If, it says, foreign capital is to be attracted here, it must be
represented either by shares or by debentures
If, it says, foreign capital is to be attracted here, it must be
represented either by shares or by debentures. ‘The question,
therefore, is whether restrictions ought to be imposed upon the extent
to which the control of the company shall be allowed to reside in
aliens, either by reason of their holding a majority of the shares, or
of the debentures, or by reason of their obtaining a majority upon
the Board of Directors; and, if so, how disclosure of their alien
character is to be enforced.’ It goes on to point out the great
difficulties which present themselves in the way of securing
disclosure of nationality and ensuring that aliens shall not command
the control. ‘The law of trusts,’ it says, ‘is firmly established in
this country. If A, be the registered holder of a share, he is not
necessarily the beneficial owner. He may be a trustee for B. To enact
that the registered holder must be a British subject effects nothing,
for B. may be an alien and an enemy. Suppose, however, that you enact
that A., when his share is allotted or transferred to him, shall make
a declaration that he holds in his own right, or that he holds in
trust for B., and that both A. and B. are British subjects. There is
nothing to prevent the creation of a new trust the next day, under
which C., an alien enemy, will be the person beneficially entitled.
Further, at the earlier date (the date of allotment or transfer) the
facts may be that A. (a British subject) is trustee for B. (a British
subject), but that B. (unknown to A.) is a trustee for C., an alien
enemy. The fact that B. is trustee for C. would be purposely withheld
from A., and A.”s declaration that he was simply trustee for B. would
be perfectly true. To require that A. should make a declaration at
short intervals (say once a month), or that A., B., C., and so on,
should all make declarations would be, of course, so harassing and so
detrimental as to be, as a matter of business, impossible. The only
effectual way of dealing with the matter would be by a provision that
the share might be forfeited, or might be sold and the proceeds paid
to the owner, if an alien should be, or become beneficially entitled
to or interested in the share. Such a provision does not in the
general case commend itself to us as practical or desirable.’ Any
endeavour to control the nationality of the Board of Directors
produces similar difficulties. It is easy to ensure that they shall be
all, or a majority of them, British subjects, but there is no means of
ensuring that their actions shall not be controlled by aliens whose
nationality is not disclosed.
