COMMERCIAL PROPERTY COMPANY.

Evening Star, Issue 13123, 2 December 1908, Page 6

COMMERCIAL PROPERTY COMPANY.

AFFAIRS .TO BE WOUND UP. BY VOLUNTARY~LIQUIDATION. • * ; A LIVELY MEETING: ; An ext Inordinary general meeting of shareholders in the Commercial Property and Finance Company, Limited, was held at noon tojday int he company’s offices to consider the proposal, submitted by the directors, that the affairs of the,company be wound up voluntarily,, the company being unable by reason of their liabilities to carry on business. The chairman of directors (Mr James Arkle) presided, and there was an attendance of about twenty shareholders.

Mr Arkle, in moving the. adoption of the statutory resolution for voluntary liquidation,-said that it was a pity that matters had come to this, because they had worked , hard and had put-the .company in a better financial position than it had ever been in before. At the beginning of theyear the deposits were £35,141, and they were now £29,666, a difference of £5,474. The real weakness of all companies of this sort was that they had to take up money at. call, and any person could demand his money at a moment’s notice. And, of course, it was impossible to get the money in at call. The £5,000 was not lost, but was accounted for in deposits withdrawn. The bankers up to this had met the company’s engagements. They had met them now to the extent of £5,474, but did not go further. And the position was that every depositor, if he demanded his money and the company could not give it, could go to the Supreme Court and demand compulsory liquidation. Mr John. Mill objected that the resolution was not in accordance with what had been done at the recent annual meeting, when it had been proposed that the directors be appointed liquidators. Mr Woodhouse (the company’s solictor) explained that that had only been a suggestion. Only the present meeting could appoint the liquidators. Mr E, A. Tapper complained that af the annual meeting it had been stated that in regard to a previous informal meeting of certain shareholders it had been left to Mr, Thomson, the manager, to decide what shareholders should be invited to attend, and that gentleman said he had invited the four largest shareholders. That was not so. He .had found since that two shareholders whose holdings were only half as large-as his own had been invited, and he himself had not been notified of the meeting. Was that fair to him as one ,of the largest shareholders? The Chairman said that the question before the meeting was that of voluntary liquidation. Would anyone second his motion ?

Mr T. A. Hunter asked if it had been proved to the satisfaction of shareholders that the company could not carry on. Would the National Bank have given them a bigger overdraft if the directors had promised to make a call. It struck him that the company’s methods were peculiar in that they took money on deposit, and though it could be withdrawn at a moment’s notice the company had no proper provision made for meeting such withdrawals. If the company could make money by working on a bank overdraft, on which interest had to be paid, they could make better profits by working on capital provided by the shareholders. If the company’s affairs were in the fair condition which the directors said they were it would be a wiser plan to make a call instead of liquidating. It was far better for the directors to have the shareholders’ money to play with than the bank’s. It seemed to him that the company’s financing had been very weak indeed. ‘ The Chairman: The 'answer to that is this: I don't know that we had time to make a call. We were taken very suddenly. It was never suggested that there should be a call, and I don’t think it likely that it would have been responded to. Besides, we could not get it in in time. Suppose we had made a call of 10s per share, that would have brought in about £IO.OOO. However, it is for the meeting. We have not gone into liquidation yet. We would have to ascertain whether our creditors would Wait while we made a call. Mr G. Esther then formally seconded the chairman's motion. ’

Mr Tamper: It would be a pity if a! splendid little company like this should go to 'the wall. I think arrangement!? could have been made whereby the company could have been carried on. I don’t think the way it has been carried on has been right. It is bad finance to take money at call and lend it out without making provision for when it is called for withdrawal. You have tried the bank, and then vou called a hole-and-corner meeting of shareholders. If yon had called a proper meeting they would have shown the way to save the company. The Chairman: The proper meeting is now. Mr Tapper: You had no more right to call a meeting of a few shareholders than you had to call one shareholder. You have destroyed one of the best little companies in town by bad management. You told u* at the last meeting that the company were in a better financial position than for many years past. The Chairman ; Yes. Mr Tapper : The same directors last year declared a dividend. Was that wise? And the yee.r before also. Was that wise? If they had been wise they would have ouilt up a reserve fund. Mr Arkle said that they had made no bad debts, and the fact that they had cleared up some sweet legacies left showed that the company had been well managed. They were not responsible for bad debts made before their time. There was nothing to prevent the shareholders from calling up the capital now, but to call up 10s would not 1* enough ; it would be necessary to call up £l. He had watched matters closely, and was convinced that the most difficult thing to carry on successfully was an institution of this sort. It was hard for an empty sack to stand upright. None of their customers. it had to be remembered, came to them from choice but from necessity. No one was going to pay 9 per cent, if he could get money from a bank for 5 per cent. But they had never gone in for a blood-sucking business, bad never charged more than 10 per cent., and in many cases much less ; and if now it was proposed that they should go on the blood-sucking lines it would not be with the present directorate. Mr Tapper: Why did you declare a dividend ?

Mr J. Hunter said that it seemed to be forgotten that if they had used their own capital they would not have made any profits. Their profits were largely made by working with a small capital and making something out of large deposits. It was also well known that the bank’s action was a surprise, because in the bank scare of 1895 the company bad over £6,000 advanced. Mr Esther said he was perfectly satisfied that a 'call would not .have been responded to. People had not the money just now, and if they had they would not put it into such a concern at this juncture.

