CO129-451 - Public Offices - 1918 — Page 396

the Board of Directors' placing the majority outside

the limits of the Order.

The adoption of the amendment proposed would, however, enable such a claim by this or any other Company to be fought with good prospect of success.

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The amendment securing British control in companies whose shareholders are not preponderantly British will check an abuse not uncommon in China the most glaring instance being the Shanghai Life Insurance Company concerning which I reported fully to the Foreign Office

in 1912.

If the

In regard to both amendments and to Article 8 of the Order itself there arises the question of the meaning to be given to the words "resident" and ordinarily resident".

Mr. Skinner Turner and Mr. Mossop agree that a definition would be desirable though difficult. Courts should hold that the former term connotes more physical residence than the latter, the purpose of the provision will be served; but, if a Court should hold the opposite view, a director might spend most of his term of office outside the limits of the Order. Many

Articles of Association do require a director to resign

if he be unable to attend to his duties for a certain portion of the year; but such a provision is not universal. On the other hand the business of a Company owning plantations in the Straits Settlements may render it advisable for the managing director to be absent on visits of inspection for several months in

each year.

With much diffidence I suggest that a note might

be appended to Article 8 of the Order to the effect that a director leaving the limits of this Order for a period exceeding three calendar months shall be deemed to have ceased to be resident, in, the, sense required by this Order. This would at least put upon directors the

onus of showing that longer absences were not intentional.

I have, etc.,

(Signed)

Consul General.

392

onus