1911-03-17 — Page 12

102.

THE CATHAY TRÜST, LTD.

An ostraordinary mesting of. membersofthe Cathay Trast, Ltd., was hold in the offer of Messrs. J. A. Wattio and Co., genoral managon, on March 7th for

.

the purpose of considering the circumstances of the loan to the Shanghai Stock Exelinge at the time of the Jane settlement, 1910, Over a very large attendance of sharohoblors Mr. David Landale presided, being supported by Masarà. J. A. Wattie, D. McNeill, C. II. MeMichol and H. A. G. Masray, Directors; J. C. Dyer, manager; Loftus E. P. Jones and 1. M. Macleod. In all 450,425 ordinary and preferred shares were representeil,

Mr. Laudalo explained that he had boon asked by Mr. Wattio to take the chair.

The notice calling to meeting having been road, the Chairman

spoke as follows:-

tion at their han ls.

THE HONG KONG

CATHAY TRUST LTD. R. N. Macleo, Esq. Dear Sir,

It became necessary for your Diseturs to call moutings of tho Brokers encomod, to discuss and determine what should be done. this object, and attempts were replies to the various questions Various meetings were held with We bug to set forth below our made to find a practical solution. You raised in yours of 22nd ult. of various difficultios which arose. with regard to the loan made by the Trust to the Stock Exchange." During these negotiatione cer- thin criticisms and suggestions 1. The Trust had ́nivancod wors made contorning the actionof about 4-1. hes prior to the 28th

Jane, the Trust, ndvanead bo- your Directorsin making this loauton the 28th June and the 4th

Those criticisme and sugges tions becanio en widely repeatedly (inclusive) nearly 13 lacs, and known that they could not

to, beforethe Stock Exchange fail, in our opinion, to injure the choque was handed over the Trust Company. We considorol that had made advances, practically all against shares, of about 17-12 they would useossarily affect the luce. At the same time the Trust Company's credit and prejudico the future conduct of the Come had bought sures for cash and pany's business and also further old same forward, to the value of negotiations with the Brokors bocamoimpossible. Besides these considerations your Directers felt that under the circumstances you, as Sharoholders, would wish to hear some report on what had boon dono, and was being

dous, They decided therefore

about 5 lacs.

TELEGRAPH

2. At the time the Stock Ex change chaque was handed over, the Trust Ind nearly 17 ines.in the Bank, and also possessed 31,600 iangle shares.

3. The total value, at making up prices of the June sallement, to call for an independent in- of the uit hold by the "En vestigation to be made on your against the 17 1- Ines referred to, behalf, and for n report on above, was about 33 laen; the the whole circumstances of the same shares would on the. 23rd loan, to be laid before you. Atult. have loan worth about 17 a meeting of the Board of Direc-lacsaccording to the slip rates of tors it was decide to instruct that day.

1

י'

FRIDAY

MARCH 17 1911

1

In

in Shanghai at present, but hood. Much of this was within his was to their credit). Tho com be held by the Company es secur (Mr. Macleod) understood from a own personal knowledge. Before piny's auditors have boon into

