THE BANK OF NEW ZEALAND

Evening Star, Issue 7751, 24 October 1888, Page 4

THE BANK OF NEW ZEALAND

[Special to the Star.]

AUCKLAND, October 23.

Mr Henry Law, of Adelaide, in the course of a long letter to the ' Star,' quotes clause US of the Deed of Settlement of the Bank of New Zealand as follows :—" That if at any time hereafter it shall appear to the Board of Directors that losses have been sustained equal in amount to one-half of the subscribed capital of the company it shall be incumbent on the Board of Directors to submit a statement of such losses as soon as possible to a special general meeting of tho proprietors, and it shall therenpon be referred to the auditors for the time being and such other special auditors as such general meeting may appoint to assess the said losses and to examine the whole .state of the company's affairs, and to report thereon to a subsequent general meeting to be convened for the purpose of receiving and considering such report; and if at such subsequent meeting the said auditors shall confirm the estimate of loss previously submitted to the Board of Directors the business of the company shall, from and after the date of such subseq?ient general meeting, be confined to the winding-up of its affairs, and converting into money all its funds an d property and distributing the same : provided, nevertheless, that it shall be lawful for snch meeting to enter into a resolution to continue the business of the company and to write off the losses from the capital of the company, and thereupon such business shall continue until the next half-yearly meeting of the proprietors and any adjournment thereof, which shall hart power to confirm such resolutions by the votes of the proprietors possessing not less than three-fourths of the actual paid-up capital." Mr Law goes on to say: This clause points conclusively to the fact that, upon it appearing that losses have been sustained equal to one-half the capital, it is incumbent that the bank should go into liquidation, and that it can only be resuscitated at the next half-yearly meeting by the vote of three-fourths of the actual paid-up capital. There is nothing in any other clause or clauses of the Deed to nullify this imperative duty, while there are many other clauses read in conjunction with it which confirm the application. Instead, therefore, of judge Gillies and three others forming a special committee, it should have consisted of the present auditors and such other special auditors as the general meeting may appoint. Clause 88 of the Deed of Settlement provides that "at all special general meetings the proprietors present shall elect their own chairman." Instead of which, Mr Buckley has placed himself in that position on each occasion. He now further assumes to be a director and president of the bank, having been elected to fill the place of the late Mr Owen. Refening to this assumption, I also give Mr E. Hesketh'a opinion as follows : "As to clauses 41 and 43, which refer to the election of directors and the supplyingof vacancies of directors, we are of opinion that the effect of these is to render the director who has been appointed to fill a vacancy caused by resignation ineligible for re-election until the half-yearly meeting to be held after his term of office expires; in other words, as a director whose vacancy he has filled could not be re-elected until the succeeding October half-yearly meeting after his term of office expired, so a successor is under the same disability. If, therefore, the term of office of a director expired to-day, and he resigned, and another was elected to fill the vacancy, the person so elected would go out of office to-day, and would not be eligible for re-election until the half-yearly meeting in October, ISB9. We are also of opinion that, unices tho vacancy by resignation occurred within sixty days before the halfyearly meeting in October, and unless the directors have, by resolution entered on their minutes, directed such vacancy to remain over until the October meeting, such vacancy ought to have been filled up by the Board of Directors within thirty days after the same first happened. Clause 43 clearly requires this, and if not carried out an election to a vacancy would be bad. Clause 47 provides for such bad appointment aHd acts done by those holding it, and operates to prevent those acts from being illegal or invalid, if done before notice in writing has been given by the shareholders; and the Board, if there has been irregularity in such appointment after such notice, must hold an inquiry, and if they are of opinion that the election is void they must declare the office vacant and another election be had. By clause 49, if such person,"being so unqualified or disqualified, acts, after notice as before-men-tioned, he renders himself liable to the bank in the sum of L 100." From this Mr Law argues thus: It is therefore obvious that all the proceedings whioh have taken place at these three special general meetings' have been under wrong conditions, and that the whole of them arej as a matter of course, absolutely bad. By the various reports of the bank I s.e.e that in September, ISB6, a sum of L 35.500 was appropriated for losses; in March, JBB7, L 125.000; and in September, 1887, L3s.ooo—making in all L 193.500 ; to which is now added the LBOO.OOO recommended by the Committee—making a total of L 993.100, and leaving only tho magnificent sum of L 6.500. This is all the proprietors' money remaining in the bank. The rest of the money is the property of the public and of other claimants. They do not individually know the amounts possessed by each other, but collectively I know it is theirs. All that we have remaining to prevent further calls upon us as shareholders under the liability clause (clause 21) of the New Zealand Bank Act No. 1, July .29, JBB6, is the reserve fund, which Mr Murdoch, by his Scotch^ sagacity 1 prudence, h'as put,by for us in .times that, were better than these. By Mr Hesketh's opinion of clause 118 you will see that with the exception of this sum the whole of the paitfup capital of the bank is los,t, and what we now have is the reserve fund. In tracing the difference in the coarse that has been followed and in jbh'e course which' shoujd have been followed, I shajl leave the sb:tr,eholders to judge whether this Committer, whilst seeking to alter one portion of the Peed of Settlement, did not know of the existence of this most imperative clause 118, which stands out high above all the others alike for the protection of the 1.057 shareholders who reside in Great Britain, of the 447 who are in Australia, and of the 010 in the southern portion of New Zealand, as well as 128 in Auckland and its district, and by which all are absolutely bound. j