112211-1927-Supplementary-Bills-read-a-first-time--Jesuit-Order-Incorporation-General-Loan-and-Inscribed-Stock-Amendment-Medical-Registration-Amendment-Watchmen — Page 3

C.S.O. 2893/13.

562

[No. 26 :--6,10.27.—1.}

A BILL

Short title.

Ordinance No. 7 of 1913.

Cesser of sinking fund

contributions.

INTITULED

An Ordinance to amend the General Loan and

Inscribed Stock Ordinance, 1913.

BE it enacted by the Governor of Hong Kong, with the advice and consent of the Legislative Council thereof, as follows:-

1. This Ordinance may be cited as the General Loan and Inscribed Stock Amendment Ordinance, 1927, and shall be read as one with the Geucral Loan and Inscribed Stock Ordinance, 1913, hereinafter call the principal Ordinance.

2. Notwithstanding anything to the contrary contained in the principal Ordinance, if at any time the trustees of the sinking fund of any loan issued or to be issued under the provisions of the said Ordinance (other than a dehen- ture loan redeemable by annual drawings or by purchase in the market) are satisfied that the value of the fund will be sufficient with further accumulations of interest but without further payments of contributions to enable the loan to be redeemed out of the proceeds of the sinking fund when the same shall fall due to be redeemed, the Governor may with the approval of the Secretary of State suspend further payments of contributions to the said sinking fund: Provided always that contributions to the sinking fund shall be recommenced if the trustees shall at any time inform the Governor that it is necessary.

Objects and Reasons,

1. This Ordinance will amend the General Loan and Inscribed Stock Ordinance, 1913, so as to render it possible to discontinue contributions to the sinking fund of any particular loan issued under the provisions of that Ordinance when the sinking fund has become potentially full, i.e., when it is clear that the value of the fund, with further accumulations of interest, will be sufficient to cuable the lean to be redeemed at the proper time. It is obviously unnecessary to continue contributing to the sinking fund in such a case.

2. While it is obviously necessary to continue con- tributions to a sinking fund after the fund has become potentially full, it may be desirable to continue the con- tributious. Where a loan is redeemable on a fixed date without option of earlier redemption, it is clearly advan- tageous to discontinue contributions so soon as the fund is potentially full. Where, however, as more usually happens, the Government has the option of earlier redemp- tion the question of whether it would be advantageous to continue the contributions turns mainly upon a comparison between the rate of interest borne by the loan and the rate of interest currently obtainable on the class of invest- ments composing the sinking fund. If the former is higher, it would be better to let the fund accumulate aud pay off the lean so soon as possible. If on the other hand it is lower, the more profitable course is to discontinue the contributions as soon as the fund is potentially full.

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