South Canterbury Times. TUESDAY, SEPTEMBER 27, 1881.

South Canterbury Times, Issue 2658, 27 September 1881, Page 2

South Canterbury Times. TUESDAY, SEPTEMBER 27, 1881.

The prospectus of tlic South Canterbury Building and Investment Company, Limited, which has been published, in our advertising columns for the past fortnight, is deserving of more than ordinary consideration, as it offers facilities to borrowers which have not previously been offered by any Building or Finance Company doing business in the colony. Building Societies are institutions which, if properly managed, result in great good to the community ; and as an instance of the good which lias already resulted from the establishment of such Societies, we need only refer to the success that has attended the working of the Timaru Building Society. The latter Society is conducted on the mutual principle, and its management has been all that could be desired. Being a local institution it naturally commanded a larger share of public support than branch offices of Dunedin Societies could even hope to obtain, and hence its present flourishing condition. The promoters of the South Canterbury Building and Investment Company, Limited—most of them gentlemen thoroughly conversant with the working of Building Societies—considered that the rapid growth of the town and district during the past few years justified the establishment of a local financial institution, framed on a more extensive basis than an ordinary Building Society, and they set themselves assiduously to work to perfect their ideas, and place them before the ppblie in a practical shape. The result is the prospectus already drawn attention to. The capital of the nerr Company is fixed at £100,300 in 10,000 shares of £lO each, Guo third of the capital is reserved for subscription shares of the ultimate value of £lO each, and the. holders ol subscription shares are to be allowed to

withdraw their shares on maturity, or to convert them into fully paid up capital shares 1 in the .Company. Capital shares in the Company will be marketable property and may be sold and transferred, but they cannot be withdrawn. The wisdom of this rule is ‘ obvious, as a company floated on a capital share principle, with a shareholder liability up to the value of £lO per share, at once enables the company to offer a tangible security to its banker, and reap the advantage of working on outside capital. This is not the case with ordinary Building Societies, as those who have had to manage them through periods of commercial depression know only too well. Mortgages on the Building Society repayment system are what may be termed diminishing securities—a class of securities that bankers do not care to trade on. It will thus be seen that the new company has acted wisely in determining to issue two-thirds of its capital in what is termed capital shares. The decision arrived at in reserving one-third of the capital for issue in the shape of subscription shares is equally judicious, as it will enable working men to take up shares by paying 2s Oil per month per share, and thus secure a profitable channel in which to invest their small savings. Provision has been made by which subscription shares may be withdrawn at any time if the shareholder is unable through loss of employment or any other unforeseen cause to continue his payments ; or he may borrow seventy-five per cent, of the value of his shares at any time, by simply transferring his scrip to the company. The object of the latter provision is that the shareholder may not lose the profits which are likely to accrue upon his shares by being compelled to withdraw them. The next important ingredient in the constitution of this company, and one which we deem the most important, is the power given to convert Building Society repayment loans into fixed loans or vice versa. Those who have been unfortunate enough to borrow money from Building Societies in good times on the monthly repayment principle, in the hope of being able to meet their payments punctually, have often—and with good cause—had occasion to repent such an indiscreet act. Trade depression, sickness, and loss of employment have repeatedly prevented them from fulfilling their obligations to the Building Society, and what has been the inevitable result? Simply this : that fines have doubled, trebled, and quadrupled upon them, till, despite their most strenuous efforts, they have lost the property they were striving for so many years to make their own. In this particular the new Company comes to the rescue. We observe that by their rules, any shareholder who, through pressure of circumstances, is unable to continue bis Building Society repayments may have his loan converted into a fixed loan. Should he afterwards be in a position to continue his.-repayments, and thus reduce the principal in addition to paying the interest, he can have the loan re-; converted back to the monthly or quarterly repayment system. This is an innovation in the laws of Building Societies, and one which we have long wished to sec adopted. It is thoroughly sound in principle, and must be productive of good and beneficial results alike to borrower and investor. It should promote a large and lucrative business, and we feel certain it will. There is no earthly reason why the people in the town and district should send their money out of the place for investment, neither is there any reason why borrowers should not obtain what accommodation they require at home. Another, and by no means the least important consideration, is the solicitors’ charge for transfer fees. These, we observe, are fixed at a very low rate, and borrowers will be able to ascertain before commencing negotiations the actual law costs which they will be required to pay. In concluding onr remarks, we may say that we can confidently recommend the new company to the consideration of the public, feeling certain that the far-seeing basis on which it is established will command the success which the venture merits.