1930-01-23 — Page 2

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THE HONGKONG TELEGRAPH. THURSDAY, JANUARY

THE INSTONE BANK

LOANS.

PROMISSORY NOTES BETTER THAN UNCALLED CAPITAL.

ACCOUNTANT'S VIEW."

OBITUARY.

MR. J. H. RAMSAY DIES ON HIS WAY HOME.

person would have the right to altor them in the books to read anything else but cash transactions, without the consent of the direc fors Personally I would say, as an auditor, that once the thing took place it would, in my opinion,

Grent regret will be felt by his turn into a cash transaction. If 1 were an auditor of the company, many friends in the Colony at the I would not allow that cash trans death, which occurred on Tuesday, action to be amended without at of Mr. J. H. Ramsay, a member of taching some addition to my the Shanghai staff of the Hongkong and Shanghal Bank, who for nearly a resident of report

Mr. Brewer then referred to the sixteen years was WES

snd requirements of the Companies Hongkong. A particularly Ordinance as to the contents of a feature is that Mr. Ramsay con- the tracted pneumonia while on his Statutory Report, "that Statutory Report must include the way home on leave and was taken total amount of cash received, by off the ship at Kobe, where he en the Company in respect of shares tered the hospital but gradually allotted." He asked witness if he grew worse and passed away. Ho would be prepared to state that the left Shanghai on the Empress of total amount of cash received in Canada, on January 18 intending to respect of all ahards allotted in travel to England via Canada on a cluded all sums obtained under the year's leave. Unfortunately, le loaf applications, Mr. Udy re-contracted pneumonia and his con- plied that in his opinion immediato.dition was such that on arriving at a witness called by, Mr. Brewery a transaction took place convert-Kobe ho had to be rushed off to

ing the uncalled capital to a loan, hospital straight away. the whole of the shares were fully paid.

The most important evidence at the Brewer trial yesterday that of Mr. E. A. H. Udy, an Australian accountant, who said that he would have preferred money available on promissory notes to uncalled capital. Mr. Udy said that he had inspected the books of the Instone Banking Corporation, and had found them to be in order, He also said that he had tested a number of applications for loans from shareholders and had also found them to be in order...

Mr. Ernest Albert Henry Udy, said that he had just commenced to practice in Hongkong. He was # member of the Federated Institute ef Accountants of Australia, and also of the Secretaries' Association of England. He had been gazetted to practice under the Companies' Ordinance of Hongkong. He was engaged in lecturing with the technical Education Department of Western Australia and also New South Wales for a combined period of about five years,

The late Mr. Ramsay, who was born on June 6, 1889, was a resi- Mr. Brewer, But my question is dent of the Colony from August, that the sums received should be 1912, when he first came out to the included in the figure for the total Far East, until March of 1928. amount of cash received by the when he was transferred to the company in respect of shares Shanghai office, with the exception of a short period in 1918. when he' That is my opinion..

went home to join up. Of a genial and kindly disposition, he was very popular among the Bank staff here and a large circle of friends.

His Lordship asked witness it he would have compiled the certi 'ficate in the same way, to which he

replied in the negative.

い

The late Mr. Ramsay will be re- Mr. Brewer:Would you go Bu Mr. Udy also added that "he was a Justice of the Peace for New far as to say that all these trans-membered as a very Heen Volunteer netians had the effect of fully pay-in the old days. For six years he South Wales,

Replying to Mr. Brewer, witnessing the shares and would you have was in the old Scouts Company and said that he had inspected the books included all the amounts so paid retired with the rank of Sergeant. of the Instone Banking Corpora-an being cash received in respect tian with regard to cash tranene of eluures? Yes, but I am not in tions with a view to ascertaining position to say whether that whether they were, in his opinion, total figure is correct or not.. drawn up on a proper system of book-keeping."

.

Mr. BrewerDid you find the bunks In respect of these trans Actions to have been kept on an easily understandable system?

of course, withr Yes, I could not, the limited time at my disposal go through every entry, but I did find as an accountant that the system of book-keeping was properly car: ried out in the books I saw.

Mr. Brewer-Did you test any individual transactions to deter mine whether they had been con- sistently treated throughout the books? tested several Items an the question of conversion of share capital into what I may call re ceivable, and in the eases that I tested. I did find that the entries were consistent and did show the history of the transactions." "

Mr. Brewer: Can you say that had you been engaged in preparing thia Statutory Report, you would have prepared It in substantially the same way if the calculations are correct?—Yes.

To Obinin Capital. " Cross-examined by Mr. Fitzroy, Mr. Udy agreed that the object of selling shares.. WAN to obtain capital.

took a keen interest in various public and sporting activities. An enthusiastic member of the St. George's Society he served on prac tically all the annual Bail Com mittees during his resklence here and was for a number of years on the General Committee, on which he did much useful work.

