SHARES TRANSFER

Hawke's Bay Herald-Tribune, Issue 110, 26 May 1937, Page 10

SHARES TRANSFER

-Presa Aisoelatlon.)

Director Alleges Unfair Treatment 0RDER S0UGHT

iBy Telegraph-

INVEBCABGILL, Last Night. In the Supr&me Court to-day before Mr. Justice Kennedy an order deelaring invalid certain resolutions passed by and shares transferred in the drapery company of Millers (Invercargill), Ltd., was sought by George Maddams, of Rangiora, one of the shareholders of the company. Defendants in the action were Millers (Invercargill) Ltd., with Jamas Thomas Sharp, of Invercargill, manager, Alice Sharp, of Invercargill, Walter Gurwood Winnocott, of Christchurch, draper, Thomas Loftus Jone6, of Christchurch, engineer, Oharles Laidlaw Purdie, of Christchurch, retired, William Alfred Thomas, of Christchurch, tailor, and William Josiah Love, of Christchurch, retired. Mr. ^ H, D. Macalister appeared for plaintifC and Mr. L. J- Hensley, of Christchurch, for the defendants. Plaintiffi was a shareholder in the company known as Millers (Invercargill) Ltd., an incorporated company carrying on business as dxapers in Invercargill. Mr. Macalister, is opening the case, said the company was registered in 1933. with a capital of £1000. PlaintifE held 300 shares in the company, Sharp 350 and a Mr. Hanchard 350. The company took its name as the resulfc of its association with a Mr, Miller, a wholesale draper, of Christchurch, who supplied a number of Shops beariug his name throughout the Dominion. Apart from that he had no connection with the firm. The company started in Invercargill in june, 1933, and became increasingly successful. Sharp was appointed manager at £5 a week and in September this was increased to £7 a week. At the expiry of the pferiod ending September, 1934, there was a profit of £2318. The directors were then the thTee shareholders Hanchard, Sharp and Maddams, and in dealing with the surplns the uirectors were able to declare a divi* dend of 150 per cent., £1500 being paid out as a dividend and £750 in addition as directors' fees. Plaintif? would say that in recognition of Sharp 's services during the strenuous first year he was allocated £655 of the directors' fees, the balance of £95 going to plaintift and Hanchard. Immediately after the meeting on October 1 Hanchard resigned and Mrs. Alice Sharp was appointed in his stead/acquiring 50 shares. It would be proved that defendant acquired the shares from Hanchard and as the xesult of a protest from Maddams it was agreed that the latter xeceive 33 of these shares. That was the position in October, 1934, and the business was carried on by defendant as managing director until the expiry of the year. In March, 1935, when the company showed a profit of £1886 after allowing for income tax. No meeting was held to deal with this balance-sheet until after September, 1935. Prior to any action being taken a series of minutos was prepared by Sharp in Invercargill signed by himself and Mrs. Sharp as directors and sent to Maddams for h!s signature. Counsel then dealt with various negotiations between plaintiff and defendant and said the claim was based on the well-established principle of company law that a majority could not obtain an unfair advantage at the expense of a minority. Defendant had over-ridden plaintiff in conducting the business.

After evidence for plaintiff had been given, Mr Hensley said he did not intend to call any evidence. The broad position was that the company was part of Millers' organisation in Christchurch. AU Miller got out of it was the business from the stores. The supply of stocks provided a source of outlet and nothing more. The trouble between Sharp and Maddams seemed to have arisen 'at the time of the disposal of Hanchard 's shares. Hanchard was at liberty to seU his shares as he pleased and counsel submitted that the company would have to accept the transfer. Maddams actually signed for the shargs and also signed the resolution appointing Mrs Sharp a director. Maddams got an idea that he had been unfairly treated and from that time he began his bargaining. His signing of the transfer of shares showed that he must have been satisfied at the time and his latest statements were apparently an afterthought. As for the alleged "dummy" shareholders, defendants acted upon advice and accepted the shares. The proceedings were perfectly valid and legal "dummy" Shareholders were appointed to avoid a deadlock over the hold-up of the annual meeting and were not used in any other way. There was no desiro to oppress Maddams or take away his rights. Mr MacAlister was replying when ;the Court rose till to-morrow morning.