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For your private information only, the shareholders of the Companies are largely Chinese citizens resident in China and in most of the Companies they hold a pred_minant number of the shares. For instance, in the case of one Company,
90% of the shares are owned by Chinese, and in others the percentage ranges frọm 15, to over 50%
The Registrar of Companies in 1946 gave permission to all the Companies to re-open their Share Registers in hanghai, and a large number of shares have been transferred on those Registers since that date. Stepa are now being taken by the Companies to keep their Principal Registers at their Registered Offices in Hongkong pursuant to the provisions of the Hongkong Ordinance and to maintain Branch Registers here for the convenience of their shareholders resident here. The prescribed procedure in this connection has already been comp cted by most of the Companies concerned.
The difficulty which has now arisen arises out of the new inancial and economic emergency measures which were promul- gated by the Chinese Goverment on the 19th August 1948. An En lish translation of the Chinese text of Article 4 of the "Regulations Governing the Registration and Control of Foreign Exchange Assets held broad by Nationals of the Republia of China" which is believed to be a correct translation reads follows:-
"Article 4.
"Foreign Exchange assets" used in these Regulations refer to current and fixed deposits abroad, foreign currencies, gold ingots and bars held abroad, and all rights and benefits arising from payments derived or derivable abroad, including foreign currency securities of any foreign Government or the Chinese Government, stocks and shares, bonds and treasury notes, land title deeds, in urance policies, annuities, forward payments collectable, advance payments in buying and selling, margin deposits in security transactions as well as all negotiable instruments. "
with
It is our opinion that the above Article of the Fegula- tions is intended to cover (inter alia) shares of a foreign Company operating and carrying on its business abroad and its assets abroad but not shares of a foreign Company whose business is carried on exclusively in china and has its
properties and assets here.
It has come to our knowledge confidentially that on the 17th instant the Authorities in control here issued orders to all Chinese Banks to surrender all their Foreign Exchange Assets to the Central Bank of China, including shares of all Companies whose capital is expressed to be in a foreign currency. We also understand that this order will be extended to all Chinese concerns other than Banks, for instance Insurance and Chipping Companies, etc., and eventually to in ividual shareholders. It will therefore readily be scen that the
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