DISSATISFIED SHAREHOLDERS.

Pukekohe & Waiuku Times, Volume 6, Issue 326, 13 November 1917, Page 1

DISSATISFIED SHAREHOLDERS.

Meeting at Hamilton. N.Z. DAIRY ASSOCIATION AND DIVIDENDS. (Published by arrangement)

A meeting of non-supplying shareholders in the New Zealand Dairy Association was held in the Farmers' Union Board Hamilton, last Thursday! Mr S Fullerton (Te Kowhai) presided over an attendance of about 50 including several ladies The business of the meeting was to consider (1) the announced intention of the New Zealand Dairy Association to make no payment on capital invested by non-bupplying shareholders for the year ending June 30th, 1917 ; (2) the question of the N Z. D A. resuming shares at current rates when requested to do so; (3) the p-licy of the N.Z.I) A. as affecting the value on the open market of the N.Z D A and other companies' shares ; (4) the formation of a committee to guard the interests of non-supplying shareholders in the N Z I) A. The chairman outlined the business of the meeting. The secretary said ha had received copies of circulars whereby suppliers were notified of the company's policy. Mr Simcock said he had loiters from non-Mipplyiug shaieh ihiers, and t' n ey were all in favour of something being done, and promising support. The following series of resolutions were submitted by the chuirmau:— (1) That this meeting is of the opinion that the notification given by the N.Z D A re discoDtinuai.ee of the payment < f the usual 6 per cent on share capital was ejuite inadequite, anel that ample notice of change of policy was the more desirable because of the present prosperous condition of the dairying industry, and became of the fact that the N.Z.J).A had never previously in its history of 17 }ears failed to pay the promised G per cent. And, further, because many concerned were on active service, and so at a disadvantage in realising on their shares; thus the interest foimerly considered due to them would now go to their supplying neighbours at home. (2) That in the opinion of this meeting the failure of the N Z.D.A to make the usual payment for the year ending June 30th, 1917, on capital invested by its non-supplying shareholders would be a grave breach of faith. That such capital, having been invested after assurances that 6 per cent per annum would be paid thereon, the aforesaid non-supplying shareholders are entitled to interest at that rate till such time as either their shares are resumed by the N.Z.D.A or the N.Z.D.A is no longer in a position to fulfil its financial obligations. (3) This meeting respectfully requests the Board of Directors of the N.Z DA to within fourteen days give assurance that they will favourably consider the early payment of their non-supplying shareholders for the year ending June 30th, 1917, of an amount equal to the usual G per cent dividend or, failing this payment, an assurance that they will within throe months from date be prepared to resume non-supplying shareholders' shares at par. Failing a satisfactory reply to this request the non-supplying shareholders present agree that such further action be taken as may be deemed necessary to secure their just and legal

rights (4) That the opinion of this meeting the announced intention of the N Z J) A to pay neither dividend nor interest on &c-called"dry" shares whilst at the same time making a pajment on their other shares equivalent to over Ho percent interest, is neither fair nor equitable, and has already seriously affected the value of the N X D.A shares on the open markets, and is likely to also detrimentally affect the value of shares in other co-operative corn-

panies. (5) That the failure to resume shares on the ground that the intending vendors aie still producing butterfat is not justifiable when payment of interest is stopped. The directors should reiognise that sometimes tlirough the removal of creameries, etc, it was in roali'y the NZI>A that left the shareholders, ami not the shareholder* that left tho association. Als i, there wore thos,. who, alter fulfilling their obli-

gations to the N Z D A, found it better that they should adopt homeseparation or cheosc-iuakiug, and it was not reasonable to i xpect that these people should now leave those eo-ot itivo companies which had lirst made these advantageous changes practicable

fi That a cop) of the resolutions passed »t tin.-, meeting be forwarded to the managing din c.tor and each of the directors of the \X DA. Mr K II dull s iid it was a mattei for surprise that the Dairy Association should have decilednot to pay dividends on shares If their commercial business was not founded on righteousness it was not - ,un<i tint a company the rielit, when in a position to pay a dividend, to v ith tio.d tti i* payment ''. It was moralh wrong for a coiii|iany o ad in sin ii a way I he Association win not ing its shareholders a ''sijiiare deal.'' Tho interest of larea! numbers of people were at stake, and they should do something in the matter. Mr M L. Watkius said they had themselves to blame perhaps, be-

t meeting and voted against the proposal. Mr Fulton, Tuakau, moved the adoption of the resolution. He was a non-supplier to the Association. The position was very unfair and very unjust, as they had been given to understand when taking up shares that they would he paid a dividend of 6 per cent, on the paid-up capital, and this had been done up till the past year. Conditions had now changed, and home-separation had become popular in some cases. It had become difficult to get their shares resumed even at 75 per cent. They should get at least a square deal. They were all in favour of cooperation, and the action of the Association was having a detrimental effect on other co-operative concerns. All the shareholders in his district would support the proposal.

Mr Watkins seconded the resolution.

