CO129-557-9 British protection of companies in China 26-3-1936 - 27-2-1937 — Page 117

3.

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of this Article shall be a ground upon which an order

for winding up the company may be made by the Court" Would it not, it was asked, he possible to maintain

that persons other than British Subjects were exercis-

ing general or substantial control unless the greater

part of the capital and the majority of the voting

shareholders were British ?

4.

An apportunity to test this point in the most

favourable cireumstances arose at Shanghai at this time

in connection with two China Companies: the Finance

Banking Corporation Limited and the Quaranty Under-

writers of China Limited, in which it was possible to

show that every one of the shares, including those nomin-

ally owned by the statutory British directors, were

actually held by an American corporation. A test ca se

was brought against one of the two companies by His

Majesty's Consul-General at Shanghai as Registrar of

Companies, but broke down because he was unable to

satisfy the Magistrate that any person other than a Bri-

tish subject had in fact exercised control of the Com-

pany's business within the meaning of Article 194 of

the Order-in-Council. This case was fully reported

in Sir John Brenan's despatch No. 253 of June 19th

1935 which was copied to the Foreign Office in my

No. 1059 of July 1st, 1955. Sir John Brenan expressed

the view that this case showed that the purpose of the

company legislation contained in the China Order-in-

/Council