8.—6.

For the purpose of providing funds for carrying on its business under the Act the Corporation may from time to time issue bonds, stock, or other securities at such rate of interest and on such conditions as it thinks fit, provided that the total amount borrowed and for the time being outstanding shall not at any time exceed an amount equal to fifteen times the sum of the subscribed capital of the Corporation and the amount then standing to the credit of the General Reserve Fund. Securities issued by the Corporation will constitute a floating charge on all the assets of the Corporation and shall be for such term, not exceeding fifty years, as the Board of Management of the Corporation may in any case determine. The Corporation may at any time purchase any securities issued by it, and such securities shall thereupon be cancelled. Incorporation. Incorporation of the shareholders as a body corporate with perpetual succession and a common seal will take effect on a date to be specified by the Minister of Finance in a public notice in the Gazette, such notice to be given after the full amount of the share capital has been subscribed. The legislation establishing the Corporation prohibits the formation in New Zealand or registration under any Act of a company or corporation with a name identical with or resembling that of the Mortgage Corporation of New Zealand. General Reserve Fund. Provision for the establishment of a General Reserve Fund is contained in section 33 of the Act, which requires the Corporation to credit the fund with an amount equal to the capital moneys secured by debentures or other securities vested in the State Advances Superintendent in respect of advances made to Local Bodies pursuant to Part 111 of the Local Bodies' Loans Act, 1926, or former enabling Acts, and to be transferred to the Corporation in terms of section 36 (1) (c) of the Act. The amount of securities coming within this category will be not less than £2,750,000, thus providing an adequate reserve fund at the outset of Jhe Corporation's activities. If at the end of any financial year, however, the amount at credit of the General Reserve Fund exceeds 10 per cent, of the nominal value of all bonds or other securities issued by the Corporation and for the time being outstanding, the excess shall be paid to the State in reduction of the amount originally provided as above; apart from this the Corporation will have no liability in respect of the State's contribution to the General Reserve Fund other than the payment of interest on the amount thereof in pursuance of section 35 of the Act. The General Reserve Fund will be further augmented by contributions by mortgagors of 2 per cent, of the loans granted to them and by interest on moneys credited to the General Reserve Fund. The Board must at all times keep invested in approved securities such amounts as it thinks fit, being not less in the aggregate than the amount for the time being credited to the General Reserve Fund. Management of the Mortgage Corporation. The management of the Corporation will be vested in a Board of Management consisting of eight directors, as follows:— (a) Four State Directors appointed by the Governor-General in Council, one to be appointed as Chairman of Directors and two to be appointed as joint Managing Directors, the latter appointments to be for a term of seven years. Of the State Directors other than the two Managing Directors, one will retire in 1939 and the other in 1940, but otherwise the term of their appointment will be five years. (&) Three shareholders' directors, appointed in the first instance by the GovernorGeneral in Council, and retiring in rotation in 1937, 1938, and 1939. Thereafter the shareholders' directors will be elected for a period of five years by the shareholders at a general meeting. No person may be appointed or elected as a shareholders' director who is not a shareholder of the Corporation. (c) An ex-officio director, being such officer of the Treasury as the Minister of Finance may approve for the purpose. Transfer of Established Business to the Corporation. The consolidation of the lending operations of the State Advances Office and the Lands Department will be effected by the transfer to the Corporation of certain mortgages now vested in the State Advances Superintendent and the Crown. The Corporation will thus take over as a.going concern practically the whole of the lending operations now conducted by these Departments and will, from the outset, be firmly established in a. manner- which will ensure that the- administrative costs per cent, of the capital employed will be. maintained at the lowest possible level. In gaining these important advantages the Corporation will be adequately safeguarded from loss in respect of these mortgages, firstly by the fact that such part of the purchase price as is agreed upon between the Minister of Finance and

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