NEW ZEALAND GOLDFIELDS.

Greymouth Evening Star, Volume XXXI, 30 September 1901, Page 4

NEW ZEALAND GOLDFIELDS.

Up. Warden Hawkins’ Report on the District.

(Continued.)

X think that, without reservation, the promoter’s shares should not be issued, and no “promoter” should have any vote whatever until the company shall have paid two dividends. That no “promoter’s ” or holder of “ promoter’s ” shares should, till the happening of that event, be a director or officer of the company. That if the company went into voluntary or compulsory liquidation before two dividends had been paid, the promoter should have no claim whatever on- the general assets, hut the license only should be retransferred to him. In order to protect the “ promoter ” against any unfair delay or failure duly to prosecute the undertaking, there should la' a power to apply to the Warden, for a winding-up order on such terms as to the promoter's interest the Warden, after having both parties, may adjudge. It is worth consideration whether this power to order a winding-up should not fee vested in the Warden on application of shareholders representing one-half of the contributing shares. In either case the order should be to effect a winding-

up in the same way as if a voluntary winding-up had been carried by resolution.

I think that for the information of

persons wishing to invest, the following information, or to the like purpose should /appear on the prospectus. Very long * reports from mining experts are pubbhshecl in prospectuses from which it is often difficult to sift the grains of fact, and the promoters are in no way made responsible for them; the purpose of the details now suggested is that they should : be made on the direct respousifeilily of the promoters, and form the basis and consideration of the contract into which the applicant for shares enters. Copies oc all agreements whatever made between the several promoters and between them and the company to be printed on the prospectus. Besides printing on the prospectus every such agreement, there should fee a short tabulated list in detail of all expenses, sums of money, and al sh res agreed or intended to be paid and allotted respectively out of the assets of the company, and the Christian name and surname, address, and occupation of every payee or allotee, and the several amounts or number of shares to be paid or allotted to each of such persons, and including the payment to be made to the broker for getting sharps taken up. That information at least would put the b ona fide investor on his guard, and not only enable him to discount the value of interested advice, but put, him in possession of the liabilities to be met fey the . company. It should bo a penal offence punishable summarily to fail to give the above information, and to give it correctly ; and on proof in the Warden’s Court that such false statement was wilfully made, any applicant or allotee ol shares should have his application avoided, and he should bo entitled to a return of all sums paid. There is another matter which I think in these companies dealing with mining claims requires legislation. A company is floated to work a particular claim or claims. The memorandum of association should bo confined to that claim or those claims. Nothing should be allowed in the memorandum to authorise that com- . pany to shift its capital to acquire and to work any other claim. No majority, however great, should be allowed to force a person who invested in the one claim to ,T divert his capital, to another. The remedy of the majority must ho to pay out the minority at current market value V of shares.

Besides this, there is a great evil as to articles. The schedule to the Companies Act is rarely adopted, but, instead of Unscheduled articles, articles of the most vague and loose description are filed ; and when it is too late the shareholder finds that ho is absolutely at the mercy of the directors, or, at least, of a majority

,of proxies under tko command of the directors. It is true that he is referred to the memorandum of articles, which may be seen at the office of the company ' But he takes them for granted, and even if he read them would probably quite fail to grasp their effect. I think that the adoption of the schedule form of articles should be imperative. If there are objections, those objections should be considered and the form amended ; but t at present the wide laxity of the optional memorandum and articles is a serious evil, and permits all kinds of abuses. If alterations are really necessary, there should be a reference to the Chief Registrar of Joint-stock Companies, who should have access to legal advice on behalf of the Crown, or to the Warden’s Court, and the certificate of the Registrar or order of ,the Warden should be necessary to validate the articles so altered.

The prospectus of every sluicing and dredging company should, in addition to any reports or matter the “promoter” chooses to insert therein, contain on its front sheet certain other information, and I make the following suggestions as to the details of such information

(1.) The character of the superficial area-that is, whether it is river bed or dry land; whether it consists of river fiats or terraces ; whether it is covered with ’ timber, or scrub, or is grass land. (2.) The general character of the stuff to be dealt with, whether light sandy soil and wash, or heavy shingle and boulders

. (3.) How the ground has been proved auriferous ; the number, size, and depth of bores put down, or holes sunk, the locality of each hole by reference to the plan accompanying the prospectus, and the number of gains per cubic yard from every bore. (4.) The names, addresses, and qualifications of the persons responsible for the bores and tests, and thejdates when they were made; whether the depth at which the *true bottom of the wash lias been ascertained, in what number of places, and with what results ; whether the bottom is rock or clay. (5.) As to sluicing claims, also dredgimr claims, requiring the water to be brought to the claims, the source and number of heads of water to bo obtained therefrom in winter and summer, the length of race, the character of the ground over which the race is to be carried, and the estimated cost of the race, including tunelling, rock-cutting, fluming, piping, and siphons.

(6.) If Nos. 3, 4, or 5, or any of them, has not been ascertained or clone, or insufficiently so to test the {General auriferous value and the depth to which sluicing or dredging will have to bo carried on, and the number of heads and cost of race, then give the estimated cost to the company of making effectual tests and Hurveys, and ascertaining the number of heads and the cost of the race.

The reason for furnishing in a categorical form this information hardly need be given. But I may point out that it at least enables an investor to see at a glance the nature of the claim in which, ho is asked to risk his money, and to judge whether further testing will be necessary, and what the cost of such testing will probably be. Nos. 3, 4 and 5 form the foundation of the responsibility of directors, who ought not to order any plant and enter on any contracts till tho facts have been Ascertained and submitted to ..the shareEpkJo^, V : .V.’ -,-

A good example of the cost of pre liminary investigation made by directors of a dredging claim appears in the reports of Messrs. J. P. Smith and Messrs. Cuttcn Brothers to the Perrett’s Junction Lead Gold-dredging Company (Limited) in February or April last. There is one more point for consideration. The question of the exclusive jurisdiction of the Warden’s Court has been raised in the case of Thomson s Bullock Crock Dredging Company (Limited) and Hume v. Thomson and others. His Honor Judge Edwards, in May last, decided that au action charging fraud in relation to a contract referring to a mining privilege was not within the exclusive jurisdiction of the Warden’s Court. Possibly the question may bo carried to the Court of Appeal. In any case it may be a matter for the consideration of the Government whether the jurisdiction sections of the Mining Act should bo strengthened. Actions for calls in mining companies are frequently brought in the Magistrate’s Court. Did the Legislature intend this, or to bring everything connected wit.i mining to the Waulons’ Court ! J

(To be continued.)