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HASIY LEGISLATION.
The objection of the unofficial members of Council to being called upon to approve by laws passed by the Sanitary Board before they have had adequate time to peruse and study them is well founded. The only fault to be found with it is that it does not go quite far enough, for the same objection ought to be raised in the case of Bills brought before the Council before they have been duly published in the Gazette. The Parliamentary Committee which in- quired into the grievances of Hongkong in
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THE HONGKONG WEEKLY PRESS AND members might have made themselves acquainted with the nature of the by-laws by reading the newspaper reports of the proceedings of the Sanitary Board. It is not for us to minimise the importance and value of newspaper reports; but possibly the unofficial members may share with the Government the error of not paying suffi- cient attention to what appears in the papers. At all events we venture to say the Colonial Secretary would not consider a newspaper report sufficient notice of the proceedings of say the Chamber of Commerce on any point calling for official action.
the forties recommended that all laws should be published six months before they were brought into force. We do not ask for any such
extreme delay as that, but, except in cases of extreme urgency, all Bills should be published in the Gazette before they are introduced for first reading. It is true the standing orders provide for publication before final passing, but that is not sufficient, and on this point the orders call for amendment. An example will show the inadequacy of the present rule. The last meeting of the Legislative Council was held on Monday and several Bills of more or less importance were in troduced for first reading. The standing orders provide that "After being read a "first time every Bill shall be published in the Government Gazette for general in- "formation." The Bills read a first time on Monday last will accordingly be pub- lisbed in the Government Gazette of Saturday next, which many of the subscribers receive only on Sunday morning. The Conncil stands adjourned until Monday next, when the Bills introduced at the last meeting will in ordinary course be read a second time, and, if there is no material amendment, may be passed. Thus the public have only a little over twenty-four hours' notice of the contents of the Bills, and the greater part of that time falls on Sunday, a non- working day. Such notice, we venture to, say, is altogether insufficient. It may be replied that the unofficial members may ask for delay if they wish to consult their constituents or have reason to suppose that But an any suggestions are be male. ounce of fact is worth a pound of theory. The Bill authorising the levying of the Gap Rock light dues was rushed through Council, the second and third reading being taken on the same day. A sug- gestion was made in this column-which unfortunately did not appear until the next day, when it was too late that the Bill should contain a provision for the cessation of the dues when the purpose for which they were levied was fulfilled. Had there been an opportunity of making the sugges- tion in time it would undoubtedly have been adopted, for the Government and the unofficial members were in complete accord at that time and the understanding was that the dues should cease when the light was paid for, but instead of embodying this. understanding in the Bill, a verbal promise from the Governor was considered sufficient. Had more time been allowed for the con- sideration of the Bill no doubt a special account would have been kept of the Gap Rock light dues, which would have been thus kept separate from general revenue, and the recent discussion and the exercise of pressure to make the Go- vernment keep its word would have been saved. So much for the importance of adequate publication of Bills. As to the by-laws passed by the Sanitary Board, which have to be approved by the Legisla
tive
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Council before becoming operative, Was suggested that the unofficial
PUBLIC COMPANIES AND NEW ISSLES OF CAPITAL.
