CO129-557-9 British protection of companies in China 26-3-1936 - 27-2-1937 — Page 38

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by at least two-thirds of those persons with authority

to sign on behalf of the company, being personnel of

branches or agencies in China. The capital must be

effectively owned, up to 35 per cent at the least, by

British subjects".

It is felt that it is not possible to place any

hard and fast restrictions as to nationality on the

shareholding of public companies, but in practice this

might not matter, as those organisations which are mainly

concerned are private companies.

The shareholding of private companies is

already restricted by law, the number of members being

limited to fifty. It is therefore possible to insist

that at least a majority of the shareholders and the

greater part of the capital of such companies operating

in China should be British.

It is proposed that Article 194 of the Order in

Council dealing with the control of China companies

should be repealed and replaced by an Article following

the precedent already established by Article 200 on the

subject of companies limited by guarantee. This should

lay down the principle that no British company would be

allowed to operate in China without the consent of the

Ambassador, this only being given subject to certain

conditions. A requirement would be enforced by the

usual Penal Clause, and the operation of a company without

it would be aground for compulsory winding-up by the Court.

A difficult question is raised by companies

formed by persons of Chinese race, some of whom might claim

to