He was a member of a number of Clubs in the Colony, including the Hongkong Club (where the fag was flying at half mast yesterday) and the Royal Hongkong Golf Club. The fings of the Hongkong and Shanghai Bank on both sides of the harbour were also half-masted yesterday.

During 1918 he went home ta join up and became a Cadet,in the The war came to Scots Guards. an end without him seeing active service.

As the result of these applications you would have got rid of your aliares, not for capital but for credit? In the ordinary course of business as long as they have got a certain amount of subscribed capital, their uncalled 'capital is

certain The late Mr. Rameny was Acting always looked upon as assets, provided the people who Sub-Accountant of the Shanghai apply for the shares are sub- branch at the time of his death. stantial.

Jan't the result of all this that Mr. Brewer-Was the complete you have sold a good many Bliares nature of these transactions enslly on credit?-With an obligation to ascertainable, from the hooks nepay the balance.. they stood, or were they difficult to ascertain? I followed without any explanation thoses enses I did Lest. Iis Lordship remarked that ho thought Mr. Rags would grant that point.

But instead of getting capital for which the shares were issued you have got credit?--Yes.

38 an

Would you yourself," auditor, consider sa a good security merely names 7-Provided that the form was drawn up by a legal ad- viser I would say, yes.

five per cent. Apparently there was need of ready cash at the time the second call was made. Instead of getting actual cush, however, on the second call, shareholders were allowed to fill in promissory notes in some cases.

Mr. Udy said, he could" not ex- plain why, as he was only speaking on the principle of the method.

Mr. Thomson said he thought as a man of business, Mr. Udy could To another question, witness anid

Mr. Udy replied that If he was that if a legal adviser advised him surely guide the jury in the matter. it was a legal document he would secretary of a company, he would certainly take it without hesitation. be only ton pleased to get share What sort of security have you capital put Into some solid security got on that document 7--I have gat in the way of promissory notes this, that I can call up that money provided the people who signed and it is not share capital. I have would pay on demand. "I would lost Life right of forfeiture but my take it as a fairly good business contention is that the shares are

Mr. Thomson:-Would you ́ac- fully paid up and the only thing proposition if I could bring it off." I lose is the right of forfeiture.

cept a man's signature as security? In fact merely cross-entries

In his reply witness indicated he would do st.

Applicatton for Loans, Witness said that he had a copy of the Statutory Report and also a copy of a letter applying for a loan. He had given a certain amount of consideration to them and could claim to understand them. Mr. Brewer-Assuming the ob- ject in these transactions to have heen to convert uncalled capital to loans payable" on demand, were these transactions properly dealt with in the books, in your opinion?

The cases 1 tested, yes. Which would be better, for the company to possess, uncalled capital happen?-Cross-entrics happen but or such promises to pay on demand sill have a lien over the shares according to the specimen in your all the time, hands would take the latter, that is a promise to pay. I consider them definitely better as an asset than uncalled capital,

Mr. Udy suld he considered that

Hi Lordship:-With your in- formation derived from the books, do you say you might have drawn he had a better security because as up that report in the same way or the manager of the company, if can you suggest how you would have

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money whs wanted immediately it drawn it up?--I might have added Agents-REISS, MASSEY & CO., LTD.

Mr. Udy went on to say that as a secretary, auditor, or manager,

But could you get it? Of course if he could get security for un enfled capital in such a form that everything is conditional on the he could command it at any moment, landing of the person who gives it In reply to another question, wit or draw it in at any moment, he would rather have that than un-, said he did not think he could allow a company to buy its own entled capital.

Mr. Brewer.Provided that the loan was of person signing a mature age, and capable of entering into a contract, would the fact of his ability to meet that on demand on any given date alter the nature of your answer 7-Certainly not.

Cash Transactions.

could be demanded on the docu- rider such as "included in the ment.

sum of $876,750, or a portion of that amount was paid over by loans made to the shareholders for which personal security has been given." Mr. Udy continued that his whole iden of the transaction was that once the transaction took place transferring share capital to loan -in his opinion, it was fully paid- up shares, but he might have gone to the extent of having that note in the report if the thought came to

abares

Juror's Questions. To a question by. Mr. Thamson. foreman of the jury, witness said he could not say why shareholders were asked to fill in the form as his mind. certain things might have happen-

Mr.. Brewer said he would pyt ed which he knew nothing about. Mrs. Brewer in the box if Mr Mr. Thomson sald at one time Fitzroy wished. Mr. Fitzroy and Mr. Brewer-Assuming that the when the company was founded, His Lordship both agreed that they management had thought fit to applicants were asked to pay five did, not wish Mrs. Brewer to give best transactions us cash, would per cent on shares. A little later evidence, after which the Court ad- you go so far as to say that no, they were asked to pay another journed;

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SWEET ADOLINE!

MY AD-0-

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