TO SUE DIRECTORS

Dominion, Volume 25, Issue 267, 6 August 1932, Page 12

TO SUE DIRECTORS

Shareholders’ Decision N. TOBACCO CO., LTD. Action to be Taken Some forty shareholders of the New Zealand Tobacco Company Ltd. (in liquidation), at a meeting in the Oddfellows’ Hall, Clyde Quay, last night, decided to support the decision come to at the general meeting of shareholders at Auckland on May 13 last to the effect that legal action should be taken against the directors. A motion was carried confirming the Auckland resolution and requesting that immediate action be taken against the directors and provisional directors of the company. Mr. P. C. Watt, who was voted to the chair, read a legal opinion stating that the purchase of the Hobsonville property was of minor importance compared with the Brigham’s Creek purchases, over which Pacific Investments Co., Ltd., had made an apparent profit of £55 per acre in respect of 354 acres. It would, continued the legal opinion, be only prudent to Investigate the Brighams Creek and Paremoremo purchases further with a view to bringing them before the court simultaneously with the Hobsonville transaction. “The directors have protected themselves to a certain extent. by disclosing in a prospectus that they intended to make the Brigham Creek purchases at the price of £BO per acre, .and they have mentioned a payment by Pacific Investments Ltd. to Messrs. Sinton of the sum of £25 per acre under circumstances which might have made an experienced investor somewhat suspicious, but it can hardly be said that the prospectus fairly and adequately discloses that Pacific Investments Ltd. were buying the property at £25 per acre, and were passing it on at £BO per acre.” The opinion emphasised that a further investigation was essential, and would have to be done in Auckland. Pay to Investigate. The chairman stated that copies of this legal opinion had been forwarded to the liquidator, and to the shareholders in Taranaki, Wairarapa and Canterbury. , “The whole trouble with regard to this tobacco business,” said Mr. B. G. H. Burn, who attended the Auckland meeting as a Wellington delegate, "is that the Auckland directors were wise. Very few shares were taken up in Auckland; most of the investors were in Taranaki,. Wellington and Canterbury.” From inquiries Mr. Olliver and he had made in Auckland, he was convinced that it would pay them to investigate the whole position. Mr. D. D. Olliver said he was satisfied it would be a mistake to let things drop. It appeared to him that the whole thing was a gigantic fraud: Tobacco was making fortunes for people in New Zealand, and recently the company had had to turn down an order for 50001 b of tobacco. There were 1200 shareholders in the company, and It was a mistake that the 140 Wellington shareholders did not have a representative on the directorate. The Auckland district had scarcely been canvassed at all, and it appeared as if the directors did not want to have too many shareholders near home. Serious Responsibilities. Mr. C. J. B. Norwood said hewas not a shareholder, but his family were all in the company. He was confident that the shareholders in Wellington, Canterbury, and Taranaki would be quite prepared to join in the action against the directors. He was not sure what action could be taken against the directors. The Companies Act was much more severe upon ' provisional directors, and they could probably be got at through the prospectus. They still had serious responsibilities to the shareholders. He suggested that the liquidator be informed that the Wellington shareholders were desirous that the provisional directors be joined with the directors in any action taken. After a lengthy discussion, the chairman moved: “That this meeting confirms the motion carried at the general meeting of shareholders at Auckland on May 13. That immediate action be taken against the directors of the company, and further urges that such action be sufficiently comprehensive to cover the . previous actions of the provisional directors, and that a local solicitor be requested to collaborate with an Auckland solicitor by correspondence, and report to the chairman.” The motion was seconded by Mr. Burn, and carried unanimously. A committee, consisting of Messrs. P.i C. Watt, A. W. O. Travers, D. D. Olliver, O. J. B. Norwood, and B. G. H. Burn,' was appointed to watch the, interests of the Wellington shareholders.