BANK OF NEW ZEALAND.

Te Aroha News, Volume VII, Issue 447, 19 February 1890, Page 5

BANK OF NEW ZEALAND.

REMOVAL OF THE HEAD OFFICE TO LONDON. CONFIRMATION BA A SPECIAL MEETING. Auckland, Feb. 14. A special general meeting of the shareholders of the Bank of New Zealand was held at the Banking House at noon to-day. There was a large attendance of shareholders. Capt. Col beck, President, occupied the chair. * The President, in his opening observations, stated that the object of the meeting was to confirm the resolution passed at a meeting of shareholders held on January 9th approving of a proposal to remove the Head Office of the Bank to London, and for consideration of certain amendments to the deed of settlement, rendered necessary by the confirmation of that resolution. The Bank’s legal adviser had informed them that it was necessarv to pass certain resolutions, and these had been framed accordingly. Their adviser asked that certain resolutions should be passed at this meeting and confirmed at a subsequent meeting before the transfer of the general management to Loudon could be affected. It was first necessary that the resolution passed at the previous meeting of shareholders should be confirmed, and he therefore moved, Ihat the Head Office and general management of the Bank’ be removed to London, and that the directors take such steps as they may think tit to remove the same accordingly, and that this resolution is now confirmed.” Mr F. G. Ewington asked whether the directors had taken legal advice as to the liability of New Zealand shareholders, whether it would be increased by the removal of the management to London, or whether it was advisable to take any steps to have the institution brought under the Limited Liability Act in England. The President: Our legal adviser says there is no occasion for the adoption of such steps. The confirmatory resolution was agreed to unanimously. The President said he would now proceed to move, ovriatim, resolutions rendered necessary to give effect. to the decision arrived at. The first resolution required no comment. It was as follows : —l. “That the words ‘Auckland, colony of New Zealand,’ in the sixth clause of the deed of settlement, be deleted, and the words ‘ London, in England,’ be inserted instead. ’ Major George seconded the resolution, which was carried unanimously. The President, in moving the second resolution, explained that it was similar in its effects to the resolution just passed. Its object was to substitute London for Auckland throughout the deed of settlement, wherever that was rendered necessary, so that matters now transacted in Auckland by virtue of the Head Office being here, might in future be done in London. He therefore moved: 2. “That the word * Auckland,’ in clauses 44, 71, 75, 77,,78, 85 and 91 of the deed of settlement shall be deleted, and the word ‘ London ’ inserted in lieu thereof, and the words, * the colony,’in clauses 80 and 85,shall be deleted, and the word ‘London’ be inserted instead.” Major George seconded the resolution, and it was agreed to unanimously. The President, in moving the third resolution, explained that its object was to introduce a clause in the deed of settlement to enable the Board of Directors-in-Chief in London, if it thinks tit, to appoint a local board orboardsinNewZealandorelsewhere, to supervise the businesffof the Bank. This was a permissive power which the London Board upon election might or might not wish to exercise. The resolution was as fol10W8 ; _3, “ That the following clause shall be added to and inserted in the deed of settlement, between clauses 57 and 58, namely : lish a local board or local of directors at such place or places in New Zealand and elsewhere as they may think fib, the members of which, being proprietors, shall be appointed by the Board of Directors, and the Board of Directors may depute to such local directors powers as they may think expedient.” Major George seconded the resolution. Mr H. Green said he was glad to hear from the President that this power was permissive, because there had been considerable experience under this head in Now Zealand., The Union Bank of Australia used to have local directors, but ceased to have them; and more recently, the National Bank had a local board of directors, and ceased to have such a Board. Unlese there was something peculiar in the case of the Bank of New Zealand requiring the appointment of local boards, he thought the London management would not avail themselves of this power. The President replied that the resolution had been so framed that the power should be entirely permissive. The present Board, he added, had power to appoint local boards of directors olsevvhere. Mr Reader Wood, speaking to the resolution, said considerable hesitation appeared to be felt, both by the directors ; and the shareholders, in passing a permissive resolution of this kind. It was true the resolution was only permissive, but then it could be acted upon, and from his point of view, they proposed to put a power in the hands of the Board of Directors in London which might be exercised greatly to the ■disadvantage of the Bank. It appeared to him that the resolutions now being proposed would amount to a new constitution ior the Bank of New Zealand, and he (Mr Wood) thought it would be generally admitted, that, in doing so, it was their duty to look on this question from every possible point of view, and to regard its bearings in every aspect, j He would first draw attention to ■what he termed very extraordinary _ differences existing between these resolutions, as now printed and placed in the hands of shareholders, and the resolutions which Mr Button, on the 9th January, stated it was the intention of the directors to place before the meeting. In order that he (Mr Wood) might not be said to misrepresent Mr Button’s resolution he read that resolution as stated by Mr Button, viz., “That the Board of Directors, meaning thereby the Board of Directors in London, may, if they think fit, appoint a colonial board of directors, which would act accordingto instructions to beframed by the Board In London.” In his remarks, Mr Button explained that he referred to this Board not £0 much as a Board of Directors, but as a Board of Advice ; “ an Advisory Board ” was the language Mr Button used. Now they saw that this one Board had, since the 9th of January, developed into a resolution to this effect:— “ The Board of Directors may establish a local board or local boards of directory at such place or places in New Zealand and elsewhere as .they may think fit_ qnr numbered, unlimited, with no limit to the number of members, with no limit whatever to the number of persons who might Jdo appointed by these boards. It did appear to him that the shareholders present would not be doing their

