LOAN CAPITAL. Money raised by a company upon debentures is called loan capital. It forms a debt due by the com pany and is different from the actual capital, which is money subscribed by the members of the company.
By the Finance Act, 1899, Section S : " (1) Where any local authority, corpora tion, company, or body of persons formed or established in the United Kingdom propose to issue any loan capital, they shall, before the issue thereof, deliver to the Commis sioners a statement of the amount proposed to be secured by the issue.
" (2) Subject to the provisions of this Section every such statement shall be charged with an ad valorem stamp duty of two shillings and six pence for every hundred pounds and any fraction of a hundred pounds over any multiple of a hundred pounds of the amount proposed to be secured by the issue, and the amount of the duty shall be a debt due to Her Majesty.
" (3) The duty under this Section shall not be charged to the extent to which it is shown to the satisfaction of the Commissioners that the stamp duty payable in respect of a mortgage or marketable security has been paid on any trust deed or other document securing the loan capital proposed to be issued.
" (4) If any local authority, corporation, company, or body of persons neglect to deliver a statement, or fail to pay the duty in compliance with this Section, that local authority, cor poration, company, or body of per-, sons, shall be liable to pay to Her Majesty, in addition to the duty, a sum equal to ten per cent. upon the amount of the duty, and a like sum for every month after the first month during which the neglect or failure continues.
'' (5) In this Section the expression ' loan capital ' means any debenture stock, county stock, corporation stock, municipal stock, or funded debt, by whatever name known, or any capital raised by any local authority, corporation, company, or body of persons formed or estab lished in the United Kingdom, which is borrowed, or has the character of borrowed money, whether it is in the form of stock or in any other fonn, but does not include any county council or municipal corporation bills repayable not later than twelve months from their date or any over draft at the bank or other loan raised for a merely temporary pur pose for a period not exceeding twelve months, and the expression ' local authority ' includes any county council, municipal corpora tion, district council, dock trustees, harbour trustees, or other local body by whatever name called."
By the Finance Act, 1907, Section I0 : Reduction of Duty on Loan Capital issued the Purpose of the Conversion or Con. solidation of Existing Capital.
(1) Where it is shown to the satis faction of the Commissioners that the loan capital issued by any local authority, corporation, company, or body of persons, in respect of which a statement has, after the com mencement of this Act, been de livered to the Commissioners under Section eight of the Finance Act, 1899„ has been wholly or partly applied for the purpose of the conversion or consolidation of then existing loan capital, that authority, corporation, company, or body of persons, as the case may be, shall be entitled to repayment in respect of the duty charged on the statement so de livered at the rate of two shillings for every hundred pounds of the capital to which the statement relates which is so shown to have been applied for the purpose of the con version or consolidation of then existing loan capital ; but this Section shall not apply to any duty payable in respect of a mortgage or marketable security which has been paid on any trust deed or other document securing the loan capital which has been issued.
(2) If it is represented to the Commis sioners by any such local authority, corporation, company, or body of persons that loan capital about to be issued by them is to be applied, in whole or in part, for the purpose of the conversion or consolidation of existing loan capital, the Commis sioners may postpone the time for the delivery of the statement and the payment of duty under Section eight of the Finance Act, 1899, until the capital has been issued or until such other time as the Commissioners think fit for the purpose of enabling the payment and repayment of the duty to take place as one transac tion," (See ( SHARE CAPITAL.)