INTEREST ON SHARES.

Hawera Star, Volume XLVII, 13 August 1928, Page 7

INTEREST ON SHARES.

THE POINT DISCUSSED.

MELROSE COMPANY’S DECISION.

At an extraordinary gj moral meeting of the Melrose Dairy Company lauppliens on Saturday the question arose as to whether the payment on interest on shares in the- company was optimal or compulsory, and. after an interesting discussion. it was dmided that it was optional lor the directors to declare at their discretion. The present articles made the declaration of an annual dividend compulsory, and a majority of over 75 par cent, of the suppliers favoured amendment of tire articles. The special resolution stated that: “The shareholders of the company may be maid interest upon their shares at such rate not exceeding 5 per cent, as the directors may declare.” That was tire main provision, said the chairman, in moving the .alteration. The directors felt that compulsory payment of 5 per cent, interest on share capital as weU a s interest upon a debt of about £21)00 ’ to the bank, was a great drag on tho company in its present state. Interest paid had been too high in comparison with the amount of milk being supplied. For a co-operative concern there, were too many “dry” shared held. . , A ioquest for admission to x-ixe imieet* bv tlie solicitor of a decea.sed estate (Mr A. K. North)’ and by the D.O.A. (Mr 1L S. Sage) was then made and both were allowed to .present and to speak. ■ , , ■ Mr Dunlop stated that the debt to the bank was £2OOO, but share .capital was £3400, not £4OOO as stated, by. the chairman. - • ■ ' ' Mr S age quoted) the practice or other companies, but the chairman said most companies had an optional clause as to payment of dividends. It had merely happened that Melrose Laid its articles drawn up in absolute terms. Mr North said that every investor was entitled to interest on his money, whether a "dry” or a “wet” shareholder and if the resolution,,were carried, all! investors could say goodbye to further interest. He hinted that an appeal might be. made. . In answer to Mir Sage, the chairman said directors could buy up ‘‘dry” shares, and Mr Sage maintained; the directors should have done this or reduced Hie capital, and he could not favour the proposal because the interest would assist the estate. The secretary (Mr A. K. Fyson) said the directors had considered buying, but coulld not do so. , , Mr Looney said he had purchased shares at 4s each and to pay-5 per pent. (interest on fully paid shares would really equal 25 per cent, on that basis. “Drv” shareholders, he added, were seriously endangering the company, if the directors were forced to pay 5 per ,° e ypr North suggested a reduction; of 1 capital. .... . r ! The chairman said that with tour vats in operation, the company would be in a better position and be able to pay in full. He asked Mr North what he would give for a factory in concrete with the present milk supply, but Mr North said he was not a buyer. _ “Plrinoipall and interest will be kilted,” said the chairman, “if the iaotory does not continue operations. - LL» added to the D.O.A. that they had been obliged to reduce the liability to the bank by the amount of depreciation al*°T?ie amendment as noted was carried.