duty if they gave such unlimited powera as these to the London Board of Directors. It was not unreasonable to suppose that the London Board would require a Board, or perhaps Boards of Advice, but let the shareholders limit the number of these Boards. He thought that if they had one for Hew Zealand and one for Australia they would have amply sufficient—more, in fact, than enough* Mr Green had told them that certain banks which had been established here for a long while began with local boards, but found that they were useless, and gave them up. The Union Bank still had one or two very limited local boards, bub they were simply boards of advice absolutely, and not boards of directors. That was to say, they were not boards of directors in the sense that they could direct anything at all. What they could do, and only do, was to give eel vice to the geimial manager, so that the responsibility for the colonial management of the Union Bank was absolutely and entirely with the general manager. He (Mr Wood) would ask the shareholders present to read these resolutions, and when they had read them, to ask themselves, and answer the question: Where does the responsibility for the colonial management rest ? He had asked himself that question and had answered it. In these local boards —in this multiplicity of local boards, what responsibility could there be _ Anybody knew that divided responsibility was never severely felt, and the division of responsibility in the present case might amount to "the samething. Sotheymightbe putting a power into the hands of the directors in'England that they ought not to have without limitation of some kind or other. If they had a multiplicity of these boards where were they. to lix the responsibility V It could be fixed nowhere, and whatever might happen nobody would be to blame. They would be in a state of confusion almost impossible to conceive. The only way in which he could illustrate the position he had in his mind was by reference to the parable concerning a man out of whom a evil spirit had been cast, who, when he went to his house, found it empty, swept, and garnished, whereupon he took unto himself immediately seven other spirits more wicked still —and the last state of that man was worse than the first (laughter) —and that was what he (Mr Wood) believed would be the state of the Bank of New Zealand with the unlimited number of boards. Why, the object of removing the management to London was to get rid of this local influence, and now they were going to multiply the local influence. It was in an unbusiness-like manner that the whole thing was proposed to be done. Now, it was his (Mr Wood s) intention, although he recognised the attempt to be hopeless, to test the feeling of the meeting by moving an amendment, viz., “ That the word ‘ director ’ shall be struck out and the word ‘advise'inserted, so that, insteadof giving the Board in London power to appoint anv number of local boards of directors they should have power only to appoint local boards of advice. He supposed that the amendment was hopeless, inasmuch as Cautain Colbeck had told them that thedirectors had any number of proxies from English shareholders that they could use. He (Mr Wood) would, however, ask the directors whether they ought to use these proxies ? Were the Lnjjlish shareholders when asked to entrust the directors with their proxies told what the object of this resolution was ? Tiiey were asked for proxies to enable the directors to take steps to remove the directorate from New Zealand to London they sent out their proxies for that purpose, and nowthe directors weregoingto usethesevery same proxies to empower that Board in London to appoint any number of local boards here. This he considered to be unfair. As the gentlemen knew.no notice whatever had been given to the English shareholders that it was intended to use their proxies for this purpose. If they read over. the resolutions, they would see that the intention was to give very large powers to these boards of directors, and that it was not intended simply to urre them as boards of advice. So that really these boards of directors were intended to direct, and not simply to be boards of advice. In that case, what responsibility would the general manager of the Bank in this colony have ? He (Mr Wood) held that there was nothing of greater importance in the management of any business institution than to be able to fix responsibility directly somewhere. Now, where ought it to be fixed here 1 The responsibility for the colonial management of this Bank should be fixed on the general manager, but if they placed that general manager under half - a - dozen colonial boards, his responsibility was gone. With a multiplicity of colonial boards . they would have no responsibility at all in the matter. Mr A. Boardman seconded the amendment for the reasons already given by Mr Wood. There was no doubt about the necessity for a fixed responsibility. That was shown by the fact that a late manager in London, Mr Larkworthy, writing to a financial paper tells the shareholders in London' that he is not responsible for the gross mismanagement of the past, but that the responsibility has been with the people of New Zealand. He therefore objected to local boards, and what was more, the people of Wellington, Christchnrch, Canterbury, and Otago might all claim that if there was to be a local board it should be in each of these cities, and those shareholders could fairly claim that they had not had any band. in bringing the bank to its present condition, and that if there was to be a local board, it should be anywhere but in Auckland. He would prefer himself that there should be no advisary Board and that the management should be removed altogether. A local Board of advice would- simply mean that a few supposed important men would be paid so much a year to do nothing but give influence to the Bank by their names. He hoped that the London Board would send out first-class banking men, if they had not already gob such here. Banking men were wanted, nob business men, who would be ironmongers, millers, butchers, and so forth. They wanted banking men who would put a stop to a monetary institution competing in business with men who had a little capital in their businesses. It was one of the scandals of New Zealand that this could be done. He believed the London Board would stop all that kind of thing. All they wanted here was a general manager and proper inspectors, one for New Zealand and another for Australia. Proper inspection would mean that there could not be two. huge swindles in the same town within a few months. With regard to the proxies he might say that companies in these colonies were governed by the directors by means of proxies. He would like the vote of the shareholders present to be taken distinct from the proxies, so that the feeling of the people in Auckland might be well, known with regard to the question of appointing a loc&l Board. By removing the control entirely, they could do away with local influence so that ippr) ,cogld not be bolstered up by the Bank’s money. Mr F. G. Ewington thought it was time to speak fully but also advisedly, and he considered that Mr Boardman had nob done so. There was a danger of going to the oppo-

