A COMPANY'S MONEY
VOTE TO DIRECTORS
INCORRECT BALANCE-SHEET MANAGER'S CLAIM UPHELD (By Telegraph.—Press Association.) AUCKLAND, This Day.. . A sum of £1000 voted at a shareholders' annual meeting to the directors for their services, and the subsequent discovery that, instead of ;i profit of £5000, the company'had made.: a loss of £3200, led to nh'unusual action,1 in "tho Supreme Court today. Charles John MacCulloch, company manager, who was one of the five directors, claimed £200 from the Putaruru Pino and Pulp Co. (N.Z.), Ltd., as his share- of the £1000 which had never been paid. In a counter-claim, the company asked, the Court to rescind the resolution voting the directors £1000, on the ground that the balancesheet showing a profit of £5000 was incorrect. .•■■■•
After legal argument, Mr. Justice Herdman asked: "Can you have a more definite direction than that given by the shareholders to,, directors to do a •certain thing? It was a definite_ order to pay, and if the directors did not pay, surely they could be sued." In reply to his question, it was stated that the company was carrying on and doing reasonably well. Counsel for tho company ,'said 'it would be a curious position, if the company had to pay the sum voted to directors when it voted as a result of a balance-sheet that contained a false statement.
The mover and seconder of the shareholders' resolution gave evidence that they would not have moved it had they known there was a loss and not a pro^ fit. • ' :
The present secretary of the company said that the dividend declared at the first meeting had not been paid. The company's losses since the inception totalled £11,82". He believed that the shareholders did not know till recently that the £1000 had not been paid to the directors, and that they were now moving to have the resolution" cancelled. The mistake made- by the directors was in showing as assets 90 per cent, of the amount represented by the sale of bonds, allowing only 10 per cent, for forfeitures.
Counsellor both parties made it clear that there was no suggestion of fraud against the directors.: His Honour gave judgment for tho plaintiff with costs.
A COMPANY'S MONEY
Evening Post, Volume CXVI, Issue 65, 14 September 1933, Page 12
Stuff Ltd is the copyright owner for the Evening Post. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.
Log in