ity for the balance of this loo reliable source, what his position boginning his investigations to the position at that time of Messrs... was. He had interviewed Meersaw the Crown Advocato, whom Dojjamin and Potts, and find it paid out of these other securities separately. He found slant Mossrs. tion which might be of assistanco, say, that any payment made by (Loud applause). He thought it Landale, Marshall, and Wattio ho unders'a xt had some informa- much that neither they nor I can ineluiling the brokers' guarantees. Landalo, Marstall and MeMichael He told him what he was about to Messrs. Benjamin and Potts to right that it should be said, and it mado rofits in staros over the do and asked him, if he could, to a client at the settlement was must bo quito clear to them that Juno settlement amounting in all indicate any particular points to duptural and probable con- the offor was do before thero 10thing under Tis. 50,000 which he should specially devoto sequence of the loan having been was any feil suggestion that Tho abaroholders would be struck | his allontion. He made several made. If any payment wore anyone was liable to do any by the feet that there had been a suggestions. When the speaker such a consequence it is also quite thing of the kind. Mr. Wattio those gout emon's profits. Messrs. again saw him, and asked him if extent. Mr. Pirio was admittedly making this offer. In the first great deal of exaggeration about had completed his enquiries ho impossible to say which ortowhat had explained his reasons for the and Co. la llarge accounts he could toll lum the source of his in a stronger position than Messrs. place it provided a practient forces, vel aliment; they had information on two matters of Benjamin and Potts. After-con- means of settling the whol to icesive large sums for sales of a great importance, which inform-sidering all the information this question botyper the com- argonumber of Anglo-lavashures ation he had previously mentioned have been able to collect and pany and the biogrs and others. longing to and paid for by to him. He said ho could not give comparing the foult with the He was also nutious as far as Messrs. Wattie and Co. Blessrs. him the names of his informants facts reported in the cases decided, he could, to protect the company, Walto and Clayton had a one-hd stator that in the caso of the on the point, I consider that the and to place it in a proper position third share each in these. If they to inatters his information was principle cannot bo applied be for several reasons. Mr. Wattie's had not been pail they would lure, possibly wrong, and that house I think the "profits fore interest in the company was and a great many sharos instead, thought on the whole, after there too remotely connects with considerablo. Ho had also intor and the profitamado by themmst speaker had stated his reasons the loan; there are a number of osta in the company a great depend entirely upon what the for asking him, that he might fontingencies on which the con- many of his friends and othors and shares wore taken to be worth disregard what

hadnection between the loan and the besides this thore were other con Tho making up, price of these said. (Applause). It was not payout of these "profits" de- corns which hold shares in the shares at the Juno settlement was his business to criticiso what ponds; the cases extond the company whose management and exactly double the price at which the Crown Advocato had done, principle further then any others intorests were in the hands of they were quoted now, and ne- but it was his business to Lean find, but none of the casos is, Wattic and Co., and as Mr. Wattie cordingly Ir. Wattio's profits explain to them that he had mido authority for applying it here put it he did not want this com Gentlemen-As you have just

might bo stated as anounting to overy ronsonable effort to find out if indeed it could be applied. pauy to lose in any way, a perfect heard from the notice which has

anything from one to three facs, anything against the directcra. Both on the facts and on the law, ly understandable feeling, es ho boon road, this Mooting has boon

and Mr. Clayton's woro at least as He understood that there was eer-Lam of opinion that there is 18 was anxious that no one could say called to hear a Report and con-

large. Ho land soon Mr. Metin information against them, and claim beyond that in respect of that he had in any way pride a sider the circumstances of the Mr. Macleod, of Messrs. Platt,. The lo has now been re- Michel's accounts with the bro- he had done everything to collect Mr: Michael's account.. Company's loan to the Shanghai Teesdale and Macleod, neting induced to approximately Tskars for the Jime Settlement, and that information. He irul got his

moss of it. Thora was just one Stock Exchange at the time of the conjunction with the Company's 1,284,000: against this the Trust also their bank pass-books, and information direct from the people that there were one or-two facts proposal would be that the com- Continuing, Mr. Maelcod said, thing mors. The effect of tho June 10 settlement, Before Auditors, Mr. Matthews (of Messrs holds shares which on the 16th other documents, and he had best able to give it, and he was ho would like to mention in addi-pany would receive shares of the you hour that Roport I will briefly Lowe, Binglism and Matthews), ult. were valued at nearly 51-2, asked them questions on all points glad to say that it entirely dis on to what he had already said. presont market valus, to the tell you what your Directors have and lessrs. G.H. Thompson, with lace, and sundry guarantees, to that occurred to him as suggesting agread with the information he Ho did unto the whole agree amount outstanding of this loan. done in the matter. During the power to agile or more share-talling 10 lacs: against those any evidence in support of aulerstood Mr. Wilkinson hul with lawyers coming to a meeting The company would also have

ngly weeks of the existence of holders to their number, to nako guarantees, seemity for nearly chain. It appeared that it was (Applause.)', this Company a very largo profit the enquiry referred to, and be due le has been put up, while generally known among the lathe result of his investigations holdora to take a particular course. guarantees of the brokers.

