1935-04-12 — Page 11

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PROFITS AND DIVIDENDS

Lecture At The University

The life tenant is then not entitled to any apportionment of the pro- ceeds in

HONG KONG DAILY PRESS, FRIDAY, APRIL 12, 1935,

THE KIDDIES DAY

Shanghai Function

[Special to the "Hong Kong Dally PressTM (Copyright.)].

Mr. T. A. Martin, the well- known local accountant, gave a very interesting talk at the Uni-

respect of the accruing versity on Monday night, his sub-dividend and the whole proceeds the Ject being "Profits and Dividends." We give the second instalment of the lecture.

Shangbai, April 5,

Great interest was aroused in Chinese Children's Festival are Capital. Where a Company held yesterday under the joint has power, either to distribute pro-, auspices of the City Government fits as dividend or convert them in of Greater Shanghai, the. Bureaux to Capital the decision of the Com- or Social Affairs, Public Health. "pany is binding on everyone inter- Public Safety, the local · Child Association, and the ested and what is paid by the Com- Welfare pany as dividend goes to the ten- National Child Welfare Association I must tell you also that a divid-. end does not become a debt. duent for life and what is paid to of China.

Addressing the gathering. Mr. Martin sald:-

DIVIDEND

by the Company for which a share- . holder can que, until it is declar- ed, but once it is declared the

.Statute of Limitations immediate

ly begins to run, and as the debt Is in the nature of a specialty debt, It does not become barred until 20 years have elapsed. The share holder is rather unfortunately placed as regards this dividend, which he has omitted to collect, if the Company goes into liquida- tion before he claims it, as in that

event he is a deferred creditor and can only recover after other lia- Many bilities have been paid. years ago, it was not unusual for Directors to be given power in the Articles "to" forfeit dividends if unclalried within a period of three years, but as this power was looked upon with disfavour where the. shares were dealt with in the open market, such provision is rarely met with now and, subject to the Articles in each particular oase, dividends are only forfeitable at the expiration of 20 years. A de- cision on the subject of forfeiture may interest you-it concerned shares registered in joint names-- The Company had power to for- fela by giving notice to the person whose name appeared first on the register. But the Company knew unofficially that the first holder was dead, and the second holder being resident abroad was not aware that the forfeiture had ta- ken, place. It was held that

the Company

account must for the dividends So treated. As I have already indicated, fre- quently it is found necessary for a share to be registered in two, or more names. Where this is the case Table "A" states that any one of such joint holders may give a receipt for the divdend paid on. the share.

The Articles generally provide how the dividend is to be paid, Table "A" says it may be paid by cheque or warrant sent through the post to the registered address of the Member. In such a case

the posting amounts to payment and. if the warrant or cheque is lost, the shareholder's remedy is.

the lost war upon rant or cheque. Unless the Articles definitely state other wise, and Table "" is barred,

.sue

a Company must pay its dividends in cash. Frequently a Company takes power in its regulations to permit of dividends being paid by the distribution of specifc assets. A Company also makes provision for the fact that where some Members do not collect their dividends im mediately they become payable no interest shall be paid on same whilst the money is lying with the Company. Table A states this also.

WHEN SHARES CHANGE HANDS When shares change hands in the market near dividend time, the price is sometimes fixed at "ex diy" that is to say: the seller is..to receive the dividend. In the ordinary way, shares are quoted "com div" that is the price includes the dividend. It may be noted in this connection that a iransfer of shares, after the dividend is de- clared, does not as against the Com- pany. carry the dividend- even where the transferee has expressly bought cum div, but as between a buyer and seller of shares the buyer is entitled to all dividenda❘ declared after the date of the con- tract for sale, unless otherwise ar- ranged.

Bame of you may be interested in an Estate, having settled shares, either as life tenants (here I meat having a life interest in person- alty) or as remaindermen or re versioners, Assaming that part of the income producing property consists of shares in public com- panies then the dividends usually go to the life tenant but, in the absence of express provision, this is not always the case-To give

the shareholder as capital or ap- propriated as an increase of capital in the concern benefits the re- mainderman, Where a Company capitalises its profits by the issue of bonus shares then the tenant for life is unlucky. But where the Company gives an absolute option to take the dividend either in cash or in new shares, the shares so is- sued go to the tenant for life, un less the Company's intention is notwithstanding the option that, the dividend shall be applied in taking up new shares, but only to the extent to which they are paid up by the amount of dividend. I might also mention that a trustee

At the Moon Theatre on Rue Eugene Bard, about 1,800 children from various local schools were gathered, led by their teachers and parents. They were shown various types of educational and instruc- tive movies, including "The Road to Happiness", The Henry Ford Trade School", Farin. Progress" and "Indian Lure't, all of which covered a wide field of activities their of children in America, vocational training and schooling. the life of Indian children, and various

CROSSWORD PUZZLE

1:32

Note:--Figures in parentheses indicate number of letters in the words required.

