FINANCIAL AUTHORITY

Northern Advocate, 14 August 1931, Page 6

FINANCIAL AUTHORITY

REFUSED TO DIRECTORATE “SCOPE TOO WIDE.” A CONSERVATIVE DECISION. A pToposcd amendment of the Memorandum of Association to give the directors wide discretionary powers in the arranging of finance for suppliers, was turned down by the Waipu Dairy Company, at an extraordinary general meeting held at the close of the annual meeting yesterday. The motion, of which notice had been given by Mr R. R. McKay, read as follows: —“To lend money to such persons, firms or companies and on such terms as may seem expedient, and whether with or without security, and in particular to customers, suppliers and others having dealings with the company, and to guarantee the performance of contracts by any such persons, firms or companies either by tho endorsement of p.n.’s or in such other manner as the company may deem expedient or convenient. To draw, make, accept, endorse, discount and issue promissory notes, bills of exchange, bills of lading, warrants, debentures and other negotiable or transferable 1 instruments,’’ ’

The mover said that 1 with changing conditions the dairy company was fulfilling other objects than the manufacture and sale of butter. The aim of the present motion was to allow the directorate wider scope, so as to obtain money from outside sources for financing suppliers at lower rates than from the bank. For instance, money for fertilizers could be obtained at least one per cent cheaper from the Rural Intermediate Credits Board, of the scope of which many other companies were already availing themselves. Under its present constitution, the Waipu company was not entitled to give supplier's credit for anything. The proposalj if put into effiect, would enable the company to assist suppliers in farm management and the supply of fertilizers, and be reflected directly in greater returns from their factory. He made an appeal for the motion to be given the three-quarters majority necessary for its adoption. Mr Gordon McLean, who seconded, said that Waipu was working under a disadvantage compared with those companies wiio had made the necessary change in their articles. It surely would assist farmers if they could receive money at from one to one-and-a-half per cent less interest. MrR. W. Johns thought the company could. get on quite well withoiit the change being made. It was already assisting in financing manures to many suppliers, and the present motion, if carried, would give the directorate powers which would be too wide. He

asked whether it was a fact that-the Public Trustee advised that the Waipu company could not borrow anything, as its securities were pledged already to the bank. The company was not a money-lending institution. The secretary said the Public Trustee stated that, before any definite intimation as to how much could be loaned to the Waipu company was made, ho would have to submit balance sheets to the Central Eural Credits Board in Wellington, as was the usual procedure. There was some discussion on the amount of money which could be obtained from Eural Intermediate Credits Board, it being stated on one hand that a sum of £3OO or £4OO would be inade-

quote, and that if the amount was a large one (say £2000), too great responsibility would rest on the directorate.

A suggestion tliat the -financing, if undertaken, be extended to stock, met With considerable opposition. Mr H, E. Hewlett thought that any money advanced for manures would come back the same season in increased supply to the factory. The directors knew the- financial position of most of the suppliers, and could be relied upon to exercise caution in backing p.n.’s Mr Whyte thought the motion would' be supported if the words “or without security ’ ’ ware excerpted. The chairman preferred the motion going forward as printed on the balance sheet.

Mr R. R. McKay asked suppliers to (just the directorate. He pointed r.ut that the Waipu company had never shown a penny’s bad debts in the trading account. Suppliers might be sure no money would be advanced unless the company’s interests were protected. Discussion had been confined to the E.1.C,, but there were other avenues of finance open to the company if the change were made.

The motion was lost hy 20 votes to