INTEREST PAYMENTS

Greymouth Evening Star, 5 January 1934, Page 3

INTEREST PAYMENTS

MR COATES’S STATEMENT.

[PER PBESB ASSOCIATION.]

AUCKLAND, January 4

In a statement, issued at Daigaville, the Minister of Finance, Mi J. G. Coates, made reference to the recent decision of the House of Lords in the Adelaide Electric Supply Company’s case. The Minister said. “The principal effect of this case —as far as the New Zealand local authorities are concerne4 —is that it definitely clears up an uncertainty which previously existed as to the rights of any local authorities to effect the payment of interest in London in New Zealand currency. It is unfortunate that the decision was not given earlier, as a great deal of trouble and misapprehension would have been saved. It seems clear that the effective discharge of monetary obligations must be made in tile legal tender of the country where the contract stipulates that the payments are to be made. The position, therefore, is that where a local authority has issued securities giving to the lender the option to obtain payment of interest and repayment of principal either in London or in New Zealand, the holdei - of such debentures is entitled to obtain in London the nominal rate of interest in the legal tender of the United Kingdom, or, if the coupons are presented in New Zealand, the holder is entitled to obtain the nominal amount in the legal tender of New Zealand.” “There is one result that may accrue from this decision, and that is that New Zealand holders of debentures in this class may seek to obtain an unfair advantage by reason of the present exchange rate between London and New Zealand, and may send their debentures to Lohdon for the purpose of obtaining the payment of the interest, and, in the cases where loans are shortly to mature, for the purpose of obtaining repayment of the principal in London. I desire, in conclusion, however, to take this opportunity of mentioning that the Government has made arrangements with the Associated Banks of New Zealand, whereby capital moneys released from the redemption of debentures will not be transferred from London to New Zealand through the agency of the Associated Banks. This arrangement follows an agreement that was made by the banks with the Government when the Banks Indemnity Exchange Act, 1932-33 was passed. The holders of such debentures would, therefore, be well advised to redeem in New Zealand: Otherwise, they find extreme difficulty in arranging for the transfer of moneys from London to New Zealand.”