CONFIDENTIAL #
機密
XCC(75)6
shares to the Colonial Treasurer Incorporated. In addition to this direct cash investment, the Government will also exchange, in return for the Corporation's equity, the price of any Crown land assigned to the Corporation for the purpose of establishing and protecting the route of the Railway and of securing sites for depots, stations and other works. There is, however, no provision in the bill for exchanging land grants for shares; it would be neither necessary nor appropriate to provide for this in legislation. In practice the Government would grant land in exchange for premium and by a separate agreement (or an exchange of letters) convert the premium into equity at par value. (The other financial provisions of the bill, which do not relate to control aspects, are discussed in paragraphs 14 to 18 below).
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Control by Representation on the Board. As the major and, initially, the only shareholder, the Government would have a legitimate right to have a majority on the Board of the Corporation through the appointment of senior public officers. Indeed, this is an essential feature of control, given that the Board acts as the governing body of the Corporation and given that the only alternative would be to vest over-riding powers in the Government. The alternative is undesirable from a presentational point of view and, more important still, from the point of view of generating confidence amongst potential lenders.
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There are two important points regarding the appointment of senior public officers on the Board. The first is the nature and relevance of their duties. The second is that the Board is obliged, by law, to observe prudent commercial principles (clause 13(1)). If the Government were to require the Corporation to act at variance with these principles or, conversely, should the consequences of adopting prudent commercial principles be at variance with the public interest, the Government would act through these public officers to arrive at a mutually satisfactory settlement. In other words, the public officers on the Board would have two duties one to the Government (bearing in mind the main object of the Corporation set out in clause 3(2)(a)), the other to the Corporation (bearing in mind clause 13(1)) - which they would have to reconcile.
CONFIDENTIAL
機密