THREE QUESTIONS

Evening Post, Volume CXXX, Issue 84, 5 October 1940, Page 7

THREE QUESTIONS

AUSTRALIAN SHARES

HOLDERS IN DOMINION

MINISTER'S REPLIES

Payment of calls on Australian shares, the taking up of "rights" in Australian issues, and the transfer of credit balances from Australia were 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 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 be made available to pay those calls, particularly in the case of investors who had established funds in Australia I for this purpose. It was also sug-1 gested that future dividends from Aus- j tralian 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 with the Reserve Bank the question of applying portion of the credits of investors in Australia to meet the calls. • ' AN UNDESIRABLE COURSE. With regard to the taking up of "rights" in Australian issues, at present, under the regulations {'rights" have to be sold or portion of present holdings sold to provide the founds to take up the "rights" or to pay calls. The deputation pointed out that the immediate sale of "rights" was undesirable as there were inevitably a number of forced sales which depressed the market, and the throwing on to the market of New Zealanders' "rights" would further accentuate the position, thereby losing for the individual investors and New Zealand as a whole what would be normally a financial 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 involved. The deputation suggested 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 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. 1 The Reserve Bank has been advised 1 accordingly. 1 TRANSFER OF FUNDS. J 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 j to New Zealand, the Commonwealth . Government had refused. Current divi- ] dends had come forward, but where dividends had accumulated for three months or more, such sums were re- , garded 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 Zea- , land. : 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 unreason- ! able that people in New Zealand with credits in Australia should have them "frozen" and not earning any interest. "This particular point has been raised by several of our branches and has been a bone of contention with many ; of our Wellington members," states the association. "We are pleased to re- : port that the Reserve Bank has now issued instructions to the trading banks giving the necessary permission to ; transfer funds from Australia to New . Zealand, as arrangements have been made for the release of these funds : by the Commonwealth Government. "With respect to the position generally we can state that the impression gained from our interview is that sufficient cash reserves are available in Australia from current accounts or fixed deposits maturing to meet our munition commitments in the Commonwealth for the next twelve months. Then, said Mr. Nash, we will first call on Commonwealth Government Stocks ; because these have appreciated since the outbreak of war, and there would : not be any material sacrifice either to ; the holders or to the New Zealand • Government." ___^____ mmm _ mi ]