CAPITAL REDUCED

Southland Times, Issue 20586, 10 September 1928, Page 8

CAPITAL REDUCED

THE FARMERS’ CO-OP. SHAREHOLDERS AGREE TO ACTION DISCUSSION AT ANNUAL MEETING Four years ago the shareholders in the Southland Farmers’ Co-operative Assn., Ltd., deferred for three years the question of writing down the ordinary shares in the Association from £5 to £l. Again last year a motion was passed agreeing to the lead given by the directors for the writing down of the shares in the following year. At the annual meeting of the Association on Saturday last this course was agreed to after comparatively little discussion. The wording of the motion, as proposed by the chairman, Mr Adam Hamilton, M.P., was: “That the capital of the Association be reduced from £175,000 (divided into 15,000 deposit preference shares of £5 each, 3000 preference shares of £5 each, and 17,000 ordinary shares of £5 each), to £107,000 divided into 15,000 deposit preference shares of £5 each, 3000 preference Phares of £5 each and 17,000 ordinary shares of £1 each, and that such reduction be effected by cancelling paid-up capital which has been lost or is unrepresented by available assets to the extent of £4 per share on each of the 14,684 issued ordinary shares and by reducing the nominal amount of the 2316 unissued ordinary shares from £5 to £1 each.” Mr Hamilton said the whole matter had been discussed at length before, but he decked to place the facts before them again as lucidly as possible. The resolution affected the ordinary shares only, and not the deposit preference shares. No interest has been paid on the ordinary shares since 1919. This course had been the recommendation of the Reconstruction Committee, but its adoption had been held over pending the completion of the more important parts of the reconstruction scheme. There had been some feeling against the motion as it was considered to be an injustice to shareholders. The directors had not hurried over the matter, and he thought that now most were agreed that the procedure was a wise one in the interests of the Association and its shareholders. No other institution but a co-operative one would have allowed the matter to remain in abeyance for so long. A private company would have done it long ago. The £95,000 was lost and it was better to meet the loss and forget about it. There was a loss before the reconstruction scheme and they were fortunate to have held it where it was. If there was any further loss on account of bad debts it would be met out of profits. The motion if adopted would allow the Association to do its business better. First it would be of substantial benefit as it would mean that their credit would be kept good, and secondly there would be no benefit by not doing it. The adoption of the proposal would mean, together with the profits since the reconstruction, that they could write the losses off save for £4OOO or £5OOO. The position of the business was quite sound and they were not writing down the shares because it was unsound but to facilitate its operation. The assets were sufficient to keep the deposit preference shares fully valued at £5 and the ordinary shares were practically represented by assets to the extent of £l. After the writing down the ordinary shareholders would probably receive a dividend which was impossible under the old order. Out of 2286 shareholders only 252 were good clients of the Association, and out of that 252 some were heavily involved financially. Another 612 were casual clients, while 1000 never put any business in their way. A further 422 were deceased. Those who were trading with them were building up reserves for the others and were not distributing any profit by way of rebates for those who did. “A truly co-operative business,” said the chairman, “is one in which the profits are distributed to clients by way of bonuses. It is not fair to pile up profits from those few who are dealing with us. I am convinced that those opposing the scheme are doing so because they believe they are doing right. This is however the right way to meet the losses and thereafter let us carry on as a truly co-operative concern should. This Association will then go ahead, as I question any other in New Zealand will do, and give service to the farmers of Southland. Some say we are more of a proprietary concern than a co-operative one, but it is only for this reason. Now ‘we are hampered by building up old losses.” (Applause.) Mr James McNeill seconded the motion. He had, he said, long been opposed to it, but he was now satisfied it was the right course to take. In answer to questions Mr Hamilton said shares could not be disposed of to those not interested in farming. The fact that the shares would be written down did not relieve ordinary shareholders from their liabilities for the full amount. Mrs Mcßain said Mr Hamilton was killing the spirit of co-operation by writing dow n the shares in the face of so much prosperity. The business was now doing well, and they had ceased to nurse the wasters who had been turned down by other firms. “I protest,” said Mrs Mcßain, “and if no one else will move an amendment I will. Mr Hamilton also said that the powers of the directors are limited. Fortunately they are.” Mr A. S. McNaught said the Association was certainly prosperous, but the shareholders wanted to get some benefit from the prosperity. “I am much in favour of the motion,” he said, “as a7y thinking person must be.” The motion was put to the meeting and carried on a show of hands by 88 votes to only two against. “This,” said Mr Hamilton, “gives us more assurance to do our best for you.” A special meeting of shareholders will be held on September 29 to confirm the resolution.