[May 6, 1897
the case with several of our local companies, but in the case of a company in difficulties no one is likely to subscribe additional capital voluntarily unless on terms which will secure to him the advantages expected to accrue from such additional capital; in other words, a shareholder willing to subscribe for the protection of his own interest might not unreasonably object to being called upon to share the advantages equally with his fellow shareholders who decline to subscribe, In such cases the difficulty may be overcome by reducing the existing capital by the same amount as the new capital to be proposed issued. A simple sum in arithmetic will show that the relative interests of the subscribers of the new capital will then be increased in proportion to their It is said a coach and four can be driven increased risk, whereas without such reduc- This tion their interest remains the same in through any Act of Parliament. operation has been performed perhaps more
as that of the shareholders who do not frequently in connection with the Public Com: proportion to the amount of their investment panies Acts than any other, more especially subscribe. For instance, let it be assumed in connection with reconstruction schemes. that a company exists with a capital of A fundamental principle of Limited Com- $2,000 divided into ten shares of $200 each and that it is found necessary pany law is that the liability of shareholders is limited to the amount of their shares, and by reason of the loss of part of consequently when the full amount of the the original capital to raise another $1,000,- shares has been paid up the shareholder which is done by the issue of ten additional imagines that he is safe from further calls. shares of $100 each, without any writing This assumed safety, however, can be down of the old capital; if five of the share- destroyed by a reconstruction scheme under holders stand out and the new shares are which the assets of the old company are taken up by the other five at the rate of two sold to a new company, the consideration each the latter will be in no better position being partially paid shares in the new com- than the former except that having invested pany to be distributed pro rata amongst the twice the amount they will be entitled to shareholders in the old company, who thus twice the dividend, if there should ever be a dividend; whereas if the original capital find themselves in the position of either
were written down by $1,000 the five sub- having to accept a further liability or to sacrifice their interest altogether by refusing scribers for the new shares would each to take up the new shares. Reconstruction have an interest of three-twentieths in schemes of this kind no doubt afford a ready the concern and the five non-subscribers means of raising additional capital when it for the new shares would have their is required, and if the majority of the share-interest (originally one tenth) reduced holders approve of the operation it may be taken as evidence of their belief in the bona fide and promising character of the enter prise. Nevertheless such schemes should be carefully scrutinised by the courts before which they come for approval, for they must almost inevitably bear hardly on a certain section of the shareholders to whom the new liability will come as an incon- venience, people, for instance, of small incomes who have invested their savings in a certain enterprise and have not the means of paying further calls, or people who, having retired from "business and being dependent upon the returns derived from investments, are not prepared to sink addi- tional money in enterprises of a speculative character. The interests of shareholders of this class
at
deserve consideration the hands of the courts, and none the less because the same reasons that render it inconvenient for them to make further contributions to the capital of the company would also prevent them from entering on a costly law suit to oppose the scheme.
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On the other hand, where an enterprise suffers from want of additional capital or may even be in danger of being wrecked, and some of the shareholders are prepared to make further contributions to protect their existing interest, it would, seem un- reasonable that the matter should be blocked out of consideration for those who are un willing or unable to put up more money, In such cases the issue of additional capital, either in the form of ordinary or preference shares, presents itself as an alternative In the case of a flourishing scheme. company that simply requires additional capital to extend a lucrative business such shares would be eagerly applied for and might be issued at a premium, as has been
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to one-twentieth. In this way an in- ducement is held out to shareholders to con- tribute the new capital rateably to their ex- isting holdings while at the same time those who cannot do so are still allowed to retain a fair interest in the property, which, under a scheme of reconstruction, they would either have to sacrifice or hold subject to a liability for further calls. In settling the affairs of large companies minute calcula- tions of this kind are not in much favour, or may even be considered absurd; any ad- ditonal capital required is raised by what appear the readiest means at the moment, and the different classes of shares are left to find their own value on the open market, greatly to the profit of those shareholders and operators who are able to make in dependent calculations for themselves and to the loss of those who take it for granted. that what the directors decide must neces sarily be fair and equitable. A new issue of capital is now under consideration in connection with the Punjom Mining Co., and considering the excellent prospects before the Company there will be no diffi- culty in getting it readily subscribed. The only problem before the directors and share- holders is to arrange the issue on equitable terms having regard to the fact that there are absent shareholders who will probably not be prepared to take up their respective allotments.
The second general meeting of the China on the 26th April at the office of the General Flour Mill Co., Limited, was held at Shanghai Agents, Mr. Alex. McLeod presiding and stating that it was hoped to commence work in September next. The report and accounts were adopted and the formal business trans- acted.