WELLINGTON NEWS

Hokitika Guardian, 27 July 1928, Page 4

WELLINGTON NEWS

A COMPANY’S OBJECTS. (Special to “ Guardian.”) WELLINGTON, July 25. A new company on registration must declare in its memorandum of Association the objects of the company, and acts which are not specifically included in the “objects” or which are not incidental thereto, or consequential thereon are “ ultra vires,” and therefore a practice has arisen of drawing the “objects” clauses widely in order that the company may not find itself debarred from undertaking some necessnry or desirable operation which may have been overlooked. The expression almost invariably used to provide this protection is “ general incidental.” According to the “Financial Times” it has remained for a private company registered early in June last, with a modest capital of £IOO in Is shares, to hit upon an ingenious expedient, which seems at first glance to be perfect in its simplicity. There is reason for supposing that the primary object of this concern is to carry on business as road agents and road material dealers, ■or something similar. The director from whose name the company derives its title is described as a “road contractor.” Its power to act as “agents” is mentioned first amongst its official objects, but intervening between that and its power to act ns “ road material dealers,”-are powers to carry on something like two hundred other businesses, including bootmaking, animal breeding, banking, cabinetmaking, drapery, firm owning, farming, mining, selling meat and fish, money lending, plumbing, •''photography and restaurant keeping. As the businesses enumerated are arranged in alphabetical order (except as such exceptions as “market gardeners” and “ landscape gardeners ” appearing in the “ g’s,”) it seems quite probable that the compiler of the company’s “objects” simply worked through the trade headings in some directory. Under such a scheme lie would of course, turn “ gardeners (market)” and “gardeners (landscapei ” inti “market gardeners” and “landscape gardeners.” Whether this actual procedure was resorted to or not, the principal clause starts off with some 240 businesses, beginning with “a ” and working down .to “w ”, Taking “d” as ah example we find: dairymen, designers, discount brokers, draughtsmen, dredge-owners, drillers, dryers, dyers and cleaners, dock-own-ers, builders, dry-salters, d vapors, druggists, ’etc. The compiler is something of a humourist, because after working once through the alphabet thus, he proceeds: “To carry cm any of tli© above businesses together or separately as wholesalers, retailers, importers, exporters, sellers, dealers, merchants, users, refiners, agents, producers or manufacturers,” and more particularly “to manufacture aeroplanes, asbestos, acids, alkalis, acetylene plant, adding machines, addressing machines, accumulators, agricultural produce.” . . And having got into his stride, again he works once more right through the alphabet, taking iii (inter alia) balloons, candles, electric light, fattening preparations "U:e. gramophones, gold, K as * an*, handkerchiefs ice, nails, offals, petrol. ■ pickles, pianos, sealing wax, shifts, snaps, sausages, tanks, tar, toys, telescopes, underwear, vacuum cleaners, watches, wax and wool, and canying in to a triumphant finish (although his first list ended at “w ”) as X-ray

apparatus, yeast and :::nc. keen then ho is not cut of breath, for he has another little canler in the shape of power “ to carry on any business or businesses of any kind or description separately or together with all or any of the foregoing. After this come the conventional general clauses which most companies consider sufficient to cover anv accidental omissions. SECRET RESERVES. .

Tlie secret reserves <il joint stock companies arc of importance to every investor. All businesses have lean years no matter what c-arc is exorcised in the handling of an organisation where a conservative policy has been adopted in the distribution of profits and the building up of internal reserves by adopting care in valuations, a. business is able irot only to withstand financial shocks, but generally to assure the necessary assistance front bankers to enable it to tide over bad times. The point of importance to tbe share holders is how far such reserves should be built up without the fact being disclosed to him. If the shares of the company are listed by the Stock Exchange lfis barometer is the position that the shares occupy in the quotation list.