The Evening Star WEDNESDAY, MARCH 23, 1887.

Evening Star, Issue 7168, 23 March 1887, Page 2

The Evening Star WEDNESDAY, MARCH 23, 1887.

It would seem that the provisions of the Mining Companies Act, 1886, are imperfectly understood. A vicious and illegal practice has grown up cf transferring shares in blank ; —that is to say, the transfer form is passed by the vendor to the purchaser without the name of the latter being filled in. The object is, of course, to evade the payment of stamp duties. Thus A sells to B, who sells to C, and C sells to D, and so on through all the letters of the alphabet; and eventually a bona fide investor’s name is fi'led in by the last transferor. It cannot be too widely known that this is illegal; and shares so transferred remain the property of the original transferor for all time. Section 46 of the Mining Companies Aot provides that “ Blank forms of transfer of shares “ shall not be valid. In every form of transfer there shall be written in ink the name “of the transferee, whether a person or a “ company.” Section 47goes on to enact that the transferor shall continue to be chargeable for six months after the transfer with any debt or liability incurred prior thereto. As, by the law, the transfer can never have legal effect unless it originally contained the name of the transferee, anyone who is foolish enough to sign a blank transfer may at any time be rendered liable for shares which ho has parted with years ago. Butevcn this is not all the risk incurred. Section 132 of the Stamp Act, 1882, is yet more stringent. It provides that “no instru- “ ment of sale or transfer of any share or “shares shall be valid at law or in “ equity unless the name of the purchaser or transferee is written therein “in ink at the time of, or before, “ the execution of the instrument of sale or “transfer,” Section 133 of the same Act renders any person who “executes a sale “note, transfer contract note, or other in- “ strument of sale or transfer in any manner “ or for any purpose whatsoever, unless the “ name of the purchaser is written therein “ in ink at the time of or before the execution thereof,” liable to a penalty of not less than £2O, nor more than £IOO. The next section sots forth the invalidity of blank transfers. “If any such instrument “is so made and signed, it shall bo wholly “ and absolutely void and inoperative, and “ shall in no case bo made available by the “ insertion of a name or any other parti- “ culars afterwards. And the person selling or “ transferring such share shall not be divested “ of his interest therein, but shall remain “ liable thereon, as if he had never sold or “disposed of the same.” These, it will be observed, arc not new provisions; yet there is reason to believe that the law is habitually transgressed, at the imminent risk of all persons concerned. Brokers who lend themselves to the practice of dealing with blank transfers are not only open to the penalties prescribed, but are also incapacitated from claiming the payment of commission on sales so made. The efficacy of the law will shortly bo put to the proof. A case is now pending in the Reefton District Court, the facts of which are thus given by the local correspondent of the Wellington ‘Press’:—“One P, being indebted to a “ bank, gave the manager thereof a transfer, “not dated nor with any transferee’s name “ inserted therein, of 1,370 shares in the “Globe Company. Some time after the “bank manager inserted his ow r n name in “ the transfer, registered it, and subse- “ quently sold and transferred the shares to “ S and C. In the meantime P has become “ bankrupt, and the Deputy-Assignee is “moving the District Court to rectify the “register by striking out S and C as the “ owners of these shares, and inserting his “ own name in lieu thereof, on the ground “that the transfer from P to the bank “ manager was absolutely void, and there- “ fore that he had nothing to sell to S and “C. The shares, which were sold at 3s 6d “ per share, are now worth over £2,000.” Ah the matter is sub judice, it would be premature to express any opinion on the case. But we are quite within our limits in warning sellers, purchasers, and sharebrokers of the tremendous risks they each and all incur by any violation of, or deviation from, the provisions of the Acts quoted above.