PUBLIC RECORD OFFICE
Reference ---
TIITTIC.O. 882
8
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH---NOT TO
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clause was different, but in both cases no member could become entitled to anything except on the ground that he had procured business for the Company, and the pay- ment seems to have been promised and provided, therefor, subject only to there being profits made by the Company out of which such payments could be made. In short, the payment was a return or trade commission for services rendered, and not a compensation for, or profit of, capital invested.
In the Company's accounts the payment has been treated as a working expense Facts and not as a profit, and the sums payable have been for some 30 years set aside before against it. arriving at the sum divisible for depreciation, reserve funds, and dividend. The practice of the Company has, therefore, been against the proposed adjustment.
In the report, dated 8th February, 1872, for the half-year ending 31st Decem- ber, 1871, there is this reference :-
"
payment of arrears due to contributory shareholders for three half-years, namely, June, 1870, December, 1870, and June, 1871— $2,232.67; for the future, however, each half-year will bear its own proportion of payment under Clause 72 of the Articles of Association."
In following reports there are references to the same matter:-
"30th June, 1872. estimated net profits for the period are $33,060.91, subject, however, to the payment of $6,061.50 interest from the 1st January to the 30th June at 9 per cent. per annum on preference shares, and to the pay- ment of a sum estimated at $2,600, due to contributory shareholders under Clause 72 of the Articles of Association, leaving $24,399.41 available for dividend."
"15th February, 1873. the net profit for the above period, after making allowance for charges, including depreciation and payments under Clauses 68 and 72, amounts to... &c."
This phrase is in effect repeated in the reports for the half-year ending 30th June, 1873, but in the next the ending is:—
* 31st December, 1873 .
After making allowance for all necessary payments there remains". $34,754.11 at your disposal, subject only to pay-
ments under Clause 68 of the Articles of Association."
For "30th June, 1874 . "the amount due under "Clause 72" is mentioned
as having been deducted; also in that of the 31st December, 1874. In that of the 30th June, 1875, there is no separate mention of the sum; it was included in the allowance for "all necessary payments," and not since that time has this pay- ment been separately referred to in the reports, and recently the formula has
been:-
sums.
"The net amount for the half-year available for distribution is... &c."
It is clear that the ordinary shareholder has never had any benefit from these Further
It can hardly be contended that the payments made to aiding members argument. have not been fully adjusted from year to year. If they have, such aiding members can have no claim to have the sums they have already received, now capitalized and paid again to them as ordinary shareholders. If they have not, any claims would increase the liabilities of the Company.
The Secretary of the Company has informed one of the writers that in practice these payments have been based primarily on the amount of the bills for work done by the Company preferred against the aiding members; that the payments have been so far considered in detail so that where any particular transaction had resulted in a loss to the Company, no allowance was made in respect thereof; that there has been no attempt to proportion the payment to the profit made by the Company. In effect, therefore, it seems to be clear that the payments have been a discount on bills rendered, provided no loss had occurred on the work, and then the discovat on that transaction or item only would not be allowed.
$9693r