LIQUIDATIONS.

Tuapeka Times, Volume XXXIV, Issue 4894, 25 September 1901, Page 3

LIQUIDATIONS.

In moßt of tha oompanies floated during the late boom, powex was taken in the articled lor the directors to lend to the oompany. Before the hoom collapsed it was eomtnon ior directors to enter into a " joint and several " to the Bank or a lender and secure themselves by a mortgage on the dredge. But Binee the collapse maoy dredges are in the market, and a dredge as security is looked at Askance. Directors do not care to become personally liable for large Bums, and private lenders want 20 per cent, for any accommodation they afford with a debenture mortgage over all the assets. Many of the securities to directors are beiDg called up and, on liquidation, the directors buy In the dredge. A large number of dredges have in this way passed into the hands of the late directors of the company. While we are noting the mistakes of our late dredging boom it is as well to put on record that the power given was a mistake, ft was a mistake, lot the ieason (fell directors should not be at once trustees for the phareholders and at the same time

interested as mortgagees of the dredge and assets. When the next, boom in dredging comes along, perhaps in 12 to 14 years hence, let it be noted that money should only be borrowed in tbe open market outside of the directors. We bave seen too many oases in which directors voted for liquidation as a company, yet considered the olaim quite good enough to buy in and work privately. If a claim 1b good enough for directors to put in their own money then it is good enough to oounsel shareholders to find moDey so as to chance saving something out of tbe wreck. The further moral is to see in floating a company, especially ie boom times, that ample capital is provided. lo ihe day when ihe boom is bum it is then too l&te to get capital subscribed. And bo it often happens that tor want of a few hundred pounds at the critical point of eommenoiog work, thousands ot capital are lost to the unfortunate bnt oonfiding public. — " N.Z. Mining Jour- ; nal." |