NEW COMPANIES.

Auckland Star, Volume LXVI, Issue 307, 28 December 1935, Page 4

NEW COMPANIES.

AUCKLAND REGISTRATIONS. CAPITAL REPRESENTED £12,375,090. COMMUNITY MOVES STEADILY ON. Few items in the columns of a daily newspaper look less attractive to the average reader than does a list of company registrations. Yet it is a fact that in no other way do the economic aspirations of a- people take visible shape more readily than in company promotion. Time was when most business was conducted with individual ownership or partnerships, but experience showed important defects in this system. For one tnmg, it was difficult for a person to engaged in an enterprise either by himself or with partners without pledging the whole of his own personal and business assets. In otlrer words, in any business venture he had to stand with everything he possessed behind any mistakes either he oi- his associates might make. Liabilities of tins kind proved a definite hindrance to progress, and it was to facilitate combined operations that legislation was introduced providing for limited liability companies. Under the existing law persons who form a company are liable only to the extent of their shareholding therein. Formation of Companies. ■ "Let's form a company" is the thought that comes uppermost in the minds ot those who have conceived an undertaking in which joint action seems desirable, and it is iu this, way that their efforts obtain practical expression. Bearing these facts in mind,' the close relation of a list of company registrations to the commercial progress of tjhe community is) at once-apparent, and in tins connection it is of interest to note that in Auckland during the year now drawing to a close no less than 232 companies with iV total capitalisation of £1,375,090 were registered in Auckland during the year riow drawing to a close. Past Years Compared. The following interesting comparisons are taken from previous records:— '■Companies Nominal Registered. Capital. ■toon . ' 314 5.030,000 1031 ... ' 209 1,000,000 10T> 290 1,418,000 1983 •;:.■..-( ~292 1.380,000 . loss :::,. 232 12,375,090

The year 1929, virtually the last of the boom periods, was a prolific one from the point of view of -company format on Not only were the numbers greater than usual: but the total, capitalisation was swollen by several exceptional undertakings. The figures for the latest period appear to reflect with a fair degree o accuracy the increased confidence that has generally been evident in business circles during 1935. However, as in 1929, the normal returns have been swollen b.v an extraordinary undertaking, bringing the total to a new high level. Ot the total 232 registrations, 29 were public and 203 private. Nominal or Paid-up. i If, would - be ■■ a mistake, bowever, to assume that something over ,£12,378,000 was invested in . these enterprises. in many cases the nominal capital is onl> partly subscribed, and even the amount subscribed is not necessarily all paid unit happens sometimes that an ambitious promoter will register his company with a large nominal capital in the hope ot impressing persons whom he hopes to "rope in" as shareholders. He has, no serious expectation of getting more than a fraction' of the nominal capital subscribed, and counts the extra amount required for stamp duties as money well spent. In other cases the promoters of quite legitimate enterprises will fix tne nominal capital much higher than is required for immediate.needs, in; order to avoid legal technicalities when, subsequent business expansion justifies the application for fresh capital. In this connection it should be mentioned that additional capital raised in 1934 by companies already m existence totalled £220,209. This compares with £372,737 in 1934, £963,496 m 1933 and £380,358 in .1932. ...... Fresh" Business Arrangements. Mere figures, however, may easily be misleading in consideration of company activities. It does Hot follow that the formation of a new company involves the addition of one' more enterprise to those already in existence.' In the case of private companies- the'new organisation is brought'into existence more often than not to take over and develop some business already irt operation. This definitely •makes for progress and is one of the prime, factors in the commercial advancement or the community. ■ Class, of Registration. , More.than one in every four of tbe companies, registered last year are devoted to retail trading in, ope form and another. The next'in point of numbers have manufacturing' as: object, with engineering }he most prominent class. The motor business, either in the form of transport, garage, repairing "or car, dealing, accounts for. 28 new registration's,, while 20 companies were formed for, the purpose of dealing in finance. The marked tendency in recent years, to set up mining companies appears to have been checked, though the total 6f'l3 is sufficient to indicate continued interest in the search for gold. , ' • The revival of the building industry has again turned vattention to the sawmillihg industry and ten companies have been formed to conduct sawmilling or box; making. The latter, has become one or. Auckland's leading- manufacturing industries'.' '.. '""[ """■" ' '■ '. . ■ .;•'., Biggest of Them All. ■In the fading days of- the official year— actually on Christmas Eve —came the registration of. the biggest industrial organisation xecorded. in the Dominion, namely that of .New Zealand Forest Products, Limited, with a nominal capital of £11,000,000. This huge organisation has been brought into being to facilitate the realisation of .the great., pine forests created by New Zealand Perpetual Forests, Ltd.,.in the Taupo, Putaruru and Rotorua' districts. '.A.'new page in- the economic history of the Dominion is being written, and the outcome of so ambitious an undertaking will be watched with the keenest interest from all parts of. the Dominion. • The second biggest in point of view of capital was the Consolidated Tobacco Co., registered in' May, with a capital ot £500,000. Next came the drapery fit-in of Macky Logan's, capital £100,000. formed to carry on a reconstructed business. One company was registered with a capital of £5C,500' to establish a school at Cam bridge. " That the old business of " Bottle-Oh so long confined to individual enterprise of a special typo is thoroughly organised nowadays may be guaged from the fact that a company with a capital of £30,000 was registered to carry on as "sack, bottle and general merchants'." A spirit of cheerful optimism appears to have prevailed in the case of a chemist's business, for which the nominal capital was £5. Protecting the Name. Amongst the registrations was Union Cold Storage Company (N.Z.), Limited, with a capital of £100. Union Cold Storage Company, Limited, is an English- company with a capital of £12,000,000, possessing extensive cold storage, meat and shipping interests. The New Zealand company has been registered with the intention of protecting the name in this country. Union Cold Storage does not carry on business in New Zealand under its own name but a subsidiary, W. and P. Fletcher (N.Z.), Limited, is well-known in the New Zealand irieat trade. Similar action has been taken in the case of \V. Weddel and Company, Limited, London,

