COMPANIES REGISTERED

Otago Daily Times, Issue 22197, 26 February 1934, Page 10

COMPANIES REGISTERED

TO THE EDITOR. „ Sir, —Your‘footnote to my letter published yesterday shows that the company indicated, -to which you had very properly'referred the letter, has quite failed to give satisfactory answers to the questions it contained. What does one learn from the information supplied to you? (1) That the whole of the “prodigious” capital of £IOOO has been Subscribed. (Has it been fully paid up?) My point is that, even if so, it is ridiculously inadequate for the purposes for which the company is formed. (3) It is not contemplated at present;to carry out all of the objects indicated in the memorandum. That is so far comforting, but my suggestion is that the capital of £IOOO is inadequate to carry out, except on an infinitesimal scale, even one of the objects indicated. (3) But the business, one is told, is formed for the convenience of shareholders, who, it is indicated, are wealthy men, so their capital apparently is to be borrowed and used, not openly in their own names, but in the name of the company. . From all this I suggest .that the object of their investing in this form is, and can only be, in order to secure the protection of the limited liability of the company, and that in the event of losses arising in this important unspeculative business, those losses will not fall upon them except to the extent of £IOOO, plus the amount of deposits or loans they individually may have advanced to the company, but upon those who are foolish and creditous enough to have transactions with it. _ Unless I am mistaken in these conclusions it is not surprising that the companydoes not propose “ to ask the public to subscribe shares or debentures,” but simply to operate on its own capital of £IOOO plus the capital borrowed from their own shareholders. If the men forming this company desire to invest their money in this way, why not do so openly in a. partnership, instead of sheltering themselves behind company law?—l am, etc., Dunedin, February 23. Cephas.