CO129-613-5 Transfer of registration of China Companies from the United Kingdom to Hong Kong 25-2-1945 - 4-12-1945 — Page 11

13.506 (51/800/48)

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Foreign Office, ib. 798. Dory Ton, In tra

CONFIDENTIAL

Sir,

BRITISH RABASSY

KANKTIG

1st patober, 1948.

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I have received and duly considered your despatch No. 329 of the 21st September enclosing a copy of a letter from the Acting Chairman of the Shares Sub-Committee of the British Chamber of Commerce at Shanghai on the subject of the possible application in respect of the shares of various ex-China comanies now registered at Hong Teng of a recent order by the competent authorities at Shanghai for the surrender of "foreign exchange assets" by Chinose nationals resident in Chim tazed upon the recent currenty regulations.

2. The request for official intervention would appear to be largely inspired by the apprehension that the Chinese Government may by this menus find itself in a particularly favourable position to aomire a controlling interest in more concerns in which the majority of shares are held by Chinese citisem resident in China without having to inour the expenditure of foreign currency, which would be necessary if they sought to soquire controlling internet by purchase on the open market. I doubt, however, whether this contingency, undesirable as it may hơ, constitutes by itself a sufficient came for official inter- vention.

3. Moreover even if these apprehensions are likely to prove justified by events, which would in any casɛ seer open to question, there would appear to be some degree of inconsistency in the plea presented by the Shares Sub-Cariittœe. In the first place it is at

80 to 90 per lens' open to question whether a concern with as migh cent of its capital hold by Chinese nationals resident in Chim is properly entitled toʻregari itself as representative of British interests inasmuch as the praninderant proportion of its profits are

It is therefore also open #vontually distributed to Chinese in China, to argument that it is equally to the interest of China that such con- cerns should continue to operate profitably under the expert direction of British business agterprise.

Purkher-

it is also open to question as to what extent the fact that the companies concerned actually operate in China is a sufficient argument to out-weigh the uncontestable fact that the companies are registered abroad, for which purpose their head offices are declared, at least nominally, as being established in Aritish territory, gore it is undeniable that the aspital has been converted into Nạng Kong dollars or pounds sterling in terms of which the shares mist accordingly b. inscribed, As mich conversion was carriɛd cut, on the Sub-Cowritte own admission, for the companies' operational convenienos, it would inconsistent to pretend that shere it wilted the companies" purpose they should be elassed as Chinese murrency holdings. In this connection it is presumed that such cowaries obtained "certificates of admission from

The Acting Consul-Geæral,

British Consulate-General,

Shanghai.

/the

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