PREFERENCE SHAREHOLDERS.

Auckland Star, Volume LVI, Issue 215, 11 September 1925, Page 4

PREFERENCE SHAREHOLDERS.

WHAT ARE THEIR RIGHTS? The action of the directors of the New Zealand Farmers' Co-operative Association in proposing to interfere with the rights of preference shareholders in that company, has been the subject of considerable comment recently. Critics have claimed that under no circumstances should the rights of preference shareholders 'be disturbed, whatever the sacrifices made by ordinary shareholders. The position so far as the company named de concerned, was brought, to a head on Tuesday last when, an extraordinary general meeting of first-prefer-ence shareholders was . held to consider a motion whereby they would agree to relinquish all claims to dividends due up to January 31 last. Speaking at the invitation of the chairman, the association's solicitor, Mr. H. Van Asch, advised that the proposed action was not a breach of faith or of contract, as had been alleged. He pointed ! out that under the articles of association no alteration could be made in tho rights of the preference shareholders unless at a special meeting at which 75 per cent 1 (in value) of the ; shareholders • were ■ present either in person of proxy j more than that, it had to ,be adopted by 75 per cent .of the shareholders numerically, j It would 'be a calamity if it were possible for a mere' handful of shareholders to meet and pass a-resolution affecting the rights.of the whole of the preference ■shareholders. Mr. T. N. Gibbs pointed out that the resolution passed 'by the Ohristchurch ■Stock Exchange had reference to proposals which had since been dropped. In seconding the motion Mr. F. H. Bowler said it was impossible for" a dividend to he paid until the deficit of £101,000 was wiped out. The proposal could be held up by the shareholders if they desired to do so, -but he would not advise anyone to. act in. such a manner, as it would only mean postponing the Teceipt of a dividend'for four years, and the position nteanwhile would be. such as to drive the directors and management into an early grave. The shares of the association had recently gone up from £2 15/ to £3 10/, and this was ■because the present proposal had been made. If the proposal was adopted, he felt that it would not be long before the shares would advance in value to £5. Ultimately an amendment was moved by Mr. Gibbs, and afterwards added to the resolution, theeffect of which is to authorise the association at some future i period, should , circumstances warrant j such action, to'grant - to the preference shareholders a lionus or bonuses equal to the "amount of claims now proposed , .>to be "relinquished. In this form the resolution was carried almost unanimously. CANADA'S WHEAT .YIELD. \ '■■ (Received 2 p.m.) _ ' OTTAWA, September 10. l*A ana *.Z? r , 11 , W " 262.000.000.-..