. Legislative regulation of railway finance in England . r that authority to raise them should be sought as a powerto raise additional capital, for by so doing the nominal capitalof the company would correspond with the amount which the companywould have been authorized to raise by shares if the cancellationor merging did not take place. Following these repeated reccnmendations of the Board ofTrade, Parliament inserted a clause in the Companies Clauses Act,1863; to the effect that the companies might issue new shares inlieu of cancelled or surrendered shares; but the aggregate nominalamount of
. Legislative regulation of railway finance in England . r that authority to raise them should be sought as a powerto raise additional capital, for by so doing the nominal capitalof the company would correspond with the amount which the companywould have been authorized to raise by shares if the cancellationor merging did not take place. Following these repeated reccnmendations of the Board ofTrade, Parliament inserted a clause in the Companies Clauses Act,1863; to the effect that the companies might issue new shares inlieu of cancelled or surrendered shares; but the aggregate nominalamount of such new shares should not exceed that of the old sharesafter deducting the amount actually paid up in respect of such old shares. r By the same act, railway companies, after having creatednew shares or stock, were permitted to cancel such new shares orstock should they decide not to issue the whole of such new shares. Report of Board of Trade on Railway Bills, 1861, pp. 22-23.,/2. Ibjd. %3. 26 & 27 V. c. 118, s. 11. \4. 26-^«r~^M^e^^r8^ . s. As stated tx€Ff$-r-€, between the ordianry shares and thedebentures or loans of a company are the preference shares. Thelatter bears a specified rate of dividend which shall obe met $ne companys net income before any ordinary shareholder mayreceive any dividend. Prior to 1863, the interest or guaranteeddividend on tbese preferential shares was cumulative. If it is notpaid in one year, then it must be paid together with the dividenddue in the succeeding year in full, before the ordinary stockscould receive anything. But in the Companies clauses Act, If 63,a provision was inserted to the effect that preference sharesshould be entitled to dividends only out of the profits of eachyear; and if in any year ending on the 31st of December, thereare not profits available for the payment of the preferential dividend for that year, no part of the deficiency shall be made good out of the profits of any subsequent year, or cut ofa
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