109
forwarded with your letter of the 28th August 1911
(33267/11) that the directors of a Shanghai company
should either be British subjects or should file
with the Registrar an acknowledgment by the Court
of their nationality that in any proceedings against
them such Court will enforce the British provisions re-
lating to Shanghai companies in the same way as if such
proceedings were being taken in the Supreme Court
for China. Some such provision
appears to the Board
to be necessary in order to enable the Supreme Court
to enforce the provisions with regard to companies
which are contained in the Hongkong Companies
Ordinance, but it is suggested that it might be
sufficient to require that a majority only of the
directors should be British subjects. The matter is
one, however, on which some provision must be made,
not only on the incorporation of the company but also
to meet any subsequent changes in the directorate.
It can easily be dealt with on the incorporation of
a company by providing that the Registrar shall not
issue a certificate of incorporation until he is satis-
fied on the point. There may be some difficulty in
:
framing a satisfactory provision to meet the case of a
change in the directorate after incorporation, but I am
to suggest that failure to comply with the requirement
might be made a ground on which a winding-up order could
be made or on which the company could be struck off the
Register, unless the requirements were complied with
within some fixed time after notice had been given to
the Company by the Registrar.
A suggestion was also made that all shares in
Shanghai companies should be fully paid up in order to
avoid the difficulty which might be experienced in re-
covering unpaid calls from shareholders who are not
British subjects. This might be effected by providing
that all shares should be fully paid up within a certain
fixed time after allotment, and that in the event of the
shares not being so paid up they should be forfeited.
At the expiration of the period allowed for payment the
directors might be required under a penalty to forward
to the Registrar at Shanghai a return signed by the com-
pany's auditors showing details of the amounts received
and the shares forfeited.
If any such provision is made for requiring that
the shares of Shanghai companies must be fully paid up,
it
framing