1928-12-20 — Page 6

THE HONGKONG TELEGRAPH,

you want him to appreciate the gift

as well

the sentiment~-

as

SEND HIM

Three Castles

CIGARETTES

LA 369

Christmas Greetings

The Christmas Gift

for the Entire Family

:

Be good to yourself and your family. Buy an automobile for Christmas to be enjoyed for months and years to come.

WHAT A CHOICE!

STUDEBAKER, ERSKINE, MORRIS, CHEVROLET.

COME IN AT ONCE FOR A DEMONSTRATION AND ARRANGE FOR US TO DELIVER ONE

ON CHRISTMAS MORNING.

We have a number of used cars on hand at bargain prices.

THE HONGKONG HOTEL GARAGE.

THURSDAY, DECEMBER 20, 1928.

STAMP DUTY PETITION. clples, to provent such evasion, with-

(Continued from Page 5.) different companies from a couple of days to one week or oven longer. It would, Your Patitioners submit, bo a fair assumption to make that, under the now provisions, the number of ro gistrations will increase and not de decrease, and that the time taken to perfect a registration will correspond- ingly be longthoned and not reduced.

Numerous Diflculties.

14. That Your Potilloners submit that the practical dificulties in the way of carrying out the provisions of too the proposed enactment are" numerous and complicated, to be ex- haustively set out, and they ask leave. to state a few hypothetical cases by way of example:

(1) Suppono A, wishing to buy somo

shares, kas arranged with a por, sonal friend to lend him part of the purchase price, on the understanding that 1. was to have an equitable mortgago on tho shares for the loan. How would the transaction be carried out under the new provisions? (2) Suppose, further, that B., a

month later, has to make a busi- ness trip to Canton. Before he leaves, he would naturally en- trust his marketable securities to the custody of his partner or some responsible agent. Suppose that, during B's absence, A., for pressing business reasons, desires. to soll out the shares. How would A. complete the proposed a "re- fransaction and obtain conveyance" from B., who is absent? (3) In some well-known companies the shares of which are regarded. investment, the first-class directors exercise a very strict discretion as to not allowing more than a certain number of shares to be registered in the name of A person. At present anyone wishing to buy shares in, such a company, but for reasons indicat ed above, is unable to obtain a re gistration of such shares in his name, adopts the expediant of having the shares transferred in the name of a trusted nominee who banda back to such a person the scrip together with a blank transfer. How can such a per- son now invest his money in such atures?

(4) Frequently shareholders who are desirous of having someone to be on the Beard of Directors to represent and look after their interest land shares to such a person to enable him to have the necessary qualification shares as

a

director, In kuch cases the usual procedure is for the share- holders to transfer the necessary shares into the name of the pro- posed director who hands back the scrips together with blank transfers to the true owners, How would such shareholders carry out such an arrangement under the new provisions?

(6) Loans are frequently obtained on the security of partly paid-up shares under the existing practice of blank transfer, when lenders aro satisfied with the temporary financial position of the company, and are not themselves subject to any risk of future calls. They would not lend if the shares had to be transferred into their numea.

No Substantial Evasion.

15. That, indeed, Your Petitioners submit that the manifold and well- nigh insuperable dificulties in the way of compliance with the suggested provisions, having regard, on the one hand, to the time which the register- ing company must necessarily take, in ascertaining the genuineness of the transferor's signature, in making en- quiries from the transfuror so as to obviate the risk of fraud or forgery, and in generally perfecting the trans- fer, and, on the other hand, to the frequency, urgency, and multiplicity of everyday commercial, business, and friendly transactions, aro too obvious to be laboured by Your Petitioners.

16. That Your Petitioners humbly suggest that, as regards imposta auch as Estate Duties, the possibility of their evasion must inevitably increase in proportion to the degres of what Your Petitioners may loosely describe aa ncgotlability", possessed by the property which it is sought to tax. For instance, Your Petitioners ven- ture to think that there is no property which is more susceptible of evading Death Duties than bank notes and Currency, and yet would anyone Bug- gest that the negotiability of bank notes and Currency should be des troyed, or oven impaired, for the sake of preventing the evasion of Death Dutiest

17. That the proposed legislation will fundamentally affect the propriet. ary intorest of shareholders, It will prevent such shareholders from exer- cising their vested and legitimate rights of dealing with their own pro-| parties in the way they please. It will, in short, entali consequences on shares which can fairly be described as revolutionary in their effect and disastrous in their operation. And it will, finally, necessitate the creation by the Executive, for the purpose of carrying out its provisions, of two entirely new, privileged and arbitrary classes of persons Le, "Authorised Bankers" and "Authorised Dealers."

