TRANSFER OF SHARES

Greymouth Evening Star, 2 August 1946, Page 10

TRANSFER OF SHARES

LAND SALES COURT’S CONSENT NOT REQUIRED

JUDGMENT IN OTAGO CASE (P.A.) DUNEDIN, August 1. “It seems clear that a transfer of shares in a company is not a matter which requires the consent, of the Land Sales Court —shares constitute neither a legal nor an equitable interest in land, and Section 43 of the Servicemen’s Settlement and Land Sales Act contains no prohibition against the transfer of shares in a company.” This comment was made in a resei ved judgment issued to-day by the Otago Land Sales Committee in a case in which the Crown asked for revocation of the sale of a property on the grounds that a false or misleading statement had been made in connection with the application, or that the material Tacts of the transaction were not submitted to the committee. The Crown contended that the real purpose was to effect a transfer of the property in a manner over which the Land Sales Court would have no control. The committee held in its judgment that no false or misleading statements had been made, nor had any material facts been suppressed. I m thermore, cause had been shown why consent to the transaction should not be revoked, and no order or revocation was therefore made. Sale-.of Property The Crown’s case was presented by Mr J. R.- Hampton, who said that on June 12 last an application had been filed with the Land Sales Court tor consent to the sale of a property from Mr and Mrs Algie to George Victor Murdoch as trustee in the St. Clair Milk Company, Ltd. The price asked was £3OOO. The committee granted consent at £2lOO. An application had been made on May 31 with the'Registrar of Companies for the registering of the company, the capital being shown at £3OOOG\ Later this had been reduced to £2lOO. Mr Hampton explained that it had come under the notice of the Crown that a few days after the committee’s consent to transfer the whole of the shares in the company had been sold for more than double their face value. He submitted that had the committee been aware that immediately after incorporation of the company all the shares would be sold it would have been very hesitant in granting consent. He added that there were admittedly loopholes in the Act as far as shares were concerned, and that, if advantage were taken of the position, it could easily be seen that the whole work of the committee could be negated. In evidence the vendor, Mr Algie, said the intention was to form a company, giving his sons shares, but the latter "declined to carry on the business. The witness then instructed his solicitors to proceed with the registration on the basis of the witness and his wife taking all the shares, but later some people called Duffy sought to purchase, and z the shares were disposed of for £4610. This was after the incorporation of the company. “Legal Evasion” Mr J. M. Paterson, appearing for the company, said he did not concede that the committee had any ri°ht to inquire into the transaction at all; He agreed that there had been a legal evasion of the Act, but the fact remained that the sale of shares to the company was not covered by the Act. The transaction was complete on the incorporation of the company, and from that date the jurisdiction of the committee ceased, end it had no pow°r to revoke the original decision. He quoted a decision of me Band bales Court in suoport of his contention. Mr Paterson emphasised that the Act could not be extended by implication, and before any transaction could come under the jurisdiction ol the committee it must be definitely expressed in the Act.