Sessional_Paper_1929 — Page 205

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THIRD APPENDIX.

MR. J. SCOTT HARSTON'S MINORITY REPORT.

PROPOSED AMENDMENT OF THE STAMP ORDINANCE.

The question submitted to the Committee appointed by His Excellency in Council herein is as follows:-

"To consider the amendment of the Stamp Ordinance with a view to pre- venting evasion of the Stamp Duty on share transactions and of the Estate Duty on shares forming part of the estates of deceased persons".

Though I have agreed to and signed the Report of the Committee recommend- ing the adoption of the proposals therein referred to, namely, to amend the Stamp Ordi-

nance:

(1) So as to make it illegal to pass on dividends to subsequent unregistered

purchasers;

(2) So as to make registration in the name of a deceased person prima facie evidence of ownership by such deceased person for the purpose of Estate Duty and to render the deceased's Estate liable for any contravention of any of the matters the subject of amendment No. 1 above:

I am strongly inclined to the opinion that,

the opinion that, unless some insuperable difficulty exists, and subject to what I have remarked later regarding blank transfers, it would be better to amend the Stamp Ordinance by making it obligatory upon those who purchase shares which are on a Share Register which is required by law to be kept within the Colony to execute the transfers they receive in respect of such purchases within a period not exceeding six weeks from the respective dates fixed for the completion of the respective purchases by the respective contract notes relating thereto.

An amendment of the Stamp Ordinance on these lines would, it seems to me, very largely, if not entirely, prevent the evasion which is the subject of the Committee's en- quiry, since it would, within a reasonable time, earmark the position with regard to the legal ownership of all shares. It would, it is true, have the effect of materially alter- ing the course of business at present adopted in the Colony with regard to blank trans- fers, but personally I do not view that fact as one which can give rise to legitimate complaint.

Under the course of business obtaining in this Colony, a blank transfer may-and frequently does-pass through many hands over a long period of years, with the result that not only does the Government fail to receive the Stamp Duty which I think it may fairly be said it ought to receive, but in addition, the true ownership of the shares can- not be readily ascertained.

This practice is not one which obtains to any large extent in England, and in fact as is shown by the remarks contained on page 129 of "The Law and Customs of the Stock Exchange" by Melsheimer and Gardner :-

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""The Committee of the Stock Exchange will not interfere (except under special circumstances) in any question arising out of the delivery of securities by transfer in blank nor compel a buyer to accept delivery of transfers so executed”.

To my mind, the use of blank transfers should in effect be limited to occasions when the registered, and consequently legal owner of the shares the subject thereof desires to convey an equitable title thereto in favour of some Institution or person, whether by way of pledge of the shares in question as security for a loan thereon, or otherwise.