y or lunacy of any of its members; that it enables a trader to
distribute among the members of his family interests in his business on
his decease through the medium of shares; that it facilitates borrowing
on debentures or debenture stock, and with a view to secure these
advantages thousands of traders have converted their businesses into
limited companies. To so large an extent has this been done that private
companies now form one-third of the whole number of companies
registered.

A private company does not appeal to the public to subscribe its
capital, but in the main features of its constitution a private company
differs little from a public one. It is only in one or two particulars
that special provisions are requisite. It is generally desired for
instance: (1) to keep all the shares among the members--the partners or
the family--and not to let them get into the hands of the public; and
(2) to give the principal shareholders, the original partners, a
paramount control over the management. For this purpose it is usual to
provide specially in the articles that no share shall be transferred to
a stranger so long as any member is willing to purchase it at a fair
value; that a member desirous of transferring his shares shall give
notice to the company; that the company shall offer the shares to the
other members; that if within a certain period the company finds a
purchaser the shares shall be transferred to him, and that in case of
dispute the value shall be settled by arbitration or shall be such a sum
as the auditor certifies to be in his opinion the fair value. So in
regard to the management it is common to provide that the owner or
owners of the business shall be entitled to hold office as directors for
a term of years or for life, provided he or they continue to hold a
certain number of shares; or an owner is empowered to authorize his
executors or trustees whilst holding a certain number of shares to
appoint directors. Directors holding office on these special terms are
described as "governing" or "permanent" or "life" directors. This union
of interest and management in the same persons gives a private company
an unquestionable advantage over a public company.

The so-called "one-man company" is merely a variety of the private
company. The fact that a company is formed by one man, with the aid of
six dummy subscribers, is not in itself (as was at one time supposed) a
fraud on the policy of the Companies Act, b