The speaker had and attempting to persuade shara wintover was paid under the was made by the issue through for 1 proecol hurther, I will ask oue guarantor has pothecated directors themselves that they had on all these points before the au was to be avoided if possible, conection with this he thought this Company of the shares in the Mr. Maclood to let you know the the margin on a lant him as all dealt in shares to some extent ditors, and also before Mr. Wad-but there were facta kapwa to him it right and fair to tell them Ziangle Habbor Co. and this result of thoir investigations. further security against, his guar-for the Juno settlement, tingliman, a large shareholder in the which wore portinent or important that the preceding afternoon tmpany wore assisted by curtain Mr. Mitelood mid that they ranteo, thus making the total se exactly to whet oxient was not company. Mr. Wadunu had pre-for the shareholders to eansidor. there had been a mooting be Brokers in the scrossful hand- already been told that he had been curity in hand against the guar-known. The moro fet that the viously expressed himself very One fact was this, that the report tween the directors and bro- ling of that transaction. When asked to enter upon a certain in-antees figum of rather more Directors were promoting their strongly on the unsoundness of they land just now hoard had been kers. The latter were told, ho therefore your Directors were ap.quiry, jointly with the auditors, than 21-2 lacs.

own intorests would be insufficient the loan having been, mado, al-made in their behalf and did not thought fully told, to a cortain proached chiefly by tluso Brokers Before ho went into the results At the time the loan was made, to establish a broach of trust though he admitted at the same of course include in any way all point everything that had been and asked for help in order to of that inquiry it would be as we are of opinion that it was most against them. Whether they time that he might, had he been that might be said from the directold them at this meeting. It quable the Stock Exchange to well to mention that at the meet-important the Trust &luuld do

wore in fact promoting their one of the directors, levo donet's point of view. They would was then put to them, they wero. earry on the Junio settlement, ings between the brokers and theverything possible to conserve own interests especially dopen what they did. It was sufficient quite understand that, and ho told what was going to be done, 30 Directors sidered they directors, the latter, while musious the value of the securities Leld, Lod on what was the position of for the present purpose to say that thought that he had the right to and they agreed to certain lincs, wers entitled to every considerato do all they could to arrive at a and we therefore think that the "the Inokers with whom they both the auditors and Mr. Waany it because although he was details of which he need not go satisfactory settlement, felt that Beard may have had a cortin had accounts. The important man agreed with him that the not in any way acting for them, into, because they were matters

4 Pnetlior, your Directors had to if they attempled to acel the of justification for making question was what the directors intorests. of the directors, thoir and without going into any details of practice and business. Thor take into considoration that apart brokers in my way they might the Stock Exchange le. We thought was the position of those views on the position, and the he thought it only fair to say that mat the directors as far as thoy fran the proposed Stock Ex-afterwards be met with a charm should point out it is obvians that brokers. It had been suggested general circumstances surround there was a great deal more than could and agreed to come to some eluge loan the Trancos ne- from the elreholders that they morous lamps nindo on the 28th that the brokeri, wore insolvent, ing these, did not afford any he had told them which was in satisfactory arrangement for both inally mulo or promised at had given away or sacrificed some une land bsen" arranged pre-that this loan wan sale, and that ground for a claim that the direct their favour, In saying the he sides. There was a general ex- that time on behalf of the rights of the Company that they viously.

the directors must havo ku wn tors or any of them did not truly wanapoaking of all the directors, pression of opinion that there Company on shares, amounted to had no right to dispose of. At We cannot now determine what this. To this the directors all al ransounbly believe that they Now with regard especially to should be an understanding to- about. 17. lues of tole and that that time, andin orilor amongst would have been the resulthid the replied that so far from consider-wars acting in the best inter-attic and Co., they offered to tween both sides that they would it was their duty to protect other things tonyoid this dificulty, uno settlement fallen through,ing the brokers insolvent they ests of the Company. theso advancon as far as possible. Mr. Wattie de a suggestion to but we are convinced such a thought that they were quite in applause.) There was another was made, all the shares in the or course which should clear up.