Across

1. Poison (5).

6. A country girl opens the dance

(8).

9. This animal might be part hen

..(7)

10. Kind of thread (8).

11. Instigated in true electoral

fashion (5) 12 Study a fish to cheer up (7).

prised" (5). 14. Being taken thus one is sur

Only a small drink whichever way you look at it (3). 16. "Neck, colloquially (5). 17. A rolling motion of maternal

sound (6).

forms of educational 18. training which aim at making

and children independent scious of their own position.

2014-

In the afternoon, "many of the

6. A member of the Church mili-

tant) (8)...

13. It is not pleasant to be given

this footwear (5),

17, Rub hard the underwood (8).

18. Town in Surrey associated

with → (5),

10. these (5).

20. Country of Europe (5). 11. Makes asinine noises (5). 22 Jade, perhaps, but no

ment! (5):

orna-

The following is the sol ution of yesterday's_puzzle:-

Arros-1, Nohow: 4, Quintuple; 9, Corrode; 10, Kicking; 11, Em-

Vitriol; 2, Barnowl; 22 Dog- whip; 23, Bumblebee; 94, Dirty,

holding shares cannot exercise an children were taken to the pubile 19. Of singular help to the winter brace; 19; Strong;. 15, Unclad: 17,

option to take cash or shares at his discretion, but is bound to take the greatest benefit offered by the Company.

STAMP DUTY

So that the necessary stamp¦ duty on transfers of shares may be collected and the duty is 20 cents for every $100 or part thereof of the market value on day of stamping-dividends received by a former Member may not be handed over until the shares have been act- ually transferred into the name of the person claiming the dividend. The duty on a dividend warrant is 10 cents

.' *

- Having. Lescribed dividends as the division of the profits to trad- ing amongst Members, I would like to give you some idea of the diff- bules that have arisen in an en- deavour to define that apparently simple word.

PROFITS

Definitions vary materially and the word "Profits" is no exception. The man of business, the account-' ant the lawyer, the economist and, if ever we have an income tax in Hong Kong the Commissioner would all supply different de- finitions and each would be cor- rest according to the definition he had taken. As perhaps you know Marshall in his "Economics of In- dustry" says that when a man is

aportaman's progress (3). 21. Tree (5).

23. The substance of a mural over .. Jay (7).

gardens in Frenchtown and in the Settlement by their teachers and parents, by special arrangement with the park commissioners of 84. These assist the climber's pro

both areas.

· BROADCAST ABRANGEMENTS

the

At the Chapel Benevolent Home on Liu Yin Road, a celebration was held at 10 am. for about 500 children, under the joint auspices of the Chapel Benevolent Hame, the Yangtzepoo Nursery. Tangshan Road Child Welfare Home, and the National Chlid Welfare Association of China. Mr. Andrew V. Wu, formerly general secretary of the association, spoke on the history of the children's festival.

A special evening programme was arranged with the Shanghai broadcasting station of the Minis- try of Communications last night. to arouse public interest and to call for support for the child wel- fare activities of the various or- ganizations-

China United Press (by Man).

"BOXER" STUDENTS

Nanking, Apr. 2. The annual examination for the selection of the third batch of students for postgraduate scholar- ships in Britain, offered by the. Board of Trustees for the British Boxer indenmity Refund, menced at Nanking and Pelping simultaneously yesterday.

