LOST SHARE CAPITAL

Dominion, Volume 11, Issue 266, 30 July 1918, Page 6

LOST SHARE CAPITAL

DOMINION PORTLAND CEMENT CO

SHAREHOLDERS PETITION FOR 1 INVESTIGATION Hy Telegraph—Press Association. Auckland, July 23. Thn petition of certain shareholders to lwve tiio Dominion Portland Cement Company, Limited, in voluntary liquida- < lion, coinpu.lionly wound up, came before Mr. Justice Cooper at the Supremo Court this morning. The pcLitiou asks for a complete investigation of the company's nii'iiirs 'by All official liquida'i>r, with particular regard to lj>e alleged lo;s of share capital. The petition allege* gross negligence on thy part of tho directors and olticers of tho company in connection with • tho management, and declares Ilia'c (lie shareholders sulfercd loss through their alleged recklessness, neglect, and niter disregard of tlio duties and obligations imposed upon them. It declares that a public examination is required in the ay laosls of commercial morality and business gomvally. The petition proceeds to make a number of complaints as to specific incidents in the company's history, ltegarding tlio issue of preference shares, it alleges that tho preference shareholders Mere not given tile option of withdrawing their applications when debentures of .U110',00l) were issued, and that the debenture issue placed their shares at a discount. It also alleges that the articles of association were altered to allow de-benture-holders to attend meetings and vote similarly with shareholders; that thoro wits d'jkty in tho annual reports and holding the annu.nl meetings; that in connection with a certain issue of .tfti.OOO worth of debentures for tiie purpose of carrying on, the directois ought lo have known that the issue would not provide sufficient capital for the purpose. The petitioners also complain that they acted on an assunuioe from tlio chairman of directors that the debentureholders would not foreclose, recognising that tlio market was a dead one, ami being prepared to face the position for a year or so; also that a. reasonable arraneement had been made «'illi the-de-benture-holders lor carrying on. lbey allege that Hie appointment ol Air. .£• Gorrard as receiver was a breach ot laitn and that the votes for compulsory liquidation were mainly those of persons interested as debenture-holders as weil shareholders. It is also adegj-lthat tho debenture-holders would have been unable legally to exercise, the right 01 calling in their money, and tli.it they adopted liquidation as a means of escape ron I heir obligations. Ihe | ' s stated, was the nominee ot thodobentuij,iioldcrs; that in the Kile 01, ..ho asset" the debonture-lioldei's were gi\en ciedit, while outsiders wero compelled to paj cash and that the sale was insufbciently advertised. The petition, it states, originated at a mooting of- shaivholders in Chrlstchnrch, at which inquiry into the company's winding-up was asked foi. Subsequent to this, it assortb, a conteionco was held in Auckland, at which a reconstruction scheme was agreed upon, '/or the liquidator, raised a preliminary objection on lega grounds lie slated that the petiHon out faoU which would justify the Court "\[te%°onoiir reserved the point. , Mr 0 P. Skerrett, IC.C., in oP e » ,n » the rase for the petitioners, said the latter consisted of shareholders nud ereihtors of the company, not crcdilois ot tho debenture-holders, as had been represented. The petitioners actually iepresented that 77;,0 ordinary shares and •2901) preference shares were all paid ui. besides ,65950 worth of debentures, on which XM had been actually called up and pwd. Tho petitioners represented Canterbury shareholders, who held .tItiO.OOO worth ol shares. Iho company went into voluntary liquidation on November :)(), 1017, and the petition was dated Jlay 7 last. The creditors were entitled as of right to supersede the. vo - unlary winding-up, unless their opponents could show that no benefit would accrue. As regards the petition by paiuup shareholders, if it were shown that the voluntary liquidation was likely to prejudice them, and some benefit might nccrue from compulsory winding-up, it was within the discretion of the Court togrant their petition for the latter. Iho company was started in December, 191-, with ii capital of J:250,«u0, in .81 shares. The prospectus, issued previously, stated expresslv that no provision would be made or was neccsliry for, hydro-eleo-tiio power, and, later, the directors issued a circular stating that the Uoverniiiont had issued a license for the use ol Wainui falls for a power plant, and that the engineer had prepared plans, some of the work being already in hand, lhis important change ot policy> involyiiig a expenditure, was adopted without reference to tlio shareholders, Aftoi u visit to America of Mr. Wilsou, the company's manager, and Mr. George »'lnslon'e, one of the directors, the latter agreed lo purchase plant at a cost of .-WlftliW, or, with certain deductions, .i1!)i,'721! Counsel said tho directors at this'time had committed themselves to an expenditure of JHGO.OOO, on a subscribed capital of only iiIOO.CIGO, and the prospectus had slated that the cost of the mill and plant would not excoed „C 70,00!).. Many other circulars had been sent out. by the directors, in not one of which wore the shareholders informed of tiie serious position of the company. It was evident that the condition of the company was desperate in July, 1915, w hen itIO.OUO was borrowed oil debentures the. directors mortgaging the whole of the assets. 1 The annual meeting that should have been held in June, 1915, was nut held till January, 1316. The report stated that the company's works had exceeded tho expectations of tho directors, who were making further arrangements in regard to finance. The plant and cement works had cost- .£37.287 in excess of tho estimates, and the electrical power plant .£l7,£;i2 in excess, yet no reference was made in the report and balance-sheet to fee fads. The sitting . was occupied with Mr. Skerrett's address