Lloyd's Bonds

Lloyd's Bonds are obligations by railway companies under their seal, purporting to be for work done, or for materials supplied for the purposes of an undertaking, and covenanting to pay the debt and interest thereon. They were devised by the eminent English counsel, John Horatio Lloyd, to enable railway companies to exceed the powers of borrowing money granted to them by parliament. The issue of these bonds has sometimes been abused, being made without consent of the shareholders or of the statutory debenture holders of the company; but they are valid only when granted in bonâ fide to contractors and others, for work actually done, or materials supplied. They cannot be given for a mere loan of money to the company; and a company issuing them otherwise than authorised by statute forfeits to the crown the amount of the bond.