PRICE OF SHARES

Poverty Bay Herald, Volume LXIII, Issue 19026, 28 May 1936, Page 5

PRICE OF SHARES

PREMIUM AND INTEREST POWERS OP CORPORATION CONTROL BY MINISTER FIXING INTEREST RATES (Parliamentary Reporter.) WELLINGTON, this day. An examination of “the State Advances Corporation Bill shows that the clause relating to the payment of shares provides that there will be a premium of Is 3d on each 10s paid up and of 7sd in respect of shares on which.less than 10s has been paid. The alternative provision for the issue of stock is ,as explained by the Minister, giving the same return as the investor originally expected. Shareholders, in addition to cash or stock, are to be paid a dividend at the rate of 41 per cent per annum for the period of 12 months ending June 14 in respect of the os paid up, and a similar dividend for the. period of 2} months in respect to the second os jraid; up. ;■;•„ ;■ ... The capital of the corporation will be maintained at £1,000,000, the Minister of Finance being authorised to pay to the corporation on June 15 an amount equal to the difference between the sum of £1,000,000 and the amount of share capital actually paid up as on June 14.

STAFF TO BE RETAINED The new board of management, as the shareholders directors will disappear, will consist of two joint managing directors appointed for a term not exceeding seven years, one to be chairman and the other to be deputychairman, one or more other directors appointed by the Governor-in-Council, and a Treasury officer as an ex officio director. The present managing directors will continue to hold office. The Minister of Finance will have the right to attend any board meeting. The present permanent staff of the Mortgage Corporation will become public servants, with superannuation rights, and who were not contributors having the option of joining the superannuation fund.

The housing section of the bill places .under the corporation from July 1 all powers under the Housing Act, 1919. The rate of interest specified in the latter Act, 5 per cent, is changed to a rate to bo fixed by the Minister of Finance, and the rebate for prompt payment, instead of onetenth of the amount of interest, is to be j per cent. It is declared in a general clause that the' principal business of the corporation shall be fhe making of loans in accordance with the Statute, with a view to giving effect to the policy of the Government as communicated to it from time to time by the Minister of Finance.

POWERS OF MINISTER “Every direction in writing given by the Minister shall be binding 6d' the board. ” ■ -- Securities issued by the corporatiqrt are to be State-guaranteed, default in interest or principal being a liability on the consolidated fund. _: The former restrictions on the borrowing powers of the corporation are repealed. The corporation is authorised to make loans to all local authorities, including harbour boards, for the acquisition of sites for workers’ dwellings and the erection of houses. The corporation may make loans for the development of existing industries or the establishment of new ones on terms approved by the Minister of Finance. Where such loans are made, the State may acquire and hold shares in the company, having the same rights and obligations as other shareholders. Any loan may be secured in a manner which the board, with the Minister’s approval, thinks fit, ,nnd the Minister shall guarantee the corporation against any loss that may be incurred.

DISTRIBUTION OF PROFITS A former provision under which the State guaranteed to the Mortgage Corporation any portion of a loan in excess of two-thirds the value of security is repealed in favour of a provision that where the advance is in excess of two-thirds of the value of the security the board may treat the excess as a separate loan secured by second mortgage.

Among the general provisions is one that a mortgagor may be required to effect a life insurance policy as additional security, and may be required to make periodical payments on account of rates, insurance, aiul the cost of maintenance.

The board is empowered to fix rates of interest so as to make adequate provision to cover the cost of administration, and different rates of interest may be fixed in respect of different classes of securities.

A mortgagor of the corporation, after the passing of the Act, will not be able to give a further mortgage over the land secured except with the board’s written authority. The clause relating to the distribution of profits, authorises the Minister to pay any surplus either into the public account or the corporation’s general reserve fund after making proper provision for the depreciation of securities.