A Shareholder : They would have if a call was made.

Another Shareholder : Would they ! Mr Woodhouse Would the creditors have waited ?

Mr James, Brown said that, as one of the company’s auditors, he could easily understand the feeling that prompted some shareholders ’ to favor carrying on. He himself had the strongest feeling against any readjustment of the company’s affairs. The proper thing to do was.-to liquidate and make an end of it. His experience of the company ever since he had anything to do with it was that it had been most unfortunate. Losses had arisen in most unexpected quarters losses due, however, to the nature of the business. He had pointed out to the directors—although there had been no need to do it, as they already knew—that the company’s position was one of imminent risk Owing to the nature of the business. A company with a small paid-up capital of £9,000 making advances and discounting bills up to £50,000 could not in ,any sense be considered to be trading on safe lines. To do its business it was necessary for the'company to get money from the bank to tide over and fix the overlapping of deposits. In times past that had been, managed. The call on the bank had not been very, great. The company

had deservedly held, the good opinioh of those who deposited with it. Both the depositors and the bank thought it was sound from the point of view Of .safety. Now the position had altered, and danger having arisen, the shareholders ought not to wonder at this occurring to a company engaged in a business which had never been satisfactory or profitable, and which, in his opinion, would heyer. result successfully. The best 4nd- wisest thing to do was to liquidate and make an end of the affair as speedily as possible.—(Applause.) The motion to liquidate voluntarily wat then put and carried, if not unanimously, at least by an overwhelming majority, nineteen voting for it. Mr Tapper : We have heard Mr Brown’s opinion. I ask you how it was that the directors paid divdends when the company was in such a rotten position. Mr Brown : I did not say the company was, in a rotten position. There never was a dividend declared that the position did not warrant,' so far as profit and loss account'.is concerned. No one could possibly foretell the future. So far as the position could be safeguarded it was done. Since - 1900 a sum of £14,000. had been written off the balance-sheet in bad and doubtful debts. ' Of that amount £3,ooo’was taken from capital, and the balance from profit and loss account. The business was able to make fairly largo profits, but it was attended with very material risks, inasmuch, as 'so much money, was lost. Tjie record is not .a blameworthy one. It is a case of downright misfortune. The businecs this company aims at doing is not possible on ,the terms.

Mr Arkle said that the directors had considered themselves perfectly justified in paying a dividend. Perhaps Mr Tapper did not know that the responsibility of paying a dividend-rested largely with the auditor. Dr Hocken then moved : 1. That Messrs Arkle, Burnett, and Hill-Jack be appointed liquidators of the company. 2. That as soon as the liquidators think fit; hut not later than the end of six months, another meeting be called to receive a statement setting forth the progress made with the liquidation during that period. * 3. That he remuneration of the liquidators be the amount at present paid them as directors of the company, together with such other sums as the slr.ireholders may see fit to grant in the lignt of the result of the liquidation.

Two other minor resolutions were also proposed, expressing the wish of the meeting that the liquidators devote their attention exclusively to the work of liquidation; and referring to the place of business for the liquidators’ work. In moving the above Dr Hocken said that they had only one class of creditors—depositors and the bank—and these had only to exercise a little patience and they would be paid everly sixpence due. The company had not only all their assets with which to meet the liability, but also a large uncalled capital of £4 per share to fall back on. By judicious liquidation there should be enough to leave a substantial amount of capital for shareholders. He named six months for the next meeting,, because he noticed that £16,500 of the assets consisted of bills under discount, and these ought pretty well to be run off in that time. Besides, the shorter the time given for liquidation the greater would be the pressure used by the liquidators in getting in the debts of the company. Sir Arkle, referring again to the situation, said that they owed £34,000, and had £43,000 of assets. The money they had lent was not their own money, but belonged to the depositors, and must be paid within reasonable time. The real question was Who was to pay it? If they did not get it from those who had borrowed it, they must pay it themselves, and pay it shortly. He would make no promises as to whether they could pay it out of the assets. Personally he thought they could. Mr Esther said that he presumed that any proxies would not be of the slightest use in regard to the appointment of other liquidators. The .Chairman said he understood that Mr Esther held some proxies, but could assure him that they could not affect the result, as they would be overwhelmed. Mr Esther expressed himself satisfied on that point, and went on to ridicule the small amount proposed’by Dr Hocken as the directors’ remuneration, 1 as it amounted to only 15s a week each. He would like t > move a motion. Mr Arkle said that he was not going to work hard for six months for £2O, but lie was quite prepared, and so were the other liquidators, to carry out the work faithfully for nothing. They Wanted no premises of possible future remuneration either. They were likely to get enough “ promises ” within the next - six or nine months.—(Laughter.) But promises would not. do for their creditors, and the liquidators might have to take stern measures. H-' further assured them that while it night be necessary to make some small compromises, which could be left to the discretion of the liquidators, they would make no big ones without consulting the principal shareholders. Mr J. Mill seconded all the motions moved by Dr Hocken, and these were carried, the meeting deciding to allow the motion dealing with the remuneration of diiectors to remain along with the others. Mr Tapper moved a vote of thanks to the directors “for having steered our bark to the haven of rest —on the rocks.” Mr Arkle; 1 could hit as hard as Mr Tapper if I wished. The meeting then ended.