CENTRAL BANK

Dominion, Volume 27, Issue 37, 7 November 1933, Page 10

CENTRAL BANK

New Zealand Ownership INEFFECTIVE CLAUSE Transfers Not Covered

(By

A. N. Field.)

It is an unfortunate fact that the Government after concurring in the view advanced by Mr. R. A. Wright in the House of Representatives that the ownership of shares in the Reserve Bank should be confined to British subjects ordinarily resident in New Zealand, has made an amendment which is totally ineffective to secure that encl. All that has been done is to lay it down that shares in the bank shall not be allotted to any person other than a British subject ordinarily resident in New Zealand. There is no provision restricting the subsequent transfer of shares to British subjects ordinarily resident in New Zealand. It was apparently the desire ’■ of the House, and the intention of the Government, that this should be done, but as the amendment stands it has not been done. The amendment .was made to Section 6 of the Bill, which lays down that the shares in the bank shall be offered for public subscription by the Minister of Finance, and shall be allotted by him in such manner as he may in his discretion determine. No amendment was made to Rule 11 of the Rules of the Bank contained in the schedule to the Bill and dealing with the subsequent transfer of shares. The absence of amendment to this rule leaves it open to the Governor of the . Reserve Bank at his discretion to accept anyone irrespective of nationality as a transferee of shares. Whew Introduced this year in its revised form the Bill had a new proviso to section 6, stating that not more than 500 shares might be allotted to any one person. Additional words were also inserted in Rule 11 to the effect that the bank must decline to accept any transfer that would increase the holding of any person beyond 500 shares. It is most desirable that the same precaution taken with respect to the limitation of individual shareholding should be taken with respect to the nationality of shareholders. In a previous article on this point in “The Dominion” of October 31 the writer- directed attention to the fact that the acquirement of shares in the bank by foreigners might easily be a source of embarrassment later on should amendment of the Reserve Bank legislation be found necessary, as in such case' the Act constituting the bank would become the basis of a contract between the Government of New Zealand and the citizens of a foreign State. As the shares are to be first allotted at the discretion of the Minister of Finance, such a situation was not likely to arise at the outset. So far as the writer understands the Bill, the acceptance or rejection of subsequent transfers of shares is solely at the discretion of the governor of the bank (not apparently being a matter specifically reserved for the board of directors). If the governor treated the transfer of shares as a purely commercial proposition, the ownership might get into anybody’s hands, and it is here that a specific direction is needed if the bank is to be made purely national New Zealand institution. The Bill has still to pass the Legislative Council, and it is to be hoped that the necessary steps will be taken to embody in a clear and unambiguous manner the amendment intended in the House of Representatives.