Mr Miller, of Auckland, said sufficient notice had been given by the Association ro the discontinuance of the usual fi per cent on share capital, so perhaps the first clause of the ro .solution was hardly in oider. Mr J J. Riynes stated that the Cambridge Ass,ocia'ion was paying interest on capital out of its profit and loss account. He was paid his original 5 per cent before the profits of the company were calculated, and he thought the N Z D.A. should do the same. Their money was earning G per cent, and they were entitled to it. Aeb quate notice was not. given that the 6 per cent promised them would not bo given. Mr Watkins thought they sh mid get face value for their shares, and it shou'd be paid out of the working expenses.

Mr .lull thought the law of the land would not uphold the Association in its action. A test case would prove this. For any company to hold people's capital and to pay no interest was an unjust and un-Biitish action.

Otheis agreed that it was a breach of faith on the part of the company, Mr Spragg having guaranteed the payment of interest. Mr Barugh said ho had been asked by the Military Trustee Board to attend the meeting. He thought it was a cruel thing to send men to the front and deduct their interest while they are away. He outlined the proceedings taken in the formation of the Bacon Company. As chairman of the Farmers' Auctioneering Company he said it was their policy to pay interest on the paid-up capital. The interests of co-operation must be safeguarded by the payment of a dividend. The Chairman said the farmers were unanimous in their feeling in the matter.

Mr Tlawkins said he had seen one of the directors, who had told him in regard to the Association's offer of 1")S for £1 share that this was necessary owing to creameries being closed down, thus meaning a loss to the Association of a large amount. They were within their legal rights in their action, and thought the retiring shareholders should he aslce i to pay their proportion of tho loss. When they refused absolutely to take hack shares, they held tin shareholder was responsible for certain loss. He, however, thought the loss should be paid out of the profits of the Association A company was not hound to pay a dividend—a purely co-opera-tive company was not out for dividends, but for a bonus to shareholders. The fairest thing he cculd see was for tta c >nipany to pay fair interest on their snares or resume them at their market value. In regard to Clause 2, could they prove it? If not they should pass it, no matter what they thought or knew. As to Clause .'}, lie did not think they were justified in asking the Association to resume shares at par ; they should be prepared to pay their proportion of the loss owing to the closing down of the creameries.

Mr Raynes stated that they had consulted a firm of solicitors, and had been assured that they had a legal claim. The Chairman said tho Association might quibble about dividend, but they should at least pay interest. When the company was started, '' dry " capital was taken in, and they had been promised 0 per cent. Mr Barugh said when tho company said they were going to pay on a hutttr-fat basis they did not say they were not going to pay a dividend. Perhaps the Association could not dodge behind the '' butter-fat basis " when the matter was looked into.

A shareholder said he was quite prepared to take 75 per cent for his shares if he could «et it. (Chorus of "So am I !" and laughter.) Mr Miller said he had suggested at a meeting of the Association some considerable time ago that a ceitain amount lie set aside annually for the wa-ta»e of assets. He thought the present meeting should be very carolul about legal proceedings; it was more a matter for negotiation. The Chairman said they would take legal proceedings only as a la-it resource. Mr Simcock mentioned that he hid i'ii jived a letter from Mr Pacey l dating that the directors would reI -111110 his shares, seiing th it his herd I had been sold. Mr Ju!l thought the Association j wa - pursuing a suicidal policy. j The resolution was cairnd, v.ith I one dissentient. COMMITJ.LE Th ! following committee was ap-point-d to guard the int srestsof non- | supplying suareiiol'lers iu the N'Z. I D A.:

I Walters (Aka Aka), W. Mawhinney (Whatawhata), and R. Vowless (Ngahinepnuri.) DAIRY ASSOCIATION'S REPLY (Published by arrangement) The following letter in reference to the meeting has been forwarded by Mr H. Q. Pacey, Managing Director of the N.Z Dairy Association, Ltd., to the Secretary of the Non-supplying Shareholders' Committee, viz:— New Zealand Dairy Association, L - d. Aucklan 1, N.Z, November Bth, 1917 To the Secretary,

Non-Supplping Shareholders Dear Sir—Your letter from Hamilton of even date says you send resolutions passed at the meeting held in Hamilton this morning. At noon to-day the meeting had not adopted any resolutions on the subject. As your letter covering resolutions reached this office at 1.30 p.m today, it would appear to have left Hamilton many hours before the meeting which was to consider them was advertised to start. Has a mistake been made? Some of the references in the "Resolutions'' are inaccurate, and with the information before the meeting which I sent to you some of the inaccuracies have been avoided. lam not aware of any soldiers' interests which have been neglected; if there are such please tell me of them, and I will arrange with our Directors to give special consideration to their case, as they have already done to other similar members. Any such cases will certainly be met when they become known to us.

Our action has had the unqualified and almost unanimous approval of our suppliers to whom the position was fully explained about eighteen months since as you will remember, for you personally were good enough to preside over one meeting of such suppliers.

Our Directors have satisfied themselves both of tho equity and legality of our position herein, but no good purpose will be served by a further review of the position here for clause three of the "Resolutions" indicates that legal action has been decided upon, and therefore my Board has directed me to advise you that Mr A. Hanna, of Swanson street, Auckland, is our solicitor, and that he will accept service on this Association's behalf of any writ herein. Yours faithfully, H. E. PACEY, Managing Director