WEEKLY RETURNS.

In £'s sterling, 000 omitted, thus :-£1,000 = £1,000,000.

Notes in circulation 9,880
Net deposits

9,881

9,953

ASSETS.

9,980 10,117 10,256 10,317 10,326 285,358 285,375 286,050 281,932 281,318 280,808 278,888 276,266

Loans & discounts 269,852 270,132

Legal reserve (being one-fourth of net deposits)

Reserve held (consisting of specie

272,306 272,146 270,399 270,679 269,775 269,661

61,887 61,801 60,821 60,223 59,274 58,467
16,311
16,394
15,881 15,676 15,201 15,407

57,64555,986 15,145 14,374

71,339 71,344 71,512 71,233 70,329 70,202 69,722 69,066

and legal tenders). 78,198 78,195 76,702 75,899 74,475 73,874 72,790 70,360

Price of Consols....... Bar Silver, fine, per oz. standard

37s. 2d. 34s. 11d.
83

831

33s. 6d. 328.9d.
83

83

32s. 2d. 83

WEEKLY RETURNS.

In £'s sterling, 000 omitted, thus :-£1,000 = £1,000,000.

Notes in circulation 10,343 10,312 10,311 10,320 10,388 10,523 10,633
Net deposits

ASSETS.

10,656

271,077 268,710 265,481 255,680 249,165 248,083 246,803 248,292

Specie

Legal tenders

Loans & discounts 265,515 263,388 261,941 254,606 248,689 246,939 246,793 249,395 54,888 54,860 53,484 51,147 50,263 51,137 50,272 49,375 14,400 14,292 13,824 13,682 14,086 14,213 14,211 13,706

Legal reserve (being

one-fourth of net

deposits)

67,769 67,177 66,370 63,920 62,291 62,021 61,701 62,073

Reserve held (consisting of specie

and legal tenders). 69,288 69,152 67,308 64,829 64,349 65,350 64,483 63,081

31s.8d. 31s. 4d. 31s. 8d. 318. 10d. 32s. 5d. 32s.5d. 32s. 7d.

33s.

The Institute of Bankers.

FEBRUARY, 1910.

BANKERS' ADVANCES ON STOCK EXCHANGE
SECURITIES.

By A. R. BUTTERWORTH, Esq., Barrister-at-Law.

Delivered before the Institute in London, on Wednesday, December 1st, 1909.
A. MAXWELL, Esq., in the Chair.

And at Liverpool on Thursday, December 9th,
A. FRANCIS, Esq., in the Chair.

And at Birmingham on Friday, December 10th,
Alderman C. G. BEALE, Vice-Chancellor of the University, in the Chair.

LECTURE III.

The Numbering of Shares.

I HAVE received several questions in writing with which I now propose to deal.

The following questions have been put to me :

Wherein lies the utility of dividing share capital into shares bearing distinctive numbers? Why not always have stock, transferable in certain units, and thus eliminate the enormous amount of apparently useless labour entailed by always repeating in every transaction the numbers of the shares? Is there any legal obligation to number the shares of a Company whose capital is divided into shares?

To answer the last question first: - In the case of most-I believe all of such Companies, there is a legal obligation to distinguish each share by its appropriate number: see e.g. the Companies Clauses Act, 1845, s. 6; and the Companies Consolidation Act, 1908, s. 22 (2); and a similar requirement is to be found in Royal Charters of incorporation.1

It is frequently found useful to issue shares not fully paid-up;

1 See e.g. the Charter of 1851 incorporating the Irish Peat Co., cited in The Irish Peat Co. v. Phillips (1861), 1 Best & Smith's Rep. 598, at 603; 30 L.J.Q.B. 114, at 115.

B

and until they are fully paid-up, it is not only illegal, but I take it impracticable to convert them into stock. To discuss at any length the question whether it would be practicable and advantageous to convert all fully-paid shares into stock, is, I fear, outside the scope of these lectures. But so long as shares exist, there do appear to be strong reasons (independently of the question of the present law) in favour of their being consecutively numbered, as tending to lessen the risk of error and still more of fraud.

Moreover, with regard to the transfer of shares, stock, or other interest in banking companies, by the Act of 1867, 30 Vict., c. 29, the object of which is to prevent contracts for the sale and purchase of shares and stock in English or Irish Joint Stock Banking Companies (the Bank of England and Bank of Ireland excepted), of which shares or stock the sellers are not possessed or over which they have no control, any such contract is void, unless it sets forth in writing the numbers by which the shares, stock, or interest are distinguished in the Company's register, or where there are no such distinguishing numbers in the register, unless such contract sets forth the names of the registered owners; and the wilful insertion in such contract of false numbers or names is a misdemeanour.

Debentures assignable "without regard to
equities."

Another question relates to debentures containing a condition that they shall be assignable "without regard to equities"; and I am asked to give one or two illustrations of the kind of equities affected by that condition.

In reply to this, I must first remind you of the full phrase generally employed in the condition-viz., that "the principal moneys and interest will be paid without regard to any equities between the Company and the original or any intermediate holder.'"" The equities indicated, then, are rights of the Company against a prior holder such as a debt due to the Company from the assignor at the date of the assignment. If the debentures were assignable only "subject to equities," the Company would be entitled to take such a debt into account in any claim by the assignee for the principal sum or interest due on the debentures; whereas if the Company has contracted that it will not avail itself of any such equities, it will be bound to pay the assignee in full.2

Priority of Specific Charge over Debentures.

I am asked a further question on this subject, viz.: - Whether if debentures contain the condition that they shall be assignable "without regard to equities," it would prejudice a security given to a bank in the following circumstances: a Company either having issued or having power to issue, debentures, seeks to preserve its power of borrowing from its Bankers on security, by inserting in its Articles the following clause: -" The Company shall not create any general or floating charge on its undertaking and assets ranking in priority to, or pari passu with, the security created by the debenture trust deed, but shall be at liberty in the course of its business, for the purpose of carrying on the same, to raise money on security of pig iron, iron ore, and coke, manufactured, raised, or bought by the Company, which may be charged, and such charge thereon shall rank in priority to the security created by the said trust deed."

In virtue of this clause, the Banker is accustomed to make advances to the Company on security of warrants for pig iron and iron ore. The question is, whether the Bank's claim to the iron represented by these warrants is one of the "equities," the benefit of which would pass to the debenture holders, if the phrase "without regard to equities" were used in the debentures or the debenture trust deed; or whether it would be held that the insertion in the Articles of the clause above quoted would render that particular equity exempt from the operation of the words "without regard to equities."

You will observe that this question does not raise the point whether the deposit of the warrants is, taken by itself and independently of the debentures, a good security. That preliminary point is indeed one not always easy to determine. It was discussed very fully in some lectures which I delivered some years ago before the Institute of Bankers, and I must refer those who wish to consider it fully to that discussion. The result may be briefly summed up thus: - At common law, and independently of the Factors Act, and certain Private Acts of Parliament, a warrant for goods is not a document of title; and therefore on the insolvency of the Company the security may prove valueless

(a) Unless the Bank has had the goods transferred into its name, or into the name of its nominee as trustee for the Bank, in the books of the wharfinger or warehouseman with whom they are stored; or,

(b) Unless, previously to depositing the warrants with the

See the Journal of the Institute of Bankers for 1902, Vol. 23, at pages 63-66, 124-132, and 142-144; and also Butterworth on Bankers' Advances on Mercantile Securities, at pages 38-41, 54-62, and 72--74.