TRAFALGAR DREDGING COMPANY.

Otago Witness, Issue 2481, 2 October 1901, Page 25

TRAFALGAR DREDGING COMPANY.

TO THE EDITOR.

Sir,— The meeting of the Trafalgar Company to consider the issue of £I^so debentures does not seem to have been very enthusiastic. Your report in the Witness makes it appear as if MiFrost delivered an ultimatum to the shaieholders to subscribe the issue. Now, fromwhat I can gather fiom the "Investor's Guide," this company is a flotation of thi Zealandia Syndicate. The directors of the Trafalgar Company, are Messrs Ackroycl, Arthur, Frost, Marshall, Nimmo, and Dunii. All, except Messrs Arthur and Dunn, are directors of the syndicate. Now, it is fair to assume that of the 2250 paid-up shares the promoting syndicate took the bulk , that is, one share in every four issued. Now, if the claim was worth this amount, why in the

name of goodness should not the directors personally guarantee the £1750, or write down the vendors' shares and make them contributing to that amount? It seems to me the directors are practically self-elected, and may do as they please. But being, I presume, public men in Dunedin, they are. amenable to public opinion. It is proved by the Teturns of the Pactolus i dredge on the top boundary of the Trafalgar

claim that that portion of the claim is payable It remains to 132 seen whether ihe bottom portion is similar ; but if the bores put clown gave the returns stated, then the area 13 payable all o^'er. Now it sems a rather peculiar thing for the directors to ask ihe conliibuting shares to pay moie, in vicv of the fact, or at least ptatament, that the claim is highly payable Oil the face of the pros-pectus and the returis of the Pactolus dredge, the promoters should guarantee a paltry £1750 with the lightest hearts, and it :s only putting it veiy mildly to say that things cannot be as stated or they wouH do so. Then again, the question suggests itself a= to vhether in case of the debenture issue failing, the syndicate will buy up claim and clieilge at its own valuation. It :s a well-known fact 'bat most shareholders have enough liibilitira now without contracting puy more, and tr>e directoia must be aware of this; therefore the :%vae is very unlikely to bs subscribed, and the directors or promoters, it they wish the thing to look :>bove board, ■will have to guarantee ths £1750 —I am, etc.,

SHAREHOLDER

[It seems to us a, rather lemarkable dojtniie to advance that dnecto.s should be expected to guarantee additional funds to protect the capital of shareholders, many of whom may hold two or three times the number of shares that individual directors do. The directors of mo3t companies well earn their fees c'urmg the preliminary stage of a company, at ciitical tunes not unfrequently meeting almost daily Surely this is doing enough for their company without them being called upon to make themselves liable for a large eiiai of money. Besides this, the debentures, bearipg 15 per eei:t. interest on the security of dredge and claim, are a really good investment, and if each shareholder took up his proportion there wou'd be no injustice done to anyone. — En.]