COMMERCIAL PROPERTY & FINANCE COMPANY

Otago Daily Times, Issue 14379, 24 November 1908, Page 8

COMMERCIAL PROPERTY & FINANCE COMPANY

PROPOSAL FOR VOLUNTARY LIQUIDATION. The twenty-ninth ordinary general meeting of shareholders in the Commercial Pro. perty and Finance Company (Ltd,) was held in t,ho company's offices, Vogel street, last night. Tho chairman of directors (Mr James Arkle) presided, and there wero about 20. other shareholders present. Tho directors' report has already been published. In moving tho adoption of the report and balance sheet, tho Ohairman said it was to bo regretted they could not. this year follow tho usual custom of declaring a dividend. The reason was this: at one time they-had certain "legacies" left to them; these they had nearly cleared off, but eventually it woa considered more prudent to make provision for them rather than to declare a dividend. The directors had taken what they considered was the safer and more prudent course. Ho might inform share, holders that tho business was never better than at present—it certainly was never oloaner. They wero doing very good discount business, which had gone up from £12,000 to over £16,000. Their ad-vanoee wero over £27,000. For tho last five or six years the directors-had done little else than " cleaning," and as a result the company's affaire were to-day in a better position than ever ho had known ffhOm to be. Further developments had taken place, however. Ae they all know, half tho company's capital was at call. There wore one or two prettv j large advances held by the compaaiy which wero'ufeo at call—that was to. say, no notios of their withdrawal was required. Hitherto, to moot eases of this, kind, the company had leaned on its bankom, who had always assisted it. On this occasion tho tank allowed tho directors to overdraw to a considerable amount, but when it was approached to givo still further advances it refused.-' Tho company was then placed in the position that it had to apply to its logal advisor, who explained that the position-was that if any peihon was refused his money by the company ho could go to the Supremo Court, and obtain un order for compulsory liquidation." That would havo l«cn a very whom matter for the shareholders. Ho might naythat nothing could possiblyaffcct 111),, depositor;!, whose position was unassailable, Iwth for principal and interest. Tho company <wcd about £32,000, and between it and fiotsibie loss Micro was a sum of £142,000, .ttmVisfinj) of. uncalled capital and the iimk U Iho company. He considered it' vory desirable, if the company should go itllo liquida-lton, that it shoul dbe liquidul«l by fieoplii wlio had a -largo pecuniary mtcpist In it, Tho jirracnt directors had ft liability lA ovirt £SOOO. lhi himself had nearly 1030 stiart'*, which carried a liability ')( nlxiiit f'AtMi. 'J'he uncullod tapitsl was about £90(19, If ttw conoern was judiciously worlK'd, »*'. he luni no lUmiA it would be, lie did not %ntt ihnt imy harm would Jiamsen '"> ll» diWihohkn. , / Mf 0, J'/stlw,' m-cmM the motion. Mr V,; A, said hi hid no doubt the directors mm right in deciding to pay no dividend. It w's a pity the practice wn» not eommmpid earlier, «o that a rc«rve fund might, have bfm'«tabli«hed. A reserve fund wwi'/l Jiave carried the comliany ov«jf it?i present difficulty. The chairman «i!<| the eominny iui'.l dorse well,-but. looking «|. Hie fmhi'.m he found that all they had done vm U> cam a little more than 5 per er*t. on their capital, and that ;W«» not tfluch mruMerme there 'was capital to. the extent of £40,000. ' The Chiiirnian: £9000. Mr Tapper said fchtie were deposits as well, fo that ho put the capital down at £40,000. The company ought to have been one of the best littlo concerns in the city, and its shares instead of being down to nothing, as they were now, should havo teen sailing .at a premium,/ Ho considered tho affairs of - tho company had not been well managed. To give an instance. ',-■ One gentleman in town took in probably the smartest man in Duhedin. After that tho company took this- gentleman in hand, and lost by hira. If that was tho class of bii&i. noes- the company did, it would naturally come to grief. .He knew businesses in the city with a quarter.of the capital that were' making more gross profits than this corn-: pany'liad mode. . ■•';■.■,..■ The Chairman, said'if thoy .showed' 5 per-cent, on 'their, capital they 'must be making 9 per cent., because they paid 4 per cent, for it. As- for tho particularly smart gentleman, he thought (ho company haiidlfdr.-him smarter, - than he had ever been handled before. .'-. ■.'