siteextreme and depriving the London Board of the advice of local boards# He thought that Mr Reader Wood’s amendment was a mistake. He said that they had been trying in the past to get rid of local influence, and that if they used the proxies of the English shareholders which had been entrusted to them with a view to getting rid of local influence, they would be acting wrongly. But there was a difference between local boards of advice and a board of management. As to the use of proxies, he ehould like to know whether or not the English shareholders were not to have a voice in the matter. The English shareholders had a right to be represented just the same as local shareholders. They should not forget that they had here many valuable assets, and the local Board could greatly assist the London Board in regard to them. Therefore, the shareholders should give the London Board the power to appoint the local Board if deemed necessary. It would not be wise to fetter the hands of the London Board with regard to appointing a local board. In the interest of a lady who held 110 shares he must urge that the amendment ehould be rejected. Mr John Murray said, with reference to the use of proxies, that they were given to the London Board by the English shareholders as a mark of confidence, and to give power to the London Board. The directors would, he considered, be amply justified in using those proxies for the purpose of ridding the Bank of local influence. With regard to the local boards, he thought it was well-known that there was a great deal of feeling in New Zealand against the removal of the management of the Bank to London, and it had been said that there was danger of the Bank losing sympathy here. Therefore it would be unwise to take from the London Board the power to appoint a local board if thought advisable. Had Mr Reader Wood given notice of motion that the Board should be one of advice instead of direction, he, for one, would have been prepared to acceptthe change as it was not possible for the local Board to be much else but a Board of Advice. Still, seeing that the matter had been brought in, he thought it ought to be accepted as it stood, more especially as it had been drawn out by the Bank’s solicitor. Besides, the resolution muet be carried by proxies. Mr F. Cherry said that a few years ago he would have objected to the removal of the management to London, but now it was inevitable, as there was not the slightest fear or possibility of the Bank being worse managed than it had . been in the past. Boards of advice might be of use, but local directors would be a decided mistake. The responsibility would be divided, and they had had experience of that with other banks in the past, when things had been done contrary to the wishes of the officers. There was not the slightest doubt but that companies were ruled by the proxies of absent shareholders, but that also was inevitable. He considered it had been a mere matter of form meeting in that room, although he had attended for the last 20 years. He had seen in the past men appointed as auditors who would not be allowed to put a tradesman's books in order. (Applause.) He was not speaking about later auditors. They had some competent men later on, but they gave no hint to the shareholders as to the state of affairs. He hoped that the amendment would be passed, and he should like to see the votes of the shareholders present taken separate from the proxies. The Chairman said he did not think it was in the interests of the Bank that he should make a speech, but he did not like insinuations being cast at the management. They spoke as if there were not any men in Auckland honest enough to manage the affairs of the Bunk. If Mr Reader Wood only knew how eager the directors were to be rid of their responsibilities he might speak differently, but he came there not with good wishes for the welfare of the Bank —they knew that but in order to make a speech, plausible enough, he must admit, but as empty as a nutshell. He hoped that shareholders would not be misled by the speech of a man who had nothing to do but lie in bed and make them. How many of the present directors would accept the position acrain ? None; nor would he himself, if it were not for the interests of the widows and children—whom they all seemed to forget when they entered that room and discussed the affairs of the Bank--if it were nob for their interests he would throw down his connection with the Bank, and be rid of the position. Mr Adam Porter quite agreed with Mr Wood that there were evil spirits about, and one was not far off. He considered it unfair to attack the management, for nothing had been said against it when the Bank was paying large dividends. He was himself sorry to see the Bank management removed from Auckland. He considered it quite right that the London Board should have the power to appoint a local one. He looked upon the resolution as tantamount to saying that for thirty years they had carried on a successful business, and that now they could do so no longer. He trusted that the resolution would be adopted. The question was submitted to the meeting, when 14 voted for the amendment and 33 against it. The President next moved the fourth resolution as follows :