Loud this Company, before this loan be able to work out some method Also it appeared to your Directors him that was very similar to the event must have had a very bad position to meet their guarantees question he had to deal with, Zianghe Company, and thore was all thoke questions. That was that if the Juma settlement could proposal which would be laid be-effect, not only on the market for within a short time and that the and that was as to whether the no dambt whatever that, Wattie all ho land to say, but he hoped it not be farried out the business of fore the meeting at a later stage. shares but also on the linancial transaction was perfectly safe.company could claim from pay and Co. could if they had liked would be of some service to them. this Company would be seriously About this time rumours of a very position of most of the clicuts of After the meeting at which it was director an account of profits to have kept a good punibor of those (Loud applauso). interfered with and all prospect serious character were about all the Trust. At the time of the set-decided to make the loan two of him arising out of tho lonn being shares for themselves. They did. Mr. II. P. Wadman said that of traing the Company's money over Shanghai, and these remours tlement the Ching Yas failure the directors consulted Mr. Hunter made. He had come to the con-not, and the Company had made thay hand all listened with great over rapally and advantageously, really led to the difliculty that was not, so far as we know, and of the Hongkong Bank, win told clusion that there, was only one profit of Tla, 900,000 and 34,600 interest to what had been said by would in lost for the time boing. resulted in this mooting being cipated and in our judgment this them that he thought all the claim, and it was not a very Zianglio shares (Applause). Ile, the Clairman and their legal ad I have heard it stated by one called. A meeting of the direc-ilure les been, in a great mea- guarantors with a feir excoptions serious mattor considoring wint thought that he ought to any viser. Being an original sharo- strangholder that the interests of toni was held about a fortnight sure, responsible for the decline in wore good for the amounts op- Mr. Wattie, Mr. Clayton aul Mr. that in the interests of Wattio holder in the Cathay Trust, and this. Company did not lie in sup- ago, and at that meeting her value of securities sines June last, posito tlioir mes, and he had Davidson were going to offer to and Co. Then they came to his nains having been mon- porting the inrket but that a Macleod) gavo is an his opinion We are, dear Sir.

sinco told tho apoaker that as far do for the company. If any the other transaction, the loan tioned on one or two occasions edpise is what was desired in that the question of a possible

Your Faithfully,

rs anyone could tell they were director did mako a profit when the Stock Exchange, over by Mr. Macleod, ho felt thint order that cheap investments claim by thempany against the (gd) F. N. M-tthew

then good for the amounts they acting for the company he must which there was a loss.. The ho should

