in any business (11), without special authorisation (14), to the original sum, the assumed profits to remain as a gurantee, or at all events only interest at a fixed rate to be withdrawn, until expiry of partnership. 16. Shares not transferable. 18. No compulsory dissolution on loss. 20. Registration of partners' names, amount of capital, duration (21), not of accounts. J. S. A. 11. To be formed, when interfering with private rights, only by Act of Parliament, when not involving private rights, under charter to be granted by a public board under known provisions and at small cost. 16. Shares transferable, but in banks only when paid up. Observations on banks. No. 56. Hollams, John, of the firm of Marten, Thomas, and Hollams, Solicitors, London. P. P. and J. S. A. 3, 16. Liability of nonacting partners may be limited in any business (except banking) to double the subscribed capital. P. P. and J. S. A. 3, 16. Liability of nonacting partners may be limited in any business (except banking) to double the subscribed capital. P. P. In the first instance, limited responsibility should be made applicable to private partnerships of a limited number of partners, not for banking or insurance; registration of names and descriptions of partners, capital, term, and changes of partners; unlimited lia bility for partners not paying up capital as agreed, or withdrawing it during term: profits of previous six years to be liable to be refunded. J.S.A. For enterprises of local public utility, greater facility for obtaining the benefit of 1 Vict. c. 73 (Companies' Powers and Immunities by Letters Patent Act). No. 45. Howell, John, of the firm of Ellis, Everington, & Co., Warehousemen, St. Paul's Church Yard, London. P. P. 3, 19. Liability of non-acting partners may be limited in any business, (11) without special authorisation, (4) for a term not exceeding seven or ten years. 16. Shares not transferable. 4. Registration of limited partners' capital actually invested, and share of profits, (21) not of accounts. J. S. A. 11. May be formed without special authorisation. No. 28. Hubbard, John Gellibrand, Governor of the Bank of England, London. P. P. Where unlimited power of borrowing exists, unlimited liability should attach; security of shareholder in restricting company from incurring debt. But loans to traders for an agreed share of profits should be authorised, the lender to incur no further liability, and to rank with other creditors in bankruptcy of trader. No. 48. Irwin, Edward, Merchant, Leeds. (Selected by the Chamber of Commerce of Leeds.) P. P. 1. The Irish Act, 1782, to be introduced into Great Britain, limiting the number of partners to (say) six, of whom one-third to be acting. 14. Profits of last three years to be liable to be refunded. J.S.A. 11. Public companies (except banks of issue) to have limited liability. Shares transferable; liability to continue for twelve months after transfer. No. 34. Kennedy, James, of the firm of J. and T. Kennedy, Muslin Manufacturers, Belfast. (A Vice-President of, and Selected by, the Chamber of Commerce of Belfast.) P. P. and J.S.A. 3, 4. Liability of non-acting partners may be limited in any business (except banks of issue) (11) without special authorisation; (14, 15) profits withdrawn in previous two years to be liable to be refunded. P. P. 3. Composed of not more than 25 persons; minimum capital of each limited partner 1,000l. 16. Shares transferable, if so agreed. 3, 20, 21, 22. No further particulars to be registered than the names and amount of 16. Shares transferable. 17, 18, 19. After capital of partners. yearly balance-sheet showing insolvency, li J. S. A. 3. Of more than 25 persons; Re-mited partner to dissolve, or incur unlimited gistration Act, with certain amendments, still liability for subsequent debts. 20. Registra to apply; shares to be not less than 1007. tion and publication of paid-up capital of each, to be paid up in full. 16. Shares trans- limited partners, nature of business and duraferable as at present. 20, 21, 22. Denomina- tion of partnership, (21) not of accounts. tion should mark the nature of the undertaking. No.57. Ker, H. Bellenden, Barrister-at-Law, Deeds, &c., to be registered as at present. London. No. 42. Holroyd, Edward, one of the Commissioners of the Court of Bankruptcy, London. P. P. and J. S. A. On general principle of limited liability, or commandite, not to be al Evidence on Limited Liability Partnerships.-New Rules of the Common Law Courts. 