An extraordinary general meeting of the Shanghai Hotels, Ld, was held on the th instant at the head otice of the company, No. 14 Kiukiang Road. Mr. Brodie A. Clark presided, supported by Dr. Bolton and Mr. Edward Ezra (directors), Mr. R. N. Macleod (legal adviser), and Mr. EH. Burrows (Secretary). The attendance represented 35,733 ordinary shares, and 106 founders' shares.
The notice convening the meeting having been read, the Chairman sai Gentlemen,—The purpose of this extraordinary general meeting, as notified to the shareholders in circular letter dated November 20, is to obtain your sanction to a reorganization of the capital of the company.
In my address to you at the extraordinary general meeting of the shareholders in July, as well as the annual general meeting in March, I emphasized the expected development of the Company's business: and the necessity, therefore, of being fully prepared to meet future requirements. The enormous increase in our business has more than ever confirmed the directors' opinion that the erection of a large and modern hotel in Shanghai woud be indispensable in the near future and it is, therefore, with considerable pleasure that T- can report excellent progress in the preparation of the work in connexion with our new hotel to be erected opposite the Race Course, the plans of which are practically now complete.
ProGress oF THE CoMPANY.
During recent years the cowpany's undertaking has very considerably outgrown its capitalization, with the result that balance sheets for these years have been rather misleading. Instead of paying larger dividends the company has been compelled to meet development out of profits, and this, as you will readily sce, cannot go on indefinitely. Hence' the directors e convinced that the time has arrived for the company to be properly established, and on a basis that will ensure development. This' can only be done by a thorough re construction of the company; a matter to which your directors have devoted much time and thought during past months. The principal difficulty with which we have had to contend has been the question of the founders' shares in the company. These shares, as y doubtless aware, will parti with the ordinary shares equal division of the profits after the company has paid an accumulative dividend of 12 per cent., which it is obvious will be within a year or two. In other words, 193 founders' shares will be equal in value at that time to 50,000 ordinaries, and, therefore, we have had to very carefully consider the proposed reconstruction from the founders' standpoint. I am happy to say that the principal' holders of founders' shares have agreed that it would be advisable to eliminate this class of share entirely and to give in exchange ordinary shares an equivalent value.
'The question then arises, what compensation would be acceptable to the founders without prejudicing the rights of the ordinary shareholders?' As I have previously stated, the founders' participation can now be only a matter of a few years, and since they will then -be entitled to no less than one-half of any profits divided, it would seem that the resolution before the meeting would provide an equitable arrangement. This it is proposed to do by allotting them ordinary shares in the proportion of 199 to each founder's share. As you-will see from the circular, a dividend to be applied in the' allotment-of these ordinary shares will be paid to the founders out of the profits of the current year. The original founders' shares will then in all respects rank equally with the ordinary shares. In this manner the ordinary shareholders will be safeguarded against future division of profits with the founders, whilst the founders will have an immed-late association with the profits of the company.
Furruer Snares Caearep, As you will see, it is proposed to create 100,000 additional snares of $7.50 each, of which, after the allotment to the founders, there will remain 75,523 shares to be issued at not less than $50 each, when any sarnre development is contemplat-The directors feel sure that you will agree that this arrangement is fair to both founders and ordinaries, and there can be: no doubt that, with a proper valuation of our assets and a revised balance sheet, the company's standing will be materially improved, and we will henceforth be in a position to carry out developments without the difficulties experienced in the past, and with the assurance of material increase in dividends.
This, gentlemen, is a- brief resume of the various notices and circulars which have been in your possession, and doubtless carefully considered by you during the past week, but before putting the resolutions to the meeting I would welcome the opportunity of explaining-any point upon which you may not be clear.
The chairman proceeded to adjourn the meeting (which then resolved itself into "a founders" meeting) and called: upon Mr. Edward Ezra to explain the situation.
Mr. Ezra said there was little to add to what-Mr. Clark had said in explanation of the reconstruction scheme. As the principal founder, he thought the proposition was fair and reasonable and one which
Text read from the printed page and cleaned; old type leaves the occasional error.