• might be mudo. Gentlemen, 1 directors ought to bo go into (sgd) C. II, an 1 N. Thomson, had guaranteed. The next argu- niecomit for it, however fair or directors, at their list meet ledge that he was 1erfectly do not agree with that and l'do fally as soon as possible. At the Nest he came to the question of, ment against the directors was proper his action may have becp.ing, said that they would liko to satisfied with the reasons, which not think you will find the Dirce anisot ho had been retained only law. The first point he proposed that the real interest of the com-Messrs. Wattie and Co. had an know whether they were going the Chairman had given them, tors of any financial Company to advise the compang in con- to deal with was whether the Company was not to make this loan, account with Mr. Michael, one of is a zeensed ovary time there that land influenced die Directors propared to precipitato a collapsonexion with certain questions that pany had a claim for damages in that there abould be a general the brokers who required assist was a loan of all sorts of heinous in making the loan, and also that and inconvenience, to say the had arisen with the brokers. Now raspect of any loss, sustained, collapse of the simre market so ance, the net result of which was offences, because if they were they at the time it was made it was least ofit, not only their Clients, the directors asked him to under- The loan was not ultra virea. The that, it would be able to buy that he had to deliver them shares did not see how they could enter done by them, as had been stated, but also those with whom they take the investigation ho had pro- Company was advised at the time shares at very low prices. The and they had to pay a small sum. upon any transaction even if it in the best interests of the slinse word doing business and jeopar-posed, and thonghi. by no means by Mr. Jones, and, he believed, directors' answer to this was that The shares at the king up was going to be profitable, in holders (applause). To thought diso the business prospects of the anxious to do it, he thought that rightly advised, that they had it was very important that a price for the Juno sottlement were which there was any risk. That they must fairly acknowledge that Company. You will hear from having given advies lo dught to poiver to make this loan. By the satisfactory market for denlingin worth Tls. 53.000, and on their was a fact which they ought to this unfortunate result must be at- the sport I have referred to comply with this request. It articles of association, which were shares should be maintained; that necoms with Michael they had consider. He might mention that tributed to circumstances which above, the partienlais of the Loan, might be said that he had not been in the usual form, the directors, lie company held shares as socuri- to pay him. Tls. 7,000. The re-at that directors' mocting it was nobody could possibly have foro- which was only made after due asked to make this investigation were not liable for any loss - tios for loans which it was import-sult, therefore, was that they had stated that there was some busi soen at the time. It was easy to Leoniltation with our Legal Ad-by the shareholders, but it was less it happened from their ant to be able to realizo with ease; to receive about Tls. 46,000. Onness under the considoration of criticise in the light of after visor, Mr. Loftus Jones, who was necessary that someone should go own wilful act or default. For that the company's business lay this Mr. Clayton and Mr. Wattio the Board at the prosont timo, events, which he must admit he presentat the Board Meeting call-into the matter and he therefore the Company to succeed in a chiefly in advancing against had each one-third interest, and He would now deal with the offer had himself, dono, according to el to consider the matter, and who consented to undertake the tusk claim it would bo necessary to shares and that without a satic therefore the question was whe-made by Wattie and Co, and he what Mr. Maclood had said, but informoi ue that we were acting with the assistance of the auditors show that the Director or Direc-factory market such a businessther they had to account to the wanted them to understand that lie thought the time had now are well within the powers conferred and any shareholder or shirehol- tors sued had committed a breach could not profitably be doud, aut company for something like it was made by Mr. Wattie, Mrrived when they should cease to upon us by the Articles of Associa- dows they thought would be able of trust in doing something de- that a general collaps of the mar-Tis. 15,000 each. Mr. Michael Clayton and Mr. Davidson and by blame their Directors in view of tion. For the first fortnight after to assist. He did not arrogate to liberately which they could not ket was bound to be hurtful to to was one of the brokera who no one else. He thought that it, what Mr. Macleod had just ad- the transaction, the liquidation of himself or the auditors or anyone truly and reasonably believe was company. Mr. Huutor held the could not put his settlement was in the interests of those thros' visod. They should congratulato the securities deposited with the olso the right to arbitrats or do in the best interest of the com- same views, and had no hesitation through without help that gentlemen and the other directors themselvesupon the offor that had mpany procended quito satis anything of that kind, and if they pany. Mers error of judgment, in Baying that he thought the was to say if the loan had not on the Board that they should just been made by the three part- factorily, securities to the valne listened to what he land to any holowover scions, would not be directors had done a perfectly boon made the shares would not understand this clearly, Tho ners in the firni of Messrs. J. A. of Tis. 215,000 having been dis- thought they would realize that sufficient. The only suggestions reasonable and sound thing, qui have been delivered to Wattie and offer was this: the prosont posi Wattie and Co., tint they were in posed of in 18 working days. the inquiry had been conducted in support of such n case wero that it was at his suggestion that Co. and they would not have made tion of this loan, they had heard the position they wore that Fadeed we were remonstrated with entirely in the interost of tho that it was to the interest of the the brokers approached the coa- the profit. He was artisfied that from the airlitors report, was day. He begged to propose by ouɔ at any rate of the Brokerselareholders. The director offer- Directors flwmselves to make this pany. In this connection it was the profits they received from Mr. that there was Tis. 1,204,000 out therefore that they accept that. intrested, for realising too ed, and had carried out their offer lonn, and that it was so clearly important to considor the sugges- Michael were sufficiently closely standing, and that the Company offer in the spirit in which it had quickly. Had liquidations con- to lay before him or the auditors not to the interest of the Com-tim thut the most profitable busi- connected with the making of the hold chores of about three and been made, and he was sure that he tinued at this rate the whole if necessary, the company's and pany that they could not be taken of the company consisted in lona to render them responsible half Ines and certain guaran would be voicing the opinions of of the shares deposited as part their own books and other doen to have reasonably thought that the purchase of shares for cash, to account for the profits. As a fees and rearities for the gut the shareholders present when he #curity would levo been clearednents revealing their private con- it wa It appeared that one and the sile of them for fature matter of fact they wore offering rantees of two and a half face, said he wassure that the main and off by the middle of September, cerns. He had therefore and an Director, Father Castrillo, sustain- delivery, and vice versa, as being a great dent more. With regard The position roughly was, this chief reason which prompted these awl it did not at that time appear advant go that he would probably of a considerable loss on the the safest method of carning in to the other accounts in which the the mount of the loan duo was gentlemon to make that liberal. that the Guarantors of the loan nothave had laid the inquiry boon June Settlement, and it'could not fercat at good rates.

