chambers occupy a considerable time, and in many cases are very expensive. Until these accounts and inquiries are taken and made, the debenture-holders are not what is known as before the Court.' The consequence of this is that, if it is desired to effect a sale of the property, it is necessary to apply to the judge to undertake the responsibility of sanctioning such a sale. These remarks, of course, apply with even greater force where the debentures are payable to bearer. At present, the property may be sold in an action to which unsecured creditors and shareholders can be no parties, and of which even, in many instances, they have no knowledge; and in some cases, moreover, without the knowledge of all the debenture-holders.

One of the results of the present practice is that, when there are debenture-holders, there are really two liquidations for the realisation of the assets proceeding at the same time-that is to say, one in the winding-up and the other in the debenture action-with this extraordinary result, that where an order is made for continuing the voluntary liquidation under the supervision of the Court, the debenture action does not go over to the companies (winding-up) department, but remains in the chambers of the Chancery Judges. The consequence to the public is this, that double applications for the same purpose are frequently necessary, with a consequent double expenditure.

Why a debenture action should be transferred to the companies (winding-up) department where there is a winding-up under the Act of 1890, and the same result should not follow where there is a winding-up under supervision,' is a question which must be left to lawyers to explain. The public will certainly not appreciate the distinction.

The present procedure tends to assist the improper sales by vendors to which I have referred. In such cases, where it is desired to obtain repossession of the property, it is frequently the case that a collusive debenture action is commenced at the same time, or just before, a voluntary winding-up, or a winding-up under supervision. In cases of this description, where a majority of the shares are in the hands of the vendor or his nominees, it is an easy matter to pass resolutions to wind-up voluntarily, or to obtain an order for the continuance of the winding-up under the supervision of the Court, against the protest of the minority of the bona fide shareholders. With either of such last mentioned windings-up and the collusive debenture action, the vendor and his nominees can effectually obtain the whole power over the administration of the affairs of the company. If a creditor or shareholder under such circumstances should attempt to obtain a liquidation under the Act of 1890, he is met with the defence, either that the whole of the assets are comprised within the debentures, in respect of which there is a pending debenture action, in which action, as before mentioned, neither shareholder nor

creditor has any voice or status; or that there is a voluntary windingup pending, which, as I have explained, is a bar to a winding-up under the Act of 1890 under certain circumstances.

time is justice defeated in this manner.

Time after

There is also another and more modern mode of evading proceedings by the Court, where the debenture provides specially, as before mentioned, for the appointment of a receiver without the intervention of the Court; the result being that a winding-up of any description becomes a winding-up in name only, the whole of the assets being subject to the debentures, and beyond the control of the Court. If provision were made in this particular case, that on the appointment of a receiver in this manner the company should be deemed unable to pay its debts within section 79 of the Act of 1862, and that all such proceedings, where an order for winding-up has been made, should be subject to the control of the Court which has jurisdiction in the winding-up, much injustice would be avoided.

But the remedy for the chief mischief is evident. In a windingup under the new practice, the object is to bring the affairs of the company before all the creditors and shareholders at the earliest moment, and there is no practical reason why a similar practice to that applied to ordinary creditors should not be also applied to secured creditors, and particularly having regard to what was understood by the term secured creditors when the Act of 1862 was passed, and what is now understood by the same term. In most cases it is advisable that the meeting should take place at once, or that the wishes of the debenture-holders should be known and ascertained; and the delay caused by obtaining the judgment just mentioned, necessitating inquiries, under the present system is clearly wrong. There should be but one winding-up in one department, whether for secured or unsecured creditors.

Where there is a winding-up pending, the realisation of the debentures should be by an application in that winding-up, and not by a separate action. The rights of bona fide debenture-holders would in no case be altered, as of course such rights must be respected. It is, no doubt, a mere question of procedure, but one which in its operation seriously affects the interests of the public in an extremely important matter. By the means suggested, debenture-holders would obtain a more effective and personal control over the property the subject of their security. So also, one of the important results of an application being made in the winding-up to realise the debentures, and not in a separate proceeding, would be that the shareholders and creditors would at least have a locus standi in these proceedings, and be kept acquainted with what was going on in the liquidation.

Where there is no winding-up, the realisation should be by what is known as an originating summons, which should be continued, in VOL. XXXV-No. 208

the event of a winding-up subsequently taking place, in that winding

up.

For matters of procedure the public can have, I feel, very little regard; but the important questions involved, both to the general public and the commercial community, in the matters to which I have just shortly drawn attention, will show how great their interests are, and will guide them to see the influences which are working against them.

As a last suggestion which the present space permits me to make, experience shows that disaster might sometimes have been avoided if the Companies Acts contained provisions for the determination of certain questions between shareholders or creditors and the company by the Court during the time that a company is a going concern. To obtain the decision of the Court in any matter under these circumstances it is necessary to commence a friendly action, that is to say, it is necessary to get some shareholder or creditor to initiate such action. This was recently illustrated in an important case which was commenced with the object of obtaining the decision of the Court in respect to the distribution of dividends where there had been depreciation of the assets. A useful power might be given to any shareholder or creditor of a company, or to the company, to apply, in a summary way, to the Court for the determination of certain questions. The effect of such a power, beneficial in itself, might have even more far-reaching consequences, because the decision of the Court on many points brought to its notice might be the means of preventing a company subsequently drifting into liquidation.

The Act of 1890 has been a well-directed step towards bringing the law as to winding up companies into a condition more in accord with modern requirements. The same must be done in respect to companies which are going concerns. I hope that the few remarks on matters which I have been able to give here, some of the most urgent only among many others, will help to make clear how extremely important it is at this moment that our legislature should to some extent attempt to keep pace with a modern creation of our law which is without proper safeguards to the public. If our company law is not modernised, we are indeed near the time when it may be said

Auro pulsa fides, auro venalia jura,

Aurum lex sequitur, mox sine lege pudor.

ALFRED EMDEN.

The Editor of THE NINETEENTH CENTURY cannot undertake
to return unaccepted MSS.

INDEX TO VOL. XXXV

The titles of articles are printed in italics

CKLAND (Joseph), Elementary BAKER (Sir Benjamin), Nile Reser-

Albert (Prince), as the Queen's 'perma- Bishops not entitled to preach as of