SIMPLIFYING THE COMPANIES ACT

NZ Truth, Issue 1044, 28 November 1925, Page 17

SIMPLIFYING THE COMPANIES ACT

Bearing m mind that the profit and loss account is £147 ti 2s 9d to the bad, that the bank overdraft totals the tidy sum of £7894, and tl/.at there is owing to sundry creditors^ .£3155, just listen to this: "The butter pay-outs show an average monthly paymient of l/4.6d per lb. The declaration af^ '■■& dividend of 8 per cent, on paid-up. -capital and 2/- on subscribing shares has since been made." t Did someone that you are 'not allowed* to pay dividends out of capital fwid that directors who allow sucfci to be done are liable to refund '/he whole amount to the company pt the instance of any interested person? Here is a newyyjne too, and one that should be of great interest to directors throughout New Zealand: "Business, foij the. 'annual general meeting: Recdij-imendation 'that the directors' -actipiu m paying eight per cent, on paid-.ty p. -capital, and a dividend of :.two #h/iflings per share on the

subscribed capital of the company, be confirmed." How delightfully simple, and so much easier than worrying about all that silly nonsense m the Companies Act. That Act, by the way,, provides that dividends must be paid only out of profits and must be declared by members m general meeting. The balance-sheet shows that £3825 16s is due to the company on book debts, but no provision is made m the P. and L. account foV bad debts. Regarding depreciation: Land, buildings, cream cans, motor lorries, plant, etc., are shown m one amount only, and the substantial allowance of £5 per cent, per annum has for the first time m the company's history been written. off. . ' Assuming this very high rate is appliedin the future to the reducing balance *of value of thesei assets, it means that the cream cans, motor lorries, buildings and ' plant will be written down to zero m about thirty-five years!