87 lowed at present. Limitation of liability of non- ners, non-acting towards strangers may be acting partners should be allowed, when sanctioned by some board or officer, who should judge of expediency of undertaking, and see that due protection was afforded to the shareholders and creditors. No. 18. Kinnear, John G., Merchant, Glasgow. (Secretary of, and selected by, the Chamber of Commerce of Glasgow.) P. P. and J. S. A. 3. As a general rule, liability of partners in trading joint-stock companies not to be limited. Exceptions in favour of great national undertakings requiring greater amount of capital than can be otherwise provided. 11. Limited liability to be conferred by Parliament only, not by Board of Trade. No. 31. Latham, Alfred, a Director of the Bank of England, London. Distinction between associations of many for some public work, where, after completion, no buying on credit, and no selling-in certain enterprises of which kind limitation of liability may be to public advantage-and association of few for ordinary trading, in which unlimited responsibility should be in no degree modified. No. 46. Lawson, Charles, Seedsman, Edin burgh. (Selected by the Chamber of Commerce and Manufactures of Edinburgh.) P. P. 7, 11, 19. Liability of all or any of the partners may be limited to double the paidup capital by special authorisation of Board of Trade, in any business (18) to be under the control of a board to be satisfied of payment of registered capital. 16. Shares not transferable without consent of other members. 18. Compulsory dissolution when 75 per cent. of capital lost. 20. Name to indicate limited liability. Registration of names and contributions, (21) not of accounts. limited in any business, (11) with preliminary sanction of a public board, if more than seven managing partners and 40,000l. capital, or if more than, 5 per cent. profit sought, the only guarantees to be required being general ones as to character, resources, and management. 14. Liability to be limited to declared contribution, profits withdrawn not to be refunded. 16. Shares transferable when paid up, with registration. 19. In case of loss of given proportion of capital, dissolution to be taken into consideration, and stringent powers of dissolution to be given. 4. Intimation of limited liability through name; particulars to be registered; keeping and auditing accounts; a public board to have power of public auditor. Appendix,-Summary clauses in the event of execution or enormous loss. Heads of Bill to amend Irish Anonymous Partnerships Act. No. 58. Macfarlan, John, Chemist, Edinburgh. (Selected by the Chamber of Commerce and Manufacturers of Edinburgh.) 3. Advantages not to be given to partnerships or joint-stocks when individual capital and enterprize sufficient to accomplish the object. 4. When liability limited, capital to be paid up, and parties to be liable for double that amount; no transfer of shares, except to parties equally solvent. 11. Parliament to deal with the cases as they arise. 12. In life assurance societies reserve fund to be provided out of profits. 18. If three-fourths of capital lost, compulsory dissolution. 20. Registration of names of limited partners. 21. Board of Trade to regulate examination of accounts. [To be continued.] J.S. A. 11. With liability limited to paid- NEW RULES OF THE COMMON LAW up capital, may continue to be sanctioned by the Crown or Parliament. No. 15. Levi, Leone, Lecturer an Commercial Law, King's College, London. P. P. and J. S. A. 3. Liability of non-acting partners may be limited without special authorisation in any business, except banks of issue, COURTS. UNDER THE COMMON LAW PROCEDURE ACT, 1854. Michaelmas Vacation, 1854. (14) to declared contribution; profits withdrawn It is ordered, That the practice to be observed to be retained, but small reserve fund to be No. 15A. Abstract of a common form of P.P. and J.S.A. 3. Liability may be limited in any business, (11) without special authorisation, (12) as the shareholders may determine. 15. Government audit of accounts. 18. No compulsory dissolution on loss. 20. Compulsory registration of terms of partnership. in the Superior Courts of Common Law at Westminster, with respect to the matters hereinafter-mentioned, shall be as follows; That is to say, 1. The provisions as to Pleadings and Practice contained in the Common Law Procedure Act, 1852, and the Rules of Practice of the Superior Courts of Common Law made the 11th January, 1853, and also the Rules of Pleading which came into operation on the 1st day of Trinity, 1853, so far as the same are or may be made applicable, shall extend and apply to all proceedings to be had or taken under the Common Law Procedure Act, 1854. 2. Every affidavit to be hereafter used in any cause or civil proceedings in any of the said Superior Courts of Common Law shall be drawn up in the first person, and shall be diP.P. and J. S. A. 3, 19. Liability of part-vided into paragraphs, and every paragraph No. 36. Ludlow, John Malcolm, Barristerat-Law, London. |