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8.—16.

The Bank issued a prospectus on the 15th May, 1941, inviting holders of the securities affected to convert to the new issues mentioned below as from the respective repayment dates—namely, 15th July, 15th August, and 15th September, 1941. In any case where the conversion offer was not accepted the securities became repayable on the dates specified. Provision was made for the payment of interest in respect of the securities up to the conversion dates or repayment dates specified. Alternative offers in new Stock issues were made to holders of the securities dealt with in terms of the prospectus —conversion into 3-per-cent. short-dated Stock repayable 15th September, 1946-48, being offered at par, whilst conversion to the 3J-per-cent. long-dated issue repayable 15th September, 1957-60, carried a premium of £3 for each £100 converted, such premium being met by the issue of additional Stock for amounts of £5 or multiples thereof. Fractional amounts of £5 became payable in cash on the respective conversion dates. Up to the 31st March, 194-2, additional new Stock totalling £419,660 had been issued to cover the above-mentioned premium, while fractional amounts of £5 refunded in cash totalled £6,948 lis. £ The total amount subject to offer in terms of the prospectus was .. .. 21,273,480 This amount was dealt with as under :—- Conversions — £ (a) To new issue of 3-per-cent. Stock, 1946-48 .. .. 5,985,070 (b) To new issue of 3|-per-cent. Stock, 1957-60 .. . . 14,220,285 Redemptions .. .. .. .. .. .. 1,033,560 21,238,915 Outstanding as at 31st March, 1942 .. .. .. .. £34,565 The lists for the new loans closed on the evening of the 14th June, 1941, but the Bank was authorized to accept applications after such date in any case where, in the opinion of the Bank, application prior to such date, was impracticable. It will be realized that in a conversion transaction such as the one under review, factors such a,s the absence of security-holders from the Dominion, decease of security-holders, and other factors occasion considerable delay in the completion of the final accounts relative to the transaction. Every effort is being made to clear up the few individual cases outstanding. (4) Interest-free Loans for War Purposes. The total contributions outstanding by way of interest-free loans at 31st March, 1942, was £1,216,475. The volume of work entailed in handling these loan and conversion operations was considerable, and the Board desires to express its appreciation of the helpful co-operation of the trading banks, the Stock Exchange Association of New Zealand, Government .Departments (in particular the Post and Telegraph Department), the press, and all other organizations and individuals whose assistance was such a material factor in the success of the transactions. Exchange Control. No fundamental changes in the procedure of licensing overseas trade took place during the year, and the administration of Exchange Control provisions of the Finance Emergency Regulations 1940 (No. 2) operated smoothly. The power conferred on the Minister of Finance to require New Zealand residents to offer gold coin or gold bullion for sale to the Bank has not so far been exercised. The table set out below gives a classification of foreign exchange transactions for the years ended 31st March, 1940, 1941, and 1942 : —

Summary of Transactions.

3

(£(N.Z.)000.) Year ended 31st March. Year ended 31st March. Receipts. Payments. 1940. 1941. 1942. 1940. 1941. 1942. In respect of — In respect of— Exports .. .. .. 70,975 73,302 72,774 Imports, excluding payments 37,868 42,015 39,623 Interest, dividends, legacies, 1,588 4,220 4,231 in respect of Government immigrants' funds, repatri- imports and in respect of ated capital, and private goods imported prior to debts due in New Zealand introduction of licensing Trade debts due in New Zea- 1,734 3,443 2,897 system land, including overseas earn- Interest, dividends, legacies, 3,187 3,935 3,782 ings of New Zealand firms .. emigrants' funds, repatriated Commissions, royalties, and in- 68 120 166 capital, and private debts surance due overseas Donations and allowances .. 342 382 431 Trade debts due overseas, in- 4,671 2,759 2,294 Travellers' expenses .. 270 280 268 eluding earnings in New Local-body loan raised overseas 322 .. .. Zealand of overseas firms Government loan raised over- 2,500* .. .. and payments in respect of seas goods imported prior to inUnclassified .. .. 683 965 504 traduction of licensing system Government debt and other 14,064 19,628 34,501 services, including payments in respect of imports Local-body-debt services .. 1,634 3,635 1,800 Commissions, royalties, and 323 538 549 insurance Donations and allowances .. 547 622 606 Film hire and entertainments 293 343 226 Travellers' expenses .. 727 274 198 Unclassified .. .. 43 15 78,482 82,712 81,271 63,357 73,764 83,579 * Sterling loan from trading banks since repaid.

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