BANK OF NEW ZEALAND

Evening Post, Issue 88, 12 April 1924, Page 8

BANK OF NEW ZEALAND

A SURPRISE, FOR- SHAREHOLDERS.

„ Shareholders, who .bought' ♦(■'•rights •" to' take up the recent issue.of. shares'in the' Bank of JJew 'Zealand have received a surprise. They now find ' that ih'ey' are ; liable"l to a duty of 3s on .every £50 ./. or part o£ £56 worth of the' new shares transferred !by the original holder to' themselves. This duty,, in the.'case of the Bank of New Zealand, is in the nature of' an innovation. The bank, in its circular on the subject, states: " The Crown Law Office has now advised the1 Commissioner, of Stamp Duties that your'purchase of the rights of thcise shares was a dutiable transaction, although on a previous occasion a different view was'given, and several Deputy Commissioners of Stamp Duties.gave rulings that the, transactions were not dutiable." ( "'.' The circular also refers to'" doubts " las to the amount' of duty' payable and views of 3s per.£so andl 10s per £50 on Hhe consideration paid by the purchaser are held; and a third view is that the duty would be payable, not only on the amount ,paid by the purchaser, to* the vendor for the rights, but also upon: the amount paid by the purchaser to the bank—viz., £1 per share. " Moreover," .the bank points out, " owing to lapse of time, fines have accrued in respect to those .transactions." ■ . ' In an endeavour to obtain some simple explanation of the position, a representative of " The Post ", waited on "the general manager of the Bank of. New Zealand (Mr. Henry Buckleton)/: who !iad nothing to say beyond what was contained in the circular. Next the Commissioner of Taxes (Mr. D. G Clark) was seen, and all he was prepared to say was that "these transactions afe liable to duty; but arrangements are be-1 ing made to meet the difficulty by le"is lation." ' ,■ •'Jo 0 The Bank of New Zealand, he explained had been put upon the same flevel • with respect to this duty as any other company. ! < J """F The results of. the inquiries up to this point were: (1) That those shareholders .whc| boivght from onginal shareholders of the, Bank of New. Zealand rights to take up,£l ordinary shares'of H>« 750,000 recently, issued \verelSbl e -to ! •conveyance1 duty of £1 on every £1 00 worth of consideration paid to acquire : these rights; and, further, liable to fines accrued, owing to lapse of time, in r* speet. of these transactions. to) That if, instead of tsking up the rights to apply for these shares, the new shareholders had waited until they were "on the market, then they1 would have been responsible' for the payment of the ordinary transfer duty of 6s per 100 13j Original shareholders who exercised their rights to take up new' shares and had them added to what they already held are not liable, to any duty. It is understood. that, although fines are referred to in the bank's circular the Commissioner, in the unusual circumstances that have arisen, will not insist upon them. , • The difficulty has arisen out of the •reading of.the Crown Law Office of the Stamp Duty Act and looking upon the transfer of "rights" in this way1 as a "conveyance,"., not a "transfer" of shares,, and, therefore, liable to 1 per cent, duly on the amount paid by the purchaser of the "rights." ' What was that amormt? No one can say with certainty. The Stock Exchange value at the time th,= rights were m the market was anything.from 29s to 31s 3d per share. But whatever- it was as between vendor and purchaser, the duty which the bank.will receive on behalf oi the Crown will be 3s on every £50 or broken-part of £50 of consideration paid by the buyer to the.seller. ■