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cannot be prejudiced by the conversion.
Shanghai businessmen
express the opinion that the calling of a large number of
extraordinary meetings by British Companies in order to
convert their capital would be bound to attract the attention
of the Chinese authorities and would in all probability incur
their dissatisfaction as evidencing a lack of confidence in
the Chinese dollar and as indicative of an attitude of which
they disapproved.
7.
Under the China Order in Council, 1925, partly
paid up shares in a China Company are not allowed; and any
shares which are not paid up within three months of allotment
must be forfeited by the Directors.
Thus, what would otherwise
be a major objection to such a method of conversion is satisfactorily
obviated.
8.
It is not suggested that the above method of
conversion would be suitable or equitable in cases where there
are different classes of shareholders, more particularly where
there are preference shares. In such cases it is considered
that meetings of the various classes of shareholders must be
held and their approval obtained by the requisite majorities
as laid down in Section 63 of the Companies Ordinance or in
the equivalent provisions for China Companies. Unless the
suggestion contained in paragraph 10 of this despatch is
preferred, provision would, I am advised, be required whereby
dissentient minorities could apply to the Court in such cases
in similar manner to that laid down in Section 63. Under
Section 63 the Court has power to refuse or grant the variation
but in order to avoid any possible deadlock I suggest that the
Court should be given power to compromise the deadlock and fix
a rate of conversion. In these special cases a prescribed rate
or a formula for ascertaining such a rate would no doubt assist
the Court, but it is suggested that the Court's discretion should
not be unduly fettered.
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