Directory_and_Chronicle_1905 — Page 478

398 REVISED REGULATIONS FOR THE CONSTRUCTION OF RAILWAYS IN CHINA

Chinese, undertake the construction of a railway, they must carefully observe these regulations, which must on no pretext be disobeyed.

VI.—In the raising of capital a Chinese company should take care to see that the majority of the shares are held by Chinese subjects, and if foreign financial assistance is sought, then the number of shares held by foreigners must not exceed the number owned by Chinese. When the application is presented, the exact number of shares to be allotted to foreigners must be clearly stated, and when foreigu share capital has been subscribed, it will not be permissible to also borrow foreign capital. This prohibition is to prevent deception and to insure security. Should it transpire that à concession has been obtained by fraud, such concession will be cancelled on discovery of the facts.

VII.-It being only just that Chinese merchants should be allowed to partici- pate in a railway enterprise for which a foreign company shall have been granted a concession in any province, it is required that in future a foreign company which has been granted a railway concession shall set aside thirty per cent. of the capital stock for subscription by Chinese, who shall have the right of purchasing the same at any time at the original price.

VIII. The local authorities must give equal protection, whether it be to a Chinese company assisted by foreign capital or a foreign company assisted by Chinese capital; but the said local authorities must not interfere with the manage- ment of the company's affairs. Should the company incur losses the matter must be dealt with in accordance with the laws of China, but the Chinese Government will not indemnify the company.

IX. If any Chinese obtain a concession and furnish personally the capital for the construction of the railway, amounting to more than 500,000 taels, the Board of Com- merce will on the successful completion of the railway memorialise the Throne in his behalf for the conferment of a reward as an encouragement to others; should he raise from others Chinese capital amounting to more than 500,000 taels, then on completion of the work the Board of Commerce will ask the Imperial sanction for the confer ment of rewards in accordance with the Articles of the Regulations relating to rewards.

X.-When application is made by Chinese for permission to construct a railway they must submit an estimate of the cost of the undertaking, so that the number and value of the shares may be determinel. If after the commence nent of the work it is found that the cost will exceed the original estimate, and additional share capital cannot be obtained, than the said company may raise a foreign loan on the security of the plant and buildings, but land must not be mortgaged. Such loan, however, should not exceed thirty per cent. of the original estimated capital, and the Board of Commerce should be duly informed of the intention to obtain foreign capital, it being however expressly understood that the said Chinese Company will borrow and repay, and that the Imperial Government assumes no responsibility whatever in the matter.

XI.-If upon the completion of the railway for which authority has been granted & Company, whose shares are exclusively owned by Chinese, desires to construct another line, and having exhausted the original capital desires to obtain foreign capital for this purpose, it will be necessary to petition the Board of Commerce for its sanction and await its decision.

XII. Should any Chinese who apply for a railway concession enter into a secret contract with foreign merchants to borrow capital on the security of the rail- way, and the concession be obtained under false representations or, if after the construction of the railway the concession be clandestinely sold to others, then on these circumstances becoming known either to the Board of Commerce or the Viceroy or Governor of a province, an investigation will be held and if the allegations are proved the railway will be confiscated, the concession cancelled, and the offenders punished according to the gravity of the offence.

XIII.-When a concession has been granted by the Board of Commerce, whether it be to Chinese or foreigners, the concessionaires must within six months from the

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UNIVERSITY OF MICHIGAN