RIGHT TO VOTE.

Auckland Star, Volume LXI, Issue 210, 5 September 1930, Page 5

RIGHT TO VOTE.

DEBENTURE-HOLDERS.

FOREST COMPANY'S DISPUTE

IMPORTANCE OF "VALUE."

Judgment was given by Mr. Justice Herdman in the Supreme Court to-day in an originating summons brought by New Zealand Eedwood Forests, Ltd., for the interpretation of certain provisions in the company's deed of covenant.

In September, 1925, the company covenanted with the N.Z. Insurance, Co., Ltd., defendants, as trustee for deben-ture-holders, for the purpose of securing GOOO debentures of £35 each. About 30 per cenc of the debentures issued had been paid for in part only. A clause in the deed which denned an extraordinary resolution provided that there must be present a clear majority in value of the whole of the debentureholders, stated his Honor in his judgment; and to ascertain whether that majority in value was present, contributions by debenture-holders who had not fully subscribed the £35 payable in respect of each debenture were to be taken into account. It was plain that the value of the interest the debentureholders represented, and not the number of debenture-holders, was the main consideration. If the value of the interests present at a meeting exceeded the value of the interests unrepresented the meeting was duly constituted. Next, if a resolution wore carried by a majority of not less than threequarters of the persons voting, it was an extraordinary resolution. No difficulty arose if the vote was taken by a show of hands, and no doubt about the meaning of the clause would arise if it stood alone. But it did not stand alone. -It had the misfortune to be associated with another clause which prescribed certain rules intended to regulate proceedings at meetings of debenture-holders.

After considering the effect of this further clause his Honor found that it did not prevent the value of the interest of partly paid debenture-holders from being counted in a poll. Otherwise, it would follow that debenture-holders whose payments had not been completed could take part in a show of hands but not in a poll. His Honor attached importance to the word "value" in the clause first considered, and held that if, on a poll, an exclusive right of voting was given to fully paid debenture-holder- then a majority in' number could carry a resolution and- the presence of the word "value" in the clause was superfluous. If the interpretation contended for by fully paid debenture-holders was sound, still another absurdity would result. This would be seen when debentureholders whose contributions had not been completed could demand a poll but could take no part in it. This was contrary to reason and common sense. It was plain that "value" was intended to be one of the determining factors. The holder of a debenture not fully paid was entitled to take .part in a poll, and the value of his vote was to be determined by the amount he had actually paid up, was his Honor's decision.