CAPITAL CHANGES

Dominion, Volume 29, Issue 200, 21 May 1936, Page 16

CAPITAL CHANGES

Proposals of W.F.C.A. Board MEETING APPROVES Dominion Special Service. Masterton, May 20. A special meeting of preference shareholders in the Wairarapa Farmers’ Co-operative Association, at which 30 were present, voted unanimously to-day in favour of proposals lor capital readjustment laid before it by the chairman, Mr. C. M. Bowden. A meeting of ordinary shareholders is now to be called to obtain their approval. .Mr. Bowden said at the meeting today that at the annual meeting in October proposals for capital readjustment and arrangement regarding preference shares were approved, including a separate vote of the preference shareholders in attendance. Though the proposals were adopted in the form submitted, certain suggestions were made, to which the board promised consideration. Most of those suggestions had been incoporated into the scheme of arrangement now submitted. “The scheme of arrangement,” said Mr. Bowden, "proposes (a) to reduce the ordinary shares to 6d. per share, and by applying to the credit of appropriation account, the capital so written off, to reduce the debit balance in that account to £26,435/3/4. (b) That preference shareholders agree to abandon their claims to dividend in arrears, and forgo their rights to dividend until the debit balance above referred to is liquidated by future profits. (c) To amend the rights of issue of preference shares by reducing the rate of dividend applying thereto from 6 per cent, per annum cumulative, to 3 per cent, per annum cumulative, and a further preference (not cumulative) of 3 per cent, per annum —making 6 per cent, in all. (cl) That the right of cumulation at the rate of 3 per cent, per annum shall commence on August 1, 1938. (e) That preference shares shall count, equally with ordinary shares, for qualification of a director, (f) That two members of the present board shall retire, thus reducing their number to five —and that two directors shall be elected in their stead by separate vote of the preference shareholders, (g) That certain of the articles of association of the company be amended, or new articles added, to give effect to the foregoing proposals. “The board proposes an amendment to the proposals governing the number of directors. It has been pointed out that under the present articles the company could subsequently increase the number of directors elected by ordinary shareholders, to nine. Though there is no suggestion or intention of that beisg done, the board recognises that such increase would be contrary to the spirit of the arrangement, and proposes an amendment reducing the number of directors who may be elected by the ordinary shareholders to seven instead of nine, and providing that if the number of such directors shall exceed five, the number elected by the preference shareholders may be increased from two to three.” To one suggestion made the board could not agree—that equal voting rights with ordinary shareholders be given to holders of preference shares. The board considered that the position had been adequately met by the proposal for election by the preference shareholders of two directors in lieu of two present members of the board (with possible increase to three), and of the extension of qualification rights to preference shares; and by the facts that several of the present directors already were preference shareholders, that the preference shares •still retained full preferential rights to dividend, and that their capital was to be retained at the full nominal amount of £1 per share. Mr. Bowden suggested that much more support might be given the company by being loyal customers. Some ordinary shareholders were despondent over the fact that their shares are to be written down to sixpence, and perhaps feel that their interests have been disregarded. The board did not share that view, but considered that the proposals would prove eventually to have conserved the interests of the ordinary shares. There is no doubt that the rjead weight of the adverse balance has to be removed, and that losses must be borne by the ordinary shares first. But in years to come it might be possible to resume payment of some return on ordinary shares, after the full claims of preference shares had been satisfied, and reserves built up to protect those shares against intermission in payment of future dividends. When that happy time came, it would not matter what was the nominal amount of the ordinary share. Whether fid. or £l, each share is entitled to its proportionate part of the sum available for distribution !