MORTGAGE FLAN.

Star (Christchurch), Volume LXVI, Issue 20539, 14 February 1935, Page 10

MORTGAGE FLAN.

State to Have Large Holding. BILL INTRODUCED. “ Star ” Parliamentary Reporter. WELLINGTON, February 13. The Mortgage Bond Corporation of New Zealand, the new institution proposed in a measure of that title introduced in the House this afternoon, is not to be wholly a State body, for it will require, as in the case of the Reserve Bank of New Zealand, private capital to the extent of £500,000, and three out of the eight directors will be subject to appointment by private shareholders. The Bill states that the original capital of the Corporation is to be £1,000,000 divided into £1 shares, of which 500,000 shall be allocated at par to the Minister of Finance on behalf of the Crown. Provision is made for borrowing the money with which to make this purchase. The remaining £500,000 is to be offered for public subscription at par, with a limitation of 5000 on individual holdings. It is also intended that this private share issue shall be underwritten by the Minister of Finance. The share issue is distinct from the power given to the Corporation to sell bonds, or stock, for the purpose of providing funds to carry out its lending business. Dividends on Capital. Dividends on the shareholding capital are to be cumulative, but subject to the following provisions: If the Corporation has not issued any of its bonds (other than stock which will be issued to the Crown in consideration of mortgages transferred from the Crown to the Corporation), the dividend is to be at ,the rate of 4 per cent per annum. If bonds have been sold during a particular year, the dividend in that year shall be 4 per cent, or a rate which exceeds by one per cent the rate of interest payable by the Corporation on the bonds, whichever of such rates is the greater. If bonds have been issued at different rates of interest, the average amount will be ascertained for calculation of the basis of the share dividend. The total amount which may be borrowed by the Corporation under its bond issue shall not exceed fifteen times the subscribed capital, plus any amount standing to the credit of the general reserve fund. Constitution of Directorate. Eight directors will constitute the board of management, including four State directors, of whom one shall be chairman and two of the others joint managing directors, the latter being appointed for seven years and paid such salary and allowances as are fixed by Order-in-Council, but subsequently being subject to any decision of the board, with the approval of the Minister of Finance. They will be required to devote the whole of their time to the Corporation, and not engage in any business on their own account. The shareholders’ directors are to be three in number. The first appointments will be made by the Governor-General, provision being made for their retirement, in order fixed by lot, the first in August, 1939, the second in August, 1940, and the third at the end of five years, which will ultimately be the usual period of appointment. These directors are to receive fees and allowances fixed by the board, not in the aggregate to exceed £3OOO per annum The eighth director is ex officio, being such officer of the Treasury as the Minister of Finance may approve. The Bill proposes to exclude members of Parliament from holding the office of director. There is no provision for State guarantee of the shares, which are to be inscribed in the books of the Reserve Bank and are to be classed with the shares of a public body as defined in the Reserve Bank Act. Trustees are authorised to invest in these shares, and the Bill also provides that public moneys, and moneys available for investment by trustees savings banks, may be utilised for the purchase of the Corporation’s shares. State’s Guarantee of Mortgages. The rate of interest which the Corporation may charge on mortgages issued is defined as not exceeding by more than one per cent the rate of interest payable on the last preceding issue of the bonds by the Corporation. In general the Corporation may not lend in excess of two-thirds of the value of any security and where this comprises land used for agricultural, horticultural or pastoral purposes, the board, according to the Bill, shall determine the value by reference primarily to the earning capacity of such land. Provision for a State guarantee of the proportion of a mortgage is contained in Clause 24, which authorises the Corporation to exceed < its general limit and grant a loan not exceeding four-fifths of the value of the security in cases where a mortgage debt has to be repaid in respect of land used for agricultural, horticultural or pastoral purposes. The Minister of Finance ipay, in such cases, guarantee the Corporation against loss in so far as this is incurred in respect of that part of the loan in excess of two-thirds of the value of the security. The terms of such guarantee will be mutually arranged between the Minister and the board. In the miscellaneous provisions it is made ctear that the Corporation is to be liable for rates and taxes in the same way as a public company; that its accounts shall be audited by one auditor appointed by the Government and another subject to appointment by the shareholders. A detailed analysis of the loans outstanding, which have been issued by State departments, show that the new Corporation will start business by administering nearly £65,000,000 of advances. These include: £ State advances 52,511.000 Rural advances 274,000 Discharged soldier settlers . 12,035,360 Land development loans .. 173,122 Total £64,994,482 PRICE OF GOLD. (Received February 14, noon.) LONDON, February 13. Gold is quoted at 142 s 4d a fine ounce. Recent qi*otations have been:— Per ounce, s. d.

February 12 142 21 February 7 142 1 February 5 142 11 February 2 142 0 January 2S 141 6 January 22 142 1 January 10 141 4J January 4 142 1 January 2 140 101