BANK OF NEW ZEALAND

Gisborne Times, Volume XXXVI, Issue 3409, 13 August 1913, Page 5

BANK OF NEW ZEALAND

MR. BEAUCHAMP’S REPLY TO MESSRS. KENNEDY AND WATSON. A LETTER TO THE MINISTER. [PRESS ASSOCIATION TELEGRAM] WELLINGTON, Aug. 12. The chairman of directors of the Bank of New Zealand, Mr. Harold Beauchamp, has addressed to Hon. James Allen a reply to the letter recently sent to the Minister By Messrs. Martin Kennedy and William Watson, the shareholders’ directors. Mr. Beauchamp argues that the demand for repayment of the million guaranteed stock springs from a desire not to promote the bank’s interests, but to strengthen the grounds on which these'gentlemen aeeb ?o*f.xcludo the State from its present '?-(7ntrol of the institution, with the demand that the constitution of the board shoud be altered with a view to giving shareholders the control of the bank by a majority representation on the directorate.

Mr. Beauchamp argues that it was by and through the State’s action, its guarantees, and its assistance that a derelict institution, which undoubtedly would have foundered, was repaired into a- fine seaworthiness and efficiency, and the Legislature in 1898 determined that so far as State control could prevent it, the bank should never again in its history reach a foundering condition; hence it was decided that there should be four Government nominees on the Board and only two shareholders’ representatives. In reply to the objection to legislative authority being given to the bank to issue fresh capital to the amount of three millions, consisting of one million of preference shares to be offered to the Government and two millions of ordinary shares to be offered to the shareholders, the issue in each case to be at a premium, and to be made at such time and on such terms as the Board, with the approval of the Minister for Finance may prescribe, Mr. Beauchamp points out that at the present moment the State is a shareholder in the bank to the extent of £500,000 of paid-up capital. The shareholders have put up the same amount. It is now proposed to increase the capital of the institution, but Mr. Beauchamp’s critics say that while the shareholders are entitled to subscribe the increased capital required and obtain additional shares at par, the State’s claim to an increased interest is to be ignored and the State denied the right of subscribing for any of the proposed new shares. “Upon what principles'of. equity or of company law or practice can such a contention be justified?” he continues. “My proposal is that for every share issued 1 to the State two should be issued to the shareholders. In my judgment this proposal is in the highest degree equitable to the ordinary shareholders, and I am confident that Parliament will never tolerate such a sacrifice of this country’s plain rights, as to deny it the privilege of increasing its interest in an institution which owes, its magnificent position to-day mainly owing to the State’s assistance.” ,