P. AND 0. CAPITAL ISSUE.

New Zealand Herald, Volume LXIV, Issue 19777, 26 October 1927, Page 9

P. AND 0. CAPITAL ISSUE.

TWO CLASSES OF SHARES. THE PROPOSAL POSTPONED. The proposal by the directors of the Peninsular and Oriental Steam Navigation Company to create £1,000,000 additional deferred stock was submitted to a special meeting of stockholders in London on September 14. The chariman, Lord Inchcape, said the additional capital was required to pay for new tonnage now being and about to be built and for the general purposes of the company, and would, in accordance with the company's charter, be offered in the first place to the existing preferred and deferred stockholders, who held not less than £4O of stock of the company. Mr. Theophilus Sandeman said that when the old stock was divided into preferred and ordinary stock the same individuals were the holders of the two stocks, and consequently it did not matter whether they received new allotments with one hand or with two hands; but the real intention was that each category of stock should receive allotments in the future of its own particular category. He thought that what they., did originally was a blunder, and the proceedings of the board since then showed that they recognised that it must have been an error of judgment. The deferred stock was then, as it was now, entitled to the assets of the company entirely. The preferred stock was eniitlea to its 5 per cent, cumulative dividen and to priority with regard to its n r ~ nal capital. The deferred stock possessed, everything that remained, and cn«p- ---| quently it. had always stood at an enhanced value in the market. The board, at the time it determined to pay the dividends free of income tax, decided, and quite rightly decided, not to do it for the preferred stockholder, because, that would mean paying the tax out ot funds which belonged to the deferred stockholders. Mr. Sandeman added that, on two subsequent occasions, the board made allotments of deferred stock to deferred stockholders, in addition to their cash dividend. Why did they not do it to the preferred ? Because the preferred wars hot entitled to participate in the assets. If at the present time the board recognised that the preferred stockholder was not entitled to an allotment of deferred stock, it was rather illogical to say that the preferred stockholder, who could not be given an allotment of deferred stock free, might take it if he paid 100 per cent, premium. If the board continued th is error it would • be a precedent, ana it would he saying that they deemed the preferred stockholder to be entitled to rank for the assets of the company. „ , Mr. G. Acton Davis supported the views of the previous speaker, contending that though it might be legal it was not equitable to the deferred stockholders to make the issue on the lines proposed. He appealed to the board to take the matter again into consideration and not force the proposal down their throats. Several other spoke to the same effect. The chairman, in reply, said they w - absolutely bound by their charter. • The original intention was to offer the stock to the deferred stockholders only, bnthey were advised by the highest legal authority that i# was absolutely in» possible—that they were bound to off* it to the preferred stockholders in . the same way as to the deferred. The stock was divided 33 years ago, before any of the present members of the board were on the board, and the charter provided - that when the first stock .was offered and issued to the stockholders it must be issued to both the preferred and the deferred on the same terms. In regard to the remarks made by one speaker as to the assets, the assets of the company, after the preferred stock had been paid off ? belonged to the deferred stockholders. He strongly urged the meeting to pass the resolution. After further discussion, the chairman stated that the board was willing to adjourn the meeting for a fortnight or three weeks. No advice of the adjourned meeting having been held has been received.