CO129-437 - Public Offices - 1916 — Page 163

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Enclosure 3 in No. 1.

Extract from the "China Mail" of February 2, 1915.

OPIUM COMPANY'S AFFAIRS: THE WINDING-UP PETITION.

IN the Supreme Court to-day before the Chief Justice the hearing was commenced of a petition presented by shareholders of the Yu Hing Company (Limited), a wealthy Hong Kong opium firm, asking that an order he made that the company be wound up. In the petition allegations of fraud and misappropriation of funds were made against two of the directors, and argument upon the question of whether the court could regard these allegations occupied the court on Thursday and Friday and part of yesterday, when the Chief Justice decided that they are admissible. The hearing of the petition is expected to last three weeks,

The petition was filed by Sun Fat Shan, a merchant residing in China and a shareholder in the company, and was supported by a number of shareholders. The respondent was the Yu Hing Company (Limited), and notice of opposition was also filed by Lee Hyson, Ma Chee Lung and a number of shareholders who claimed to represent nearly half the total share capital of the company.

Mr. Duncan McNeill (Shanghai) and Mr. F. C. Jenkin appeared for the petitioners on the instructions of Mr. Crewe (Messrs. Hastings and Hastings); and Mr. C. G. Alabaster, and Mr. Eldon Potter (instructed by Mr. Beavis of Messts. Wilkinson and Grist) for the respondent company. Mr. Potter also represented Lee Hysou and Ma Chee Lung, the directors against whom the allegations are made.

Mr. Alabaster informed his Lordship this morning that since the issue of the new advertisement giving notice of the petition four further shareholders, holding eighty shares, had given notice to oppose the petition; and he now represented the holders of 1,030 shares which was more than half the shares of the company.

Mr. McNeill opened the case for the petitioners, and devoted the whole of the hearing to directing his Lordship's attention to the affidavits and declarations. Dealing with petitioners allegation that the minute books of the company had been faked by certain directors entering minutes of meetings of the company which he submitted were never held, he said that all the declarations filed would be supported by the evidence of witnesses who could be cross-examined. Certain of the petitioning directors (whose names he mentioned) had filed declarations to the effect that since the incorporation of company no statutory meetings of shareholders were ever held, nor was any report ever filed with the Registrar of Companies as required by law.

Case proceeding.

the

Enclosure 4 in No. 1.

Memorandum of Agreement.

MEMORANDUM of Agreement made the 1st day of October, 1915, between the companies, firms, and persons whose names appear at the end under the heading The parties of the first part" of the one part, and his Excellency Tsai Nai Huang, the special envoy appointed by the Government of the Republic of China by presidential mandate, dated the 30th April, 1915, for the prohibition of the sale of native opium in the provinces of Kiangsu, Kiangsi, and Kwangtung (hereinafter called

the envoy") of the other part, whereby it is agreed as follows:—

L

1. The parties hereto of the first part shall sell and the envoy snall purchase 1,200 chests of certificated opium of which 806 shall be chests belonging to the parties hereto of the first part (as hereinafter defined), or held by them or some of them for sale on account of others, as set out opposite the signatures to this agreement of the parties hereto of the first part, and 394 chests shall be chests obtained by the parties hereto of the first part from Shanghai.

2. All opium sold to the envoy under this agreement shall have been certified by the Indian Government for export to China.

All opium purchased under this agreement shall be sold or disposed of by the envoy for consumption in Kwangtung, and no opium shall be shipped to Kiangen or Kiangsi,

>

3. The envoy shall pay

for all opium, purchase on delivery in the Hong Kong notes of a British bank carrying on business in Hong Kong, at the following prices

For Malwa opium (uld and/or new)

Guzerat Malwa

+

11

"

Patna

Benares

"

11

Dollars, per picul 9,300 9,110

per chest 9,150

-

8,950

4. All payments for opium from Shangbai shall be made in taels and the prices set out in clause 3 shall be converted into taels at the rate of 79 taels for each 100 dollars Hong Kong currency, and payment made accordingly, and drafts shall be drawn on Hong Kong against documents in respect of each shipment from Shanghai, and such drafts shall be met by the envoy at the above rate of exchange. Non-duty paid opium from Shanghai shall be shipped to Hong Kong, and duty paid opium shall be shipped to Canton.

4 A. If any chest of Malwa opium or of Patna or Benares opium shall, owing to circumstances over which the parties hereto of the first part have no control, contain less than the normal quantity of opium, whether cakes or balls (as the case may be) delivery shall nevertheless be taken by the envoy, but the price shall be propor- tionately diminished.

5. The weight allowances given to Chinese purchasers in respect of all Malwa opium as specified in clause 8 of the agreement between the parties hereto of the first part of the 8th July, 1913, shall be allowed to the envoy in respect of all opium pur- chased which is Malwa opium, but such Malwa opium must be weighed within two months from the 1st October, 1915.

6. The envoy shall take delivery without fail of not less than thirty chests of all opium purchased under this agreement during the month of October 1915, and of not less than thirty-five chests during November 1915, and shall thereafter without fail take delivery each month commencing in December 1915 of not less than one-sixteenth of the balance of all opium purchased. If the envoy shall take delivery of any monthly quantity or any portion thereof within thirty days after any month the parties hereto of the first part shall be entitled to sell such opium either by public auction or private contract, and the envoy shall pay to the parties hereto of the first part all losses, damages, costs, charges and expenses incurred or sustained by them.

7. The envoy shall, in respect of all opium, purchased under this agreement, pay to Messrs. David Sassoon and Co. (Limited), for each chest of opium taken delivery of by him the sum of 3,500 Mexican dollars, in accordance with the envoy and the Shanghai combine, dated the 1st May, 1915, in addition to the price for such chest as herein before provided.

8, All payments to be made by the envoy for all opium purchased shall be made to Messre. David Sassoon and Co. (Limited).

9. As security for the performance by the envoy of his obligations under this agreement the envoy shall deposit with Messrs. David Sassoon and Co. (Limited), on behalf of the parties hereto of the first part the sum of 500,000 dollars in the Hong Kong notes of a British bank carrying on business in Hong Kong. Such deposit shall be paid without fail as to 250,000 dollars within three days after the date of this agreement, and as to the balance on or before the 31st October, 1915.

10. Messrs David Sassoon and Co. (Limited) shall deposit the said sum of 500,000 dollars in the Hong Kong and Shanghai Banking Corporation on fixed deposit. Subject to the provisions of clause 12 hereof the envoy shall be entitled to all interest allowed by the bank in respect of the deposit.

11. After the envoy has taken delivery of all opium purchased except the last 100 chests, the parties hereto of the first part shall, if no claim shall exist against the envoy in respect of all opium purchased or any part thereof, and subject to any operation of clause 12, refund to him out of the deposit on the clearance of each of the last 100 chests the sum of 5,000 dollars.

12. The said sum of 500,000 dollars deposited, and all interest accrued or accruing thereon, shall be held by the parties hereto of the first part as security for the performance by the envoy of his obligations in respect of all opium purchased. If any claim shall exist against the envoy by reason of his failure to perform any obligation of his in respect of all opium purchased, the parties hereto of the first part shall be entitled, at the expiration of eighteen months from the date hereof, without notice to the envoy to satisfy such claim out of the said sum of 500,000 dollars and all interest accrued or accruing thereon, but the envoy shall remain liable to pay the balance of any such claim to the parties hereto of the first part.