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Should the buyer desire to raise a loan on the shares he has purchased, he will hand to the lender the share scrip and transfer document and if the lender is not satisfied with the security as it stands he will send the shares to the company whose shares they are, register the shares in the name of the lender and obtain, if so desired, a new transfer document in the name of the lender or his representative on payment of a fixed stamp duty of $2. It will not be essential for the lender to register the shares in his or his nominee's name as the transfer document can be in blank in the case of mortgages and it will only be in respect of sale transactions that the transferee's name must be filled in the transfer document. When the loan is paid off, the borrower will be able to get the shares transferred back into his name by getting a fresh transfer document certified for on payment of the same nominal stamp duty of $2 or in the case of a blank transfer it can be destroyed.
All transfer transactions whether sale transactions or otherwise will be adjudicated by the Treasury and certified on the transfer document.
In view of the bargain made with the Stock Exchange in 1921, it would be unfair to insist on the present contract stamp duty in addition to the stamp transfer duty and I therefore advise its abolition.
In my opinion the scheme as above set out will have the following results :---
(a) The penalties will have the effect of enforcing compliance with the pro-
posed Ordinance.
(b) In almost all cases the shares will be transferred into the name of the buyer because it will cost the buyer nothing to do so and he will get all the right of a shareholder.
(c) In the case of mortgage and loan transactions the system of blank transfer
is preserved.
(d) As in almost all cases the shares will be transferred into the name of the transferee, the identity of the shareholder for the purposes of death duty will not be lost except in cases where the shareholder during his time deliberate- ly intends evasion to take place after his death and I consider that there must be very few of these cases.
(e) The compromise arrived at with the Stock Exchange in 1921 has been pro-
vided for.
(f) The investor and the speculator are placed on the same basis.
(g) No new taxation is suggested in fact as far as the investor is concerned he
will pay less in the future.
I do not suggest that transactions between authorised dealers of the Stock Exchanges should be taxed any more than they are at present.
The Hon. The Colonial Secretary.
I have the honour to be,
Sir,
Your obedient servant,
(Sd.)
W. E. L. SHENTON.