COMPANY LIMITED BY SHARES. A company where the liability of its members is limited by the memorandum of association to the amount, if any, unpaid on the shares respectively held by them.
The word " Limited " must be the last word in the name of the company. A contraction of the word should not be used officially.
A limited company formed for promoting commerce, art, science, religion, charity or other useful object, where any profits or income are to be used in promoting its objects, may be licensed by the Board of Trade as a company with limited liability, without the addition of the word " Limited " to its name. (See CHARITABLE COMPANIES.) Every limited company must have its name painted or affixed on the outside of every place where its business is carried on, and engravers on its seal, and mentioned in legible characters in all notices and official publications of the company, and in all bills of exchange, promissory notes, indorse ments, cheques, invoices, receipts, etc. (See NAME OF COMPANY.) By Section 282 of the Companies (Con solidation) Act, 1908 : " If any person or persons trade or carry on business under any name or title of which ' Limited ' is the last word, that person or those persons shall, unless duly incorporated with limited liability, be liable to a fine not exceeding five pounds for every day upon which that name or title has been used." The number of members of a limited company should not fall below seven ; if it does, Section 115 enacts : " If at any time the number of mem bers of a company is reduced, in the case of a private company, below two, or, in the case of any other company, below seven. and it carries on business for more than six months while the number is so reduced.
every person who is a member of the com pany during the time that it so carries on business after those six months, and is cognisant of the fact that it is carrying on business with fewer than two members, or seven members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be sued for the same, without joinder in the action of any other member."
In a limited company the liability of directors or managers may, if so provided by the memorandum, be unlimited (Section 60).
As a rule the memorandum of association includes a power to borrow money and mortgage the landed property, but before making an advance the banker should examine that document and the articles of association, to ascertain exactly what the powers of the company are. If no express power is taken in the memorandum of association, in the case of an ordinary trading company the power to borrow and mortgage for ordinary business purposes is implied. . If the memorandum includes a power to borrow up to a certain fixed amount, the banker must be careful not to exceed that amount. For if a company borrows in excess of its powers, the security will not be binding on the company. The directors, however, may be held personally liable, and the money may, probably, be recovered in so far as it was used by the company to pay its debts.
If a company has power to borrow, and the advance required will not exceed any fixed limit of borrowing that there may be, the banker will be safe in accepting the company's deeds with a memorandum signed by the directors. If the articles of association provide that certain regulations are to be observed by the directors when mortgaging the company's property, the banker may assume that all the regulations and formalities have been complied with ; he is not expected, nor is he able, to examine into the " indoor working " of a company. (See REGISTRATION OF MORTGAGES and CHARGES.) The directors, however. may be expressly prohibited from mortgaging the property. (See ARTICLES OF ASSOCIATION COMPANIES. MEMORANDUM OF ASSOCIATION.