4/
IV.
Stamps on blank transfers to become invalid for registration purposes after a certain period except on payment of a penalty.
12. A tentative proposal of this nature drawn up by the Hon. Mr. Breen giving two alternative forms of the proposal, is annexed (Annexe D). Provision is made for a blank transfer at a nominal fee for hypothecation purposes in the case of approved financial institutions, which would have to be named in the blank transfer.
13. The following criticisms have been made on this proposal :-
(a) Shares would vary somewhat in value according to the dates of the stamps. (b) The approval and disapproval of financial institutions would be a difficult
and invidious task.
(c) Loans by friends would be hampered. Ex hypothesi, hypothecations should not pay transfer duty, but the effect might be that hypothecations to friends would entail transfer duty.
(d) The practice under which an owner leaving the Colony deposits his shares in a bank here with a blank transfer attached, so that he can telegraph out for a loan or to sell the shares, would be interfered with. (But the owner could leave a power of attorney).
(e) Inconvenience would be caused in carrying over arrangements, if the
transfer stamp were just running out.
14. Apparently it was intended that the approved financial institution in such a case should always be able to treat the hypothecation transfer as a sale transfer by adding stamps up to the ad valorem transfer duty. This right would be necessary in order to give the financial institution power to realise its security, but if there were collusion between the financial institution and the owner of the shares the hypothecation transfer could in fact be treated as an ordinary blank sale transfer, but with immunity from the penalty duty. Perhaps, therefore, it would be necessary to provide, under sanction of a fine, that the financial institution (a) should not use the hypothecation transfer as a sale transfer except in bond fide realisation of its security, and (b) that the financial institution should cancel the hypothecation transfer on satisfaction of the particular loan for which it was made. Evasion would still be possible and would be difficult to discover and prove. We would have to rely largely on the financial institution. The Committee does not recom- mend the adoption of this proposal.
1928
V
Late registration fees.
15. Charge late registration fees. This is the proposal of the bill of October, A copy of the bill is annexed (Annexe E). The scale there is :-
17
After 1 month.
.50 per $100
3 months
1.00
6
1
2.50
29
12
5.00
1
71
21
Several of the objections to proposals III and IV apply to this proposal also. Committee does not recommend its adoption.
The
VI.
Increased share contract duty, and abolition of transfer duty.
16. A tentative proposal of this nature, which was drawn up by Mr. Tester, is annexed (Annexe F.) The great objection to it is that the effect on the revenue is too doubtful as we have no information as to the amount collected at present by way of trans- fer duty. The Committee does not recommend the adoption of this proposal, but suggests that the Collector should regularly keep a record of the amount received by way of trans- fer duty in case this proposal is revived.
VII.
Treble duty on blank transfers.
17. Charge treble duty on blank transfers. An objection to this proposal is that it would involve a troublesome system of refunds as all transfers have to be stamped before execution by either party. The Committee does not recommend the adoption of this proposal.
Passing
on of dividends probibited,
Annexe A.
DRAFT SECTION
intended to prevent the passing on of dividends
to subsequent unregistered purchasers.
—(1) No person shall be entitled to claim, directly or indirectly, the pay- ment of any dividend, or of the amount or value of any dividend, on any share on a share register which is by law required to be kept within the Colony. unless (a) such person is the registered owner of the share in question at the time of such claim, or (b) such person was the registered owner of the share in question at some date subsequent to the declaration of the dividend in ques- tion, or (c) such person is entitled to be paid such dividend under a bona fide declaration of trust in favour of a specified person or firm, or otherwise as a bona fide cestui que trust, or (d) such person has bond fide lent money on the security of the share in question and is entitled by the express written terms of the loan agreement to claim such dividend.
(2) No person shall, orally or in writing demand or request, or accept, directly or indirectly, payment of any dividend, or of the amount or value of any dividend, which under the provisions of subsection (1) he is not entitled to claim.
(3) No person shall, directly or indirectly, pay any dividend, or the amount or value of any dividend, on any share on a share register which is by law required to be kept within the Colony, to any other person unless (a) such other person is the registered owner of the share in question, or (b) such other person was the registered owner of the share in question at some date subse- quent to the declaration of the dividend in question, or (c) such other person
42