HONG KONG LEGISLATIVE COUNCIL.
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in connection with the foundation of the Telephone Company of which he was a promoter and is the managing director, and I should like to record that the Government representatives in the present negotiations with Mr. Taggart have again met the same high qualities of vision and breadth of judgment, to which testimony is borne by the success of the Company and the service it has rendered to the Colony.
THE COLONIAL SECRETARY seconded, and the Bill was read a first time.
Objects and Reasons.
The "Objects and Reasons" for the Bill were stated as follows:-
1. The terms of the concession granted to the Hong Kong Telephone Company Limited are contained in the Telephone Ordinance, No. 9 of 1925, as amended by the Telephone Amendment Ordinances, No. 9 of 1930 and No. 27 of 1933.
2. Under these Ordinances the company's dividend was restricted to 12 per cent. plus half of profits up to a further 6 per cent. the other half going to reduce subscription rates and in no case was the dividend payable to shareholders to exceed 15 per cent. (See Ordinance No. 9 of 1925, s. 36). Thus one half of the profits between 12 per cent. and 18 per cent. and all profits above 18 per cent. was to be devoted to reducing the rates payable by the subscribers.
3. The Company's directors have argued, in discussions with the Government's Financial Advisers during recent months, that the absolute limit of a 15 per cent. dividend is inequitable because the high rate of profits which the Company has been able to earn has been due largely to its efficiency and partly to the profits on the line to Canton which was not in existence when the original arrangement was made.
4. A reasonable objection to an absolute maximum is that it gives the company no incentive to earn profits by greater efficiency and economy after that maximum is reached.
5. Moreover the existing subscription rates are regarded as reasonably low and further contribution to the public revenue by way of royalty and a contribution of certain free lines for Government purposes has been considered a reasonable basis for settlement in existing circumstances.
6. The proposed amendments are shown in greater detail in the attached Table of Correspondence.
7. The Bill is to be introduced as a Government measure; but its terms have been agreed to by the directors of the company.
ADJOURNMENT.
H.E. THE GOVERNOR.—Council stands adjourned sine die.
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