Britain: An official handbook > 1977

364 BRITAIN 1977: AN OFFICIAL HANDBOOK
policies on lending similar to those applied to banks, and all finance houses
are required to observe term controls affecting the minimum deposit and
maximum repayment period for specific goods financed by certain forms of
lending. Finance houses with total eligible liabilities exceeding £5 million, are
subject to the same system of credit control as that applied to banks (see p. 359).
Finance Finance for Industry Ltd. (FFI) was formed in 1973 as a result of the merger
Corporations of the Finance Corporation for Industry and the Industrial and Commercial
Finance Corporation. It provides capital for the re-equipment and develop¬
ment of industry when finance cannot readily be obtained elsewhere; and
provides capital, financial advice and computer and other services to small
and medium-sized companies, especially those concerned in technical
development. The resources of the company have been expanded substan¬
tially to enable it to provide up to ^1,000 million of medium-term funds at
commercial rates of interest for investment in industry. At the end of April 1976
loans to 28 companies amounting to just over £200 million had been approved,
of which £ 100 million had been advanced.
Equity Capital for Industry Ltd. (ECI) was formed in mid-1976 as a new
specialist long-term institution whose primary purpose is to provide equity
or equity-type capital for industry in Britain which cannot appropriately
be provided through the normal market mechanism. Its authorised capital is
£50 million and the shares are largely held by insurance companies and life
offices, investment trust companies, unit trusts and FFI. There is an
unauthorised unit trust associated with ECI whose units are held by pension
funds so as to enable them to participate in the provision of capital.
The Commonwealth Development Finance Company (CDFC) is no longer
confined to the Commonwealth in its activities. It supports business enterprise
overseas by providing finance in the form of share capital and loans on
mutually acceptable terms. Its authorised share capital is £30 million, of which
about 14-2 million ‘A’ ordinary shares of £1 (j£o-io paid) are held by industrial,
shipping, mining and banking interests in Britain, and 1 if million ‘B’ ordinary
shares of £1 (^o-5o paid) are held by the Bank of England and certain central
banks in the Commonwealth. At 31st March 1976 the CDFC held investments
of about £35 million spread over a wide range of industries in 40 countries.
The Agricultural Mortgage Corporation was established in 1928 for the
purpose of making loans to farmers. Its authorised share capital is £1-5 million
and at 31st March 1976 loans and investments amounted to £300 million.
The Commonwealth Development Corporation (CDC) was set up in 1948
and undertakes projects for the promotion and expansion of a wide range of
enterprises within and outside of the Commonwealth. At the end of 1975
CDC had a total capital commitment of £268 million.
Investment trust companies and unit trusts enable investors to spread their
risks and obtain the benefit of skilled management.
The usual type of investment trust company is constituted as a public com¬
pany registered under the Companies Acts with limited liability; its business
is to invest its capital in a range of stocks and shares. Like other companies, it
may issue several types of stocks or shares and may retain part of its profits to
build up reserves. Investment trust companies grew to importance in the latter
half of the nineteenth century and have been prominent in directing capital
towards overseas investment. At the end of i975> such companies held assets
worth £5,703 million, of which over one-third were in overseas securities.
Unit trusts are constituted by trust deed between a management company
Investment
Trust Companies
and Unit Trusts