com-

· 290 candidates in Pelping and 178 in Nanking are taking the examination. After passing a sat- isfactory physical test, they will sit for the writter tests from the 4th to the 6th inst Kuo Min

those of a permanent nature by means of which the business is carried on and which are held for the purpose of earning income, and not for the purpose of sale, such as Land, Buildings, Plant and Ma- chinery, that is they are used over and over again in the process of earning profitę," and they are fre-

engaged in business his Fronts for the year are the excess of his re- ceipts from his business during the year over his outlay for his business, the difference between the value of his stock and plant at the end and at the beginning of the year being taken as part of his receipts or as part of his cutlay, according as there has been an increase or decrease of value. If this definition were given practical application in business, serious difficulties might easily result, because as profits, with particular reference to limited compaules, contemplate the dis- tribution of funds in dividends `to shareholders, the paying out of profits as so defined would in many instances result in the retum of capital to shareholders to the de- triment of creditors-and then as the saying goes the fat would be in the fire. The correct businessquently referred to in terms of FIX- method of ascertaining profits is one of mafor importance affecting as It does shareholders, creditors and very often Directors and re- Executives who may be munerated by way of a percentage on profts. Commercially, profits are regarded as the surplus of cur- a given period rent income for

ver current expenditure after making good any loss-sustained by fixed or floating assets during the period in the process of earning such income. Consideration of this view makes it quite obvious that the resulting figure arrived at will depend to a great extent on the method of valuing the possessions

ed Capital Floating assets, on the other hand, are those in which the business deals, and which are bought for the purpose of sale, and the subsequent stages of their con- veralon into cach, such as stock, book debus, cash, that is they are used once only in earning the pro- fits, and they are often mentioned in terms of "floating" ör,” circulat ing" capital One also hears of the expression "Wasting asseta” These are in the nature of Axed a sets which are gradually consumed or exhausted in the process of earning income, as in the case of a mine.

In arriving at the profits for a of the business such as Land particular period, axed assets are and Buildings, Flant and Ma- valued at the close of the period chinery, Bock in trade, Debat cost less a proper allowance for tors, Investments and so on. permanent shrinkage in value, that

the is depreciation, and depreciatio generally referred to as assets of the business. If all assets is measured in terms of the expect are valued at the figures they are ed effective life to the business of likely to fetch in the event of the each of the fixed assets concerned. business being closed down, the On the other hand boating assets result would in most cases show a are valued at the close of the per- heavy loss. But as the enterprise Jod at cost or

a few examples An investment is may be regarded as a going con- realizable value purchased cum diy after the divid-cern, such drastic procedure is lower. It will be end is declared. Bush dividend neither necessary nor desirable, to value say sto when received forms part of the provided one diferentiates be-ket value Capital of the Estate and will not tween the various assets involved, than cost wou

grouping them for treatment un- takin der two heads fixed ass

go to the tenant for life. A trustee mnds it necessary to sell an invest

wo-tviathan days; „Zosting assets Fixed-aseets are

gress (5).

25. Accumulate a large quantity

(8).

26.

Do this to your opponent if you want to win (7).

This should make a clean sweep (3).

27.

9. Epithet for what Across

sounds like (5).

་

Down.

1. River of Russia (5)

Rats saunter in these eating houses. (1).

2 Only a spot, yet more than a

quarter of a bushel (6).

4. Concerning (6).

5. Young branch --

(5).

6. of this colour, very likely

(6). 7. Sleight of hand" is light to ..morrow, in France (11).

NOW

ON SALE

Down.-1. Nick; 9, Harum-sca rum; 3, Wooer; 4, Quench; 5, Inky; 6, Tacit; 7, Philosopher; S. En gage; 13, Hubbub; 14. Kindle; 16, Aboil; 18. Rigid; 19. Blob; 20, Spr

CONSERVANCY WORK

Nanking, March 28. Mr. Coode, British conservancy expert from the League of Na- for tions, left here yesterday Wusth on the Nauking-Shanghai Raliway to inspect the bydraulic work on the Tai Hu (lake). It is ex- understood that the League Dpert, having completed his mis- sion, will be returning to Geneva shortly- Kun Via

Courvoisi

DODWELL & CO., LTD.

Sole Agents.

Tel: 20098.

Queen's Building.

JUST RECEIVED.

A fresh shipment of Strings for the follorig Instrumentu:

VIOLIN.

VIOLA.

CELLO.

DOUBLE BASS.

BANJO.

UKELELE.

HAWAIIAN GUITAR. MANDOLIN.

We bare Strings for all Instruments

at prices to suit all purses.

TSANG FOOK PIANO & MUSIC CO.,

ICE HOUSE STREET.

Tel. 24648.

DIRECTORY & CHRONICLE

CHINA, JAPAN, MALAYA, STRAITS SETTLEMENTS, BORNEO, SIAM, PHILIPPINES, KOREA, INDO-CHINA, NETHERLANDS INDIA, ETC.

for 1935

PUBLISHED ANNUALLY SINCE, 1862

AN ESSENTIAL REFERENCE BOOK FOR ALL BUSINESSMEN

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