directors were interested ho would twolve aivba half lies and the offer to the shareholders was con- would have much difliculty in made in different circumstances, lo said that it was to his interest oking good their guarantoos.Ife had consulted the auditora, that a loan should be made. He view the fact that many others was as follows:-

lle found in support of this read the rest of his report, whichCompany led shares to the pre- sideration for the future welfare. thu largo nativo Mosure, Mattlaws and Thomson, would have been better off if the were doing thisbusiness, also, that

sent in arket value of six laes, that of the Cathay Trust. Fo had to Failures in the last week or so of and also Afr. Wadman, and he settlement had not gone through, even after the failure of the na-were with brokers other than muke up of six and a laalf lace hearty, vole of thanks for making The other accounts Chavo found' was to say flore was a balance to propces that they accord them a July—a catastrophe which your also went to do Mr. Wilkinson, Mr. Macray, ho understood, lind live banks thioro was a general be- those who required help, and the Against that there were guaran it (applause). He also thought. Director, and I think I may safely the Crown Advocate, and asked no June Settlement and was not lief that such business would still only important ones were with tees of the brokers or some part of that in view of what had t say the majority, if not all of lim to indicato any special in Shanghai at the tiune, nor was bo profitablo; and finally that it Mr. Pirio aul Messrs. Benjamin those guarantees, still to be ful-pired he should propose a vote of business mon in Shanghai did not points for investigation, Mr. he prosent at the Mealing of he did not occur to othors engaged and Potts. (He took it upon him filled foroses. This altered the whole Wilkinson made several Bug-Dirsets at wel it was decided og similar business to that of the self to disclose the whole of this, and Davidson now offered to put plause). He took this opportuni

Mokara Wattie, Clayton confidence in their Directors (ap- complexion of the matter and gestións, Ho would furtherrealisation ofthe securities read thom the foster he had ro tion could are so far na he was prices win a more profitable. Donjamin and Potts would have prosont market value of that convened this. mesting and so How to make this, so that no ques chupany that parchares of shares and he did not think Mosure, up to the Company shares of the ty of thanking them for laying Was impossible,

ceived from the auditors

concerned, Mr. Mrshall was not her than that above deurik the slightest objection, because it balance, roughly Tls, 650,000, to clearly enlightening them in re-

Thon camo

a

NOW." neknow-