..,,- ■ A Shareholder: But not smart enough: .The .-Chairman: We-wore not soon enough. There is hot one of the present, directors who is responsible for it. If it had not been for. the way we handkd.him this compaaiy would have been in a different posi-, tiou.l6-d.ay\' . ;■'■..-, . ( ■ Tho motion for the adoption of the report and balance slieet was agreed to. v Air J. f,'; Wbodhouse, the company's solicifbr, at the request', of tho chairman, explained the legal position of. the'company. The .position,. ho said was this •'The company,, by its report circulated, had passed its 'divideiidi' Soon afterwards- some large deposits were -ivithdrawn.. A . weekror 10 days ago the position lxcanio eo acute that the directors considered it necessary, to consult, their" spjieitoia. Another large deposit had been applied for: tho persons applying for it really/required, tho money for their business. afraiigeonints. When the 1 directors consulted-him rhcro was not money available to, meet that withdrawal. It then .'became'.'necessary, to consider what was the best thing to,- do. The. bank had given assistance,- and had really gone-beyond its limit,- and, would go -no further. Applications were coining in for other withdrawals, and what was the company to do'; In- 'the present .''state'of, the money market it was hot possible to got advances—they were not available, ■'. Now, tho great/'thing for the company to avoid ■ was, if possible, a compulsory Jiqiiklation,i which meant winding /up by the, court, where ..there was 'great expense, and where the first'pereonis ooinjidere'd (as in a voluntary liquidation) were the creditors.' Compulsory Liquidation would havo meant that the company's'affairs would, have'been placed in'.the. hands not of liquidators a-ppoinkd by tlie company, but of the official assignee, whose duty it \Vould be' to "get -in every, asset as quickly as- possible to wind up the affairs. But .when one looked at the affaire of this company we saw that the creditors—the depositors and the other creditors—wbie abso? lately,and perfectly safe. I'hey had all the assets of the company, which exceeded tho liabilities by.£3ooo or £10,000, and:also the uncalled capital, which amounted to about £100,000. _ If a depositor .had not been ablo to. gat his money he might, have applied to the court for compulsory liquidation, which would have been a disastrous thing for • the sluvrehoklers. The question,. then; was how to avoid such a catastrophe. The directors assured him that in the present state of the money market they were not able to find enough ready money to pay the_ depositors, not only the ones who were asking for money, but the ones who would ask for it when the, affars of the company became known. He,' theerfore, advised that some of the shareholders should be called together to consider the position. If no financiurassistance was likely to.be. forth.ccmin.g thtn the company should at once go into voluntary liquiidation,'so that-if any creditor did come forward with a petition for compulsory liquidation the.company could say "We are now taking tho necessary steps to go into.voluntary liquidation," and that would bo an answer to any such petition. 'The meeting of shareholders decided that that was the proper step to take, and it was taken. Anadver-. tisoment was inserted calling a meeting for. December 2 to consider the advisability of the company going, into voluntary liquidation. The next thing they did was to call a meeting of depositors, as many as they could get at the time, and explain tho position to them to let them sec that their position was safe. -As scon; as the depositors saw that the directors were prepared to take them into their confidence they passed a resoluficji leaving it to. the company to liquidate its affairs, (and he had no doubt they would adhere to that decision. The resolution for winding-up would be considered at the meeting on December 2. If any scheme or method for reconstructing the oompaay could be devised it was open to the company to agree to it. Of course, it would have to ho done with,lho consent of the creditors. If such a step could not be taken the company would have to go into voluntary liquidation. Mr Tapper asked why he, as a largo shareholder, was net asked to the meeting of shareholders. Mr W. Thomson, manager of tho company, explainod that four shareholders were invited, and all of them we're larger shareholdew than Mr Tapper. Messrs J. Arkle and A. Hill Jack wero re-elected directors, and Messrs J. Brown amd J. Davie were reappointed auditors. A \i>to of tliamks was passed to ■ the directors, the auditors, and the staff for their services last year.