4. The following clause shall also be added and inserted in the Deed of Settlemen between clauses 57 and 58, namely:— . 57b. The Board of Directors may by instillment in writing under seal of tho BanK empower any person or persons, either generally or in respect of any specified matters, as the Attorney or Attorneys of the Bank to execute deeds on its behalf in any place whatsoever, and to do, perform, and execute any matter or thing or matters or things whatsoever in relation to the business of the Bank which the Board of Directors is itself capable of doing. And the Board of Directors may, if they think fit, make it a. condition that any deed to be executed bv any such Attorney or Attorneys shall be first approved by such of the Local Boards of Directors as may be specified in the instrument creating the power. And in the event of any such condition being made, if a memorandum is written upon any such deed to the following effect, namely:—“Approved by the Local Board of Directors established at ” apd signed by some person purporting to sign as the Chapman of such last mentioned Board, any person or persons, body or bodies corporate, accepting any deed or deeds executed by such Attorney or Attorneys shall not be bound to inquire whether or not . such deed or deeds had b»pn approved bv the Colonial Board of Directors, nor whether the. person so signing as Chairman was m fact,the Chairman thereof. Every deed signed by such Attorney or Attorneys as aforesaid (and purporting to be'approved as aforesaid in any case where .speh approval is necessary) shall be binding on the Bank and have the same effect as if such deed or deeds were under the common seal of the Bank.

i This was seconded by Major George. On the suggestion of Mr Wood the word “Colonial ” was altered to “ Local” beforp the words “ Board of Directors.” This resolution was adopted without discussion. - • ' The President moved clause 5, as follows

