THREE QUESTIONS

Timaru Herald, Volume CXLVIII, Issue 21788, 18 October 1940, Page 4

THREE QUESTIONS

Australian Shares Holders In Dominion Payment of calls on Australian I shares, the taking up of "rights” in Australian issues, and the transfer of credit balances from Australia were j questions discussed recently with the Minister of Finance (the Hon. W. Nash) by a deputation representing the Investors’ Protection Association. A condensed report of the discussions has now been made available by the Association. On the first question it was pointed i out in respect to Australian Consolidated Industries shares that as obligations had been entered into prior to the regulations being issued, it was | only reasonable that facilities should i be made available to pay those calls, i particularly in the case of investors who had established funds in Australia 1 for this purpose. It was also suggested that future dividends from Australian Consolidated Industries holdings or any other holdings should be utilised to meet the calls. In reply. Mr Nash stated that it was not possible to send remittances from New Zealand to meet the calls, nor did he favour the using of dividends for this purpose, but he would take up l with the Reserve Bank the question of i applying portion of the credits of | investors in Australia to meet the calls. : An Undesirable Course With regard to the taking up of j “rights” in Australian issues, at • present, under the regulations “rights” ; have to be sold or portion of present I holdings sold to provide the funds to take up the “rights" or to pay calls. I The deputation pointed out that the { immediate sale of “rights” was un- ! desirable as there was inevitably a ] number of forced sales which depressed the market, and the throwing on to the market of New Zealanders’ “rights" I would further accentuate the position, I thereby losing for the individual investors and New Zealand as a whole | what would be normally a financial I benefit. It was urged that the sale of “rights” or the disposal of portion of the old issue was uneconomic because, assuming that the shares so sold could be replaced by other purchases in the | Dominion, double brokerage would be j involved. The deputation suggested I that, in the case of those with funds in Australia, such funds should be used for the purpose, because New Zealand ultimately would benefit and that in any case if investors had other shares which they deemed advisable | to sell, the proceeds should be applied for the purpose. Normally investors make changes of investments as conditions vary and some shares are not readily saleable in New Zealand. Case Made Out On these points Mr Nash was I adamant about using current credit balances in Australia, but he did consider a case had been made out in respect to selling other Australian shares than the particular stock where “rights” had been issued to provide the necessary funds, and he promised to consult the Reserve Bank on this aspect. The Minister has since advised the Association that in the case of New Zealand holders of Australian shares who also hold “rights,” he is prepared to agree to such shareholders selling sufficient shares to take up the “rights.” even though such shares are not those of the actual company in respect of which the “rights” are to be taken up. The Reserve Bank has been advised accordingly. Transfer of Funds On the third question the deputation explained to Mr Nash that, while the Reserve Bank has been willing to facilitate the transfer of credit balances and deposits falling due from Australia to New Zealand, the Commonwealth Government had refused. Current dividends had accumulated for three months or more, such sums were regarded as “capital.” Even where stocks which could be disposed of here had been sold to Australia, difficulty has been experienced in arranging for the transfer of the proceeds to New Zealand. In reply. Mr Nash stated that negotiations with the Commonwealth authorities had now been practically completed and shortly there should be no further trouble in this respect. There had been some delay on account of the Federal elections, but he expected finality within the next few days. He agreed that it was unreasonable that people in New Zealand with credits in Australia should have them "frozen” and not earning any i interest. “With respect to the position | generally we can state that the im- I pression gained from our interview is that sufficient cash reserves are j available in Australia from current | accounts or fixed deposits maturing to i meet our munition commitments in the Commonwealth for the next 12 months." concludes the report by the j Association. “Then, said Mr Nash, we | will first call on Commonwealth I Government Stocks because these have : appreciated since the outbreak of war. i and there would not be any material I sacrifice either to the holders or to I the New Zealand Government.”