CO129-557-9 British protection of companies in China 26-3-1936 - 27-2-1937 — Page 75

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COPY.

Hon.Colonial Secretary.

1.

As I pointed out in paragraph 7 of the memorandum the pre- paration of the draft Order in Council amending the China Order in Council, 1925, is a matter which concerns the Foreign Office rather than the Colonial Government and my draft, as stated in the said paragraph, was prepared merely to illustrate the Hong Kong conception of Sir John Brenan's proposals, which had not been crystallised into definite form, and to lay a foundation for the discussion of details.

2.

The Nankin Embassy despatch of the 2nd July 1936 indicates a desire (1) that in the case of private British companies the majority of the shareholders shall be British subjects, (2) that the Ambassador shall have power to withdraw his consent to any British Company operating in China if the required conditions cease to exist and (3) that existing companies should be brought within the net of the revised Article 194 after a period of one year's grace.

3.

With regard to the first point, the revised article 194 in my draft was applicable to all British Companies operating in China, and paragraph (2) thereof was drafted accordingly. As sub- mitted in paragraph 11 of the memorandum I think that it is both impracticable and unnecessary to consider the nationality of the shareholders in an ordinary limited company. If it is desired to make special provision for private companies words to the desired effect can be inserted in paragraph (2) or can form the subject of a new paragraph.

4.

The

As regards the second point, paragraphs (3) and (4) of my draft referred to the Court instead of to the Ambassador because Sir John Brenan's proposals indicated a desire that in the new Article 194 the precedent of Article 200 should be followed. paragraphs in question were based on that Article modified as explained in paragraphs 12 and 13 of the Memorandum. Article 200(4) enables the Court to give relief from forfeitures and penalties. it is desired to reserve this power to the Executive in the new Article 194 as well as to enable the Executive to withdraw, in its discretion, any consent already given, it seems logical that

If