5 ' The following clause shall be added to and inserted in the Deed of Settlement between clauses 43 and 44, namely : 43a. That, if m order to faeditate the removal of the Head Office and General Management of the Bank, the members of the Board of Directors for the time being shall deem it expedient to resign, in order that a new Board may be elected, or in case, from any cause whatever, the number of Directors shall be reduced to less than three, the Chief Officer of the Bank or the Manager of the Bank in London shall call a special general meeting of the proprietors to elect so many Directors as may be necessary to make a full Board, and such meeting shall bo held at the place where the Head Office and General Management of the Bank are located. In the event of an election of Directors under this clause, one of the Directors so elected shall go out of office by lot at each half-yearly general meeting held in the month of October, or such other nionth as may be substituted by the Board of Directors therefor, until the whole of the Directors so elected shall have gone out of office; and the length of notice required to be given by a candidate for election under this clause shall be ten days instead of thirty, as provided for in clause 44. This was seconded by Mr T. Peacock.

Major George moved as an amendment, “That 12 days’ notice be substituted ior 10.” This was seconded by Mr Wilson and adopted. The President moved clause 6. The following proviso shall be inserted after the first sentence in clause 75 of the Deed of Settlement, that is to say: "Provided that the Board of Directors may from time to time, as they think fit, substitute any other month not later than August for the month of April, and any other month not later than February for tho month of October. In tlic event of any such substitution theprovisionsofthe Deed of Settlement having reference to the said months of April and October shall apply to the month substituted for the same respectively as tho case may require.” This was seconded by Major George and adopted. The President moved Clause 7. 7. "The peccding resolutions, numbers, 4, 5 and 6, shall take eii'ect immediately the same shall be confirmed, as provided for by clauseß2s of the Deed of Settlement, but none of the ether Jesolutions. although confirmed as aforesaid, shall take effect until the Board of Directors under the present regime shall have inserted a notice in some newspaper published in Auckland to the effect that all arrangements for the removal of the Head Office and General Management of the Bank to London have been completed. Mr W. Wilson seconded the motion. Major George moved as an amendment and Mr Peacock seconded, that after the word “regime” be inserted “or the then officers of the Bank of New Zealand.” This was agreed to, and the resolution ae amended was adopted. The President stated that they had evidence of unity with the London Board in the presence of their old friend, Mr David Hean, and an addition to their strength by the presence of Mr Thos. Peacock.

Major George said : With the permission of the Chairman, I wish to make a few remarks unconnected with the business of this meeting, which I think may be of interest to you, and I wish you to clearly understand that I alone am responsible for what I say, though I think my co-directors will endorse a great deal, if not all, of what I state. We have continuously and recently most carefully reviewed the position of _ the so called globo assets, and I do not hesitate to say that I regard these assets most hopefully, and had we been permitted to go on quietly we could have carried on the Bank successfully, and worked out these assets to tho interest of all concerned ; for it must not be forgotten that though some of the accounts under this head have realised badly, most of the land wo still have. I have visited some of these properties which have been looked upon as amongst the worst of the Bank’s dependencies, and I feel very hopeful of their _ future. I would also like you to bear in mind that from the interest-returning properties there was an increase of £IB,OOO last year over the previous one, and we have reason to believe that there will be a further increase this year. This being the case, surely we can take credit for a large increase in the value of the properties which yield these increased returns. I will ask you to give all the more weight to my opinions, because, as you know, I am in no way connected with the past management of the Bank, and consequently am not called on to defend or excuse their actions. I pub my good money into it on the strength of the Committee’s report, and it remains in it still—and what is more, I intend that it shall remain in it, for I am convinced the Bank is sound notwithstanding what may have been said, or worse, insinuated, to the contrary. I do nob think it wise to attempt to hid© from you the unfortunate circumstance of a large robbery in Sydney, which, beside the loss, has come at a very inopportune time. The directors have not lost grasp of the position, nor are they in any sense abandoning interest in your institution on the contrary, they are keeping the whole position in view, and will until relieved take such decisive steps from time to time, as they consider necessary to conserve your interests. In conclusion, I may say that lam one of those who havealways considered it a mistake to take the management away from its birthplace, but it having been considered advantageous that this should be done I shall support it being handed over to others, who under the circumstances may be able to manage it more advantageously for you, though I claim that you will not find a body of men who will show more zeal than your present Board.”” The rough minutes having been read the meeting terminated. _