18. That, entirely apart from, and Irrespective of, the practical difficul- ties referred to above, Your Petition- ers humbly but earnestly submit that: such legislation cannot be supported unless an overwhelming case of necesalty, and in the interests of the well-being of the community 'an a whole, could be made out by the Gov- ernment, Your Pelllionera humbly submit that mere evasion of Duties emphatically cannot constitute such a case, for it should be the duty of the Government to deviss some means, In accordance with constitutional prin-

out resorting to the simple but unfair expedient of punishing the innocent with the guilty.

19. That Your Petitioners submit that, in fact and in truth, there is not substantial evasion of Duties in eithor case, and beg leave to deal with each

case in turn.

Estate Duties.

20. Estate Dutics.

(1) That Shares belonging to a des

censed person, which

(2)

were his

at the time of his death, and, al- though accompanied by blank transfers aigned before his death, of course constitute "property of at the which the deceased was time of his death competent to disposs" and are liable as such to Estato Duty. (Estate Duty Ordinance, 1916, section 6 (1) (a)).

That whatever might have been the practice in the past, Your Petitioners understand that tho practice is, and has for some timo

for the Estate Duty Com misioner to notify all the local companies of the death of any person, representation to whoeo ontato in being applied for, (3) That in any case such a practice

could caally be introduced. Under such a practice, on receipt of such a nalification, the company concerned would inform the Es- tate Duty Commissioner of any transfers which had already taken place, and such company would hold up any application for transfer sont in subsequent to the notification, until the Estate Duty Commissioner had been communi- cated with and his sanction had been obtained.

casca are

(4) That Your Petitioners under-

stand the following merely examples of numerous similar cases within the expori. ence of local legal practitionors: (a): A well-known Chinese gentle- A few months prior to his m took out from his bank some 'Union shares which ho sold to meet some business obligations. Tho purchaser took possession of the scrips and blank transfers, but did not aend them to the Company for registration until some time after the seller's death. What happened? The transfer was held up: it was only after the Estate Duty Commissioner had the been completely antisfied by clearest evidence of the bona fide anle prior to the seller's

(5)

and that the shares were

death, not liable to duty,]

that the purchaser could per- fect his registration.

(b) Another Chinese gentleman, who had purchased certain shares and had them transfer- to bis naine. Hold them zed youre before his death. He died insolvent. There was no "estate" to be administered, and no application for legal repre- his estate was Bentation to

truo necessary. Before the owner could effect the neces- sary transfer, the Estate Duty Commissioner had to be similar- ly satisfied,

Remedy for Evasion.

Having regard to such safe- quards Your Petitioners submit: that evasion of Estate Duty must bo rare. If any evasion atill exlats, it must, it is conceived, be confined to the casos where the death is unknown to the Estate Commissioner, and the 'estate consists of property of such a na- ture that, as a matter of practi- cal necessity, no application for legal representation need to made. Cases of this kind would probably be few and negligible. Morcover, even as regards auch cases, and, indeed, other possible cases of evasion, Your Petitioners submit that cogent answer to the suggested desperate remedy is as follows:

(a) If the death takes place in Hongkong, the Government should experience no difficulty in ascertaining such a death. and acting on it, on the fair assumption that there is busi- nesslike co-operation between the Estate Duty Department and the Registrar of Births and Deaths.

(b) In any event the Bill 'can be no more efficacious in prevent- ing cases of wilful evasion, staco care would naturally be takon to get the person to sign the blank transfer before his death, and to obtain dus re- gistration under the suggested Drovisions. Indeed, in tho realm of criminology, forging the deceased's signature to a transfer for the purpose of ovading duty is of course not unknown.

(8) That, application for legal repre-' sontation involves the making of an oath or affirmation verifying the account which has to be filed with the Estate Duty Commla- sloner, and which is set out "all the property in respect of which Estate Duty is payable upon the death of the deceased" (Estate Duty Ordinance 1915, Section 10) and a false declaration ren- ders the person making the same liable to the severe sanction of the law of perjury. Moreover, heavy penalties are imposed by the Ordinance for "inter-meddling" (Bection 19); and for delay in lodging the account with the Estate Duty Commissioner (Sec- tion 12).

to

(7) That Your Petitioners submit that the existing law should there- fore furnish a sufficient deterrent Petitioners ovasion. Your venture to suggest that if it is not effective in stopping evasion in toto, it is because, human na- ture being what it is, no. law can abolish crime in its entirety, (8) That having made their humble submissions that the proposed legislation cannot be justified by

(Continued on Pagi 18.)

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15

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