PERMANENT INVESTMENT AND LOAN ASSOCIATION.

Globe, Volume XXIII, Issue 2184, 24 February 1881, Page 3

PERMANENT INVESTMENT AND LOAN ASSOCIATION.

The tenth annual general meeting of shareholders in the Permanent Investment and Loan Association of Canterbury was held in the rooms of Mr Charles Clark, Hereford street, on Wednesday evens g; Mr O. W. Turner in the chair.

The annual repart of the directors, of which copies were handed round to those present, was taken as read, being as follows: In submitting their report the directors congratulate the shareholders on the results cf the operations of the association for the year ending 3lst December, 1830, whereby a somewhat larger profit than for the previous year has been earned, mainly owing to the high rates of interest ruling daring the early part of the year; but, in the face of ,a falling money market and small demand for money, the directors feel called upon to warn members that like results cannot be anticipated during the current year. The usual accounts, duly audited, are appended hereto, and also a statement of profit and loss for the year, showing a net result of .£9371 19s 5d ; and that after deducting the 25 per cent, for reserve fund, provided for by the rales, there will remain for division .£6278 19s 7d. This amount, according to the allocation of the actuary, will yield a bonus of 8s 6d per share to the capital shareholders, and proportionate sum on each of the investment shares, particulars of which are shown in the annexed table of values. The first issue of shares having matured, your directors in November paid £SO each on account, leaving the final adjustment until after audit—the result now being an extra profit payable of .£1 6s 8d each share. Tour directors, in accordance with the provisions of Rule XIV., now recommend that the reserve fund shall be distributed among the shareholders, and that in future each year’s transaction shall be considered upon its own merits. They ask your approval of this course. Messrs. J. M. Heywood and L. Harper are the retiring directers, but are eligible for reelection, and have given the notice required by the rule#.

By order of the Board, C. W. Turner, Chairman. Tho statement of assets and liabilities wag a# follows :—Liabilities on shares (with profit to Deosmber, 1879, and interest to December, 1880), £48,942 15# Id ; paid-up capital, £IOO,OOO ; special deposits and accrued intorest on the same, £41,492 14s lid ; prepayments, £179 8s ; property tax for year 18S0, payable in March, 1831, £648 4s 103 ; balance to credit of reserve fund, 1878 79 80, £4993 11s 4d ; profit for year, £8371 19s 5d ; less one-fourth shown above, £2092 19j 101 ; total, £202,537 18# 9d. Assets—Balance of mortgages current, secured by mortgage and deposit of shares, £199,560 IS# Id ; arrears of members of payments, £523 5s 103; insurance premiums outstanding, £ll 15# ; furniture, £159 16# lOd; amount paid on first issue ■hares, on account of year’# profit, to be charged against profit at contra, £587 1# ; balance at Bank New South Wales, £1693 2<j total, £202,537 18s 93. The Chairman, in referring to the report furnished by tho directors of the past year’s proceedings, alluded to some correspondence which had appeared in the newspaper# on the subject, and expressed the hope that the authors of such correspondence were present that evening. The directors courted inquiry, being anxious to furnish shareholders with the best possible information touching tho operations of the association. Taking this into consideration, it was not his intention to occupy more time in speaking to the report than was absolutely necessary, in order to allow time for direct questions to be put to the chairman, which he thought was tho best method of affording the information sought to be obtained. In view of the difficulties which had to bo fought against during the past year, the large amount of money returned which bad been lodged at remunerative rates previously, and the state of the market generally, the directors had not anticipated being able to present so favorable a report as that presented to shareholders on the present occasion. He then proceeded to refer to and comment each clause of the report separately.' With regord to that paragraph which recommended the distribution of the reserve fund among the shareholders, the directors felt that it was to the interest of ail classes of shareholders that the proposed plan should be adopted. All the necessary calculations had been made, and if it was the wish of the shareholders that the proposal should be carried into effect, the money could be paid, probably within a week. One item in the balance sheet was of a novel character, and as such called for a word of comment. He referred to the property tax, for which a sum of £648 4s lOd had been set aside. They had endeavored to escape from this liability, but on appeal the decision was given against them. This, too, he thought was inequitably levied. This would be more apparent to the meeting when he stated that companies with a large subscribed capital but small paid up capital, whose operations were of the most extensive character, involving millions of money, escaped similar taxation to a very large extent indeed, whilst provident institutions such as this were made to pay for everything. The directors had pointed out that the tax levied in this instance was unequal, inasmuch as the shares of the association wore in the main the property of email holders, who would, under other circumstances, be exempt under the £SOO clause of the Property Tax Act, and if allowed to return them as money in the Bank, would moat certainly have escaped, but the assessors had held that under tho particular clause in question, the shares were held for profit, and were, therefore, liable to taxation. He thought, however, that if the matter were well ventilated, and their representatives in Parliament posted up in the matter, some steps might be taken during the forthcoming session of Parliament to relieve the association of this imposition. Speaking of the transactions of the Association generally, he thought they must considered highly satisfactory—no losses had been sustained, and the securities were such as not to create the slightest anxiety. Ho concluded by moving the adoption of the report and balance-sheet.

Mr Mitchell seconded tho motion, and expressed the gratification he felt at tho result of the Association’s operations for the past year. He denied having written certain l etters which had been written to the newspapers, and deprecated the views expressed therein.

