e. When this is
done the share or stock certificate is usually accompanied by a blank
transfer--that is, a transfer executed by the shareholder borrower, but
with a blank left for the name of the transferee. The handing over by
the borrower of such blank transfer signed by him is an implied
authority to the banker, or other pledgee, if the loan is not paid, to
fill in the blank with his name and get himself registered as the owner.

Dividends.

A company can only pay dividends out of profits--which have been defined
as the "earnings of a concern after deducting the expenses of earning
them." To pay dividends out of capital is not only _ultra vires_ but
illegal, as constituting a return of capital to shareholders. Before
paying dividends, directors must take reasonable care to secure the
preparation of proper balance-sheets and estimates, and must exercise
their judgment as business men on the balance-sheets and estimates
submitted to them. If they fail to do this, and pay dividends out of
capital, they will not be held excused, unless the court should think
that they ought to be under the new discretion given to the court by ss.
32-34 of the Companies Act 1907 (Companies (Consolidation) Act 1908, s.
279). The onus is on them to show that the dividends have been paid out
of profits. The court as a rule does not interfere with the discretion
of directors in the matter of paying dividends, unless they are doing
something _ultra vires_.

Auditors.

By the Companies (Consolidation) Act 1908, ss. 112, 113, incorporating
provisions of the act of 1900 (ss. 21-23), as amended by the act of 1907
(s. 19), the legislature has made strict provisions for the appointment
and remuneration of auditors by a company, and has defined their rights
and duties. Prior to the act of 1900 audit clauses, except in the case
of banking companies, were left to the articles of association and were
not matter of statutory obligation.

Private companies.

The "private company" may best be described as an incorporated
partnership. The term is statutorily defined--for the first time--by s.
37 of the Companies Act 1907 (s. 121 of the Consolidating Act of 1908).
Individual traders and trading firms have in recent years become much
more alive to the advantages offered by incorporation. They have
discovered that incorporation gives them the protection of limited
liability; that it prevents dislocation of a business by the death,
bankruptc