also of the Veetey group. A company, W. VVeddel and Company (Is.'/,.), Limited, lias been registered in Christchureh. VVeddel and Company has an interest in the New Zealand butter trade through its agents in New Zealand, A. H. Turnbull and Company, Limited. Borne years ago a company, Boots, the Chemists (New Zealand), Limited, was registered in the Dominion in order to protect the name. The English company now intends to enter business in New Zealand. Directors' Rights. Amongst legal findings during the yeai which especially affect shareholders in companies was a Supreme Court judgment upon the rights of directors to remuneration. In this case the shareholders had voted a sum of money as .remuneration to the directors but the cheques were not drawn as there were no funds to meet them. Subsequently it transpired that instead of the company having made a profit of £5000, as was shown in the balance-sheet presented to {he shareholders by the directors, there had actually been a loss of over £3000. The mis-, take was due to bonds having been credited as having been paid to 90 psr cent of the amounts due on same. One of the directors sued the company for his share of the total remuneration and Mr. Justice Herdman gave judgment in his favour. This judgment was reversed' by the Court of Appeal in the following terms:—

"A director is- not, from the mere fact of being a director, entitled to any remuneration for his services. His position is not that of a servant but of a managing partner... To recover remuneration a director must show a contract, otherwise the fees are in the nature of a gratuity voted. "A resolution duly passed by the shareholders remunerating directors, though not in itself constituting a contract with tne company, is an authority to the directors to pay themselves.the amount of such fees. The shareholders cannot, however, bind the company in its corporate capacity to pay a sum voted as a present to the directors if there are no profits out of which it can be paid. Of course, if the remuneration is voted in respect of a definite and valid contract with the directors for payment for their services, that restriction would not apply. "In our opinion no valid contract has been proved, and the fees voted were consequently in the nature of a gratuity. Presents to the directors cannot be paid out of capital. Such money cannot be lawfully divided amovig the shareholders themselves, nor can it be given away by them for nothing to their directors so as to bind the company in its corporate capacity."