Mr MoOonnell complained of the position occupied by investing shareholders, being, as he said, one of inequality as compared with capital shareholders. Putting his own case, he had thirty shares, upon which he paid £9O per year, and got nothing for them till the end of a certain term. The Chairman pointed out that Mr MoOonnell had subscribed in terms of the rule pertaining to those shares, and had no legal claim to anything beyond. Ho might say, however, that tho matter had not been overlooked, and would be brought forward for serious consideration thereafter. He explained the history of the society in regard to this question, and stated that Mr John Lewi* had been the first to bring it under notice. Their position was altered since capitalised shares were introduced, and there was perhaps no reason now why the rule should not be altered, so that the money of investment shares should bear interest immediately tho money was paid into the association. Mr MoOonnell pointed out that the table referred to by the chairman—table A—was not in existence before capitalised shares were introduced, and he maintained that ho was entitled to interest on tho money he had invested. Ho also remarked that the class of shareholders to which ho belonged were called upon to pay Is per share or something of the kind on account of working expenses, whilst capital shareholders paid nothing under this hood, which he contended was not an equitable state of things. Mr Blakiston —You can go out, but capital shareholders cannot-—they have to boar the brunt. Mr M'Oonnell said he was quite aware he could withdraw, but that might not be suitable. Ho failed to see, however, that the capital shareholders incurred additional responsibility. Mr Garrick —Pardon me ; they do. The Chairman would put the case in another light for the benefit of Mr McConnell’s understanding. That gentleman complained that investing shareholders did not enjoy the same advantages as capital shareholders. But let them suppose the association only paid a profit of 6 per cent, on its transactions, who would then be the sufferers. Not tho investing shareholders, who would receive 7 per cent, as their right, which the capital shareholders were responsible for. It would also bo incumbent on the latter to pay out investing shareholders who might bo disposed to withdraw; such, at least, would be their policy, because if they declined the effect would be damaging to their credit. . , Some further discussion ensued on the general question raised, with special reference to the amount of risk put upon the capitalised shares, as compared with the immunity (here-

from and consequent advantage enjoyed by investing shareholders. The question wa# then allowed to lapse without any resolution being proposed, Mr McDonnell intimating that hi# only object in referring to the matter was to ventilate what he, in common with some other#, looked upon in the light of a grievance. With regard to the distribution of the profit proposed, Mr McConnell asked on what basis it was to be made.

The Chairman replied that the directors proposed to distribute it rateably, pound for pound, according to the assessed value of each share.

Mr Lewis h»re pointed out, with reference to a point raised In tho foregoing discussion, that according to the Building Societies Act of 1876 the shareholders were liable for nothing whatever beyond what they actually pay in. , Tho Chairman—That is the ease.

Professor Oook moved as an amendment the following :—“ That the bonus proposed to be distributed be retained by tho association, as well as the reserve fund, pending a full inquiry into tho mode of calculating theinterest and bonus on investment shares, as the present mode of reckoning interest, as shown in table A, was calculated when there were no paid-up shares, and its retention works great injustice on holders of investment shares.” In speaking to the motion, he remarked on the apparent inequality of the shares. An investing shareholder, after paying in for three years, had not received any share of the bonus, whilst the capital shareholder had been receiving interest on his money all along. He could not see why there should be any difference in the mode in which the profits were distributed. Mr J. Lewis seconded the amendment.

Mr Mitchell rose to a point of order as to whether the amendment could be received, seeing that it involved an alteration in the rules.

The Chairman regretted that tho point of order had been raised at this stage. He permitted the amendment to come forward because he was anxious that discussion on the subject should not be stifled. But he was afraid the amendment was not in order, as it was not an attack on the balance sheet, but the whole basis of the association. Mr Lewis said he had seconded tho amendment pro forma. He hold himself responsible to a certain extent for the present state of things. The fact of the table not being altered when capitalised shares were introduced, was altogether an oversight. Had he seen it at the time, ho should most certainly have brought it before the Board of Directors as the manager; but it bad in the pressure of business been overlooked. He should be sorry to do anything inimical to the directors, but wished to bring this matter to an issue, and as showing the shareholders the view which he took of it some months ago, he would road them a memorandum ho then made, and submitted to the Board of Directors. Having read it he would hand it to the reporters for publication. Mr Lewis read the memo, referred to, and, on concluding, handed the document to the reporters, Mr Garrick objected to the memo, being published. He looked upon it as inopportune and calculated to create an impression that there was something irregular, where everything was perfectly smooth and satisfactory. Mr Lewis took back tho memo., at the same time protesting that he coaid not see how its publication wa# likely to have any disastrous effect.

In reply to Mr Stevens, The Chairman stated that the distribution of the reserve fund would have to be by distinct resolution apart from the report. Mr Stevens said that he, as having a large interest in the association, felt very much indebted to the directors for their excellent management of its affairs. With regard to the property tax, he wished to point out that according to tho calculation of the financial period, £2OO would be taken out of the funds of this year, w/ practically belonged to next year. The Chairman explained that this had been foreseen, and the item was allowed to pass for convenience in arranging the accounts, but would not be lost sight of. Tho report and balance-sheet were adopted. The Hon. J. T. Peacock moved “ That, in accordance with the provisions of rule 14, the reserve fund be distributed among the shareholders.”

Mr Mitchell seconded the resolution, which was carried. The next business was the election of two directors to supply vacant seats on tho Board. Messrs. J. M. Heywood and L. Harper were re-elected directors for the ensuing year. Mr F. B. Wright proposed a vote of thanks to the directors.

The motion was seconded by Mr Mitchell, and carried. A vote of thanks to the chairman concluded the proceedings.