Royalty to Two Councils and Option of Purchase: Opposition from Subscriber Sharebiolders 4
The terms of the new franchise for the local telephone service as agreed upon by: the Shanghai Municipal Council and the French Municipal Council last_week and submitted to the Shanghai Mutual Telephone Ca, have now been cirealated to the telephone advisory committee and the firms who are desirous of purchasing the Mutual Telephone Ca, for the consideration of all parties. The franchise is for a period st 40 year with renewal periods of ten years each.
Perhaps the most interesting of the new conditions that are posed is the cancellation of Article 16 regarding the issue of shares at fa premium, which premium accord: ing to, the present regulations shal: hserecited to the general rewrve ae~ count of the company. In the new proposed franchise this nrtiets ix Cancelled, and another substituted with the title The telephone company: new article is to pay the two Councils fan annual sum as royalty, compiled fas follows: (1) For the first five years of the company's operations discount of 20 per cent. on ex: change lines paid for by the municipalities as at present in fore; (2) On the expiration of the fifth year the discount will cease and from the sixth to the tenth year the company will pay to the Coun-oils a royalty of 2) por cent. on the gras revenue derived from subserib. ers in the two Settlements and Aiviaible between the Council in proportion to such revenues; (3) After the tenth year a royalty of 5 per cent. as calculated above.
Regarding tariffs, that at present force will be maintained until the conversion to automatic working is completed, A revised tariff will then be agreed between the company and the Councils and will. be framed on such a basis as to provide a net. profit equivalent to a certain per centage on the capital invested in the concern, The initial assessment fof capital invested in the business: will depend, of course, on the purchase consideration of the shareholders, but it will be defined fas a sum equivalent to the total of the following liabilities: shares, Bonds or debentures, loans mortgages and similar forms of semi-permanent finance and reserves as defined in the franchise, Fifty per cent. of the surplus, when net profits in any year exceed tasse, will be eredit-Revision Suspense Account, and the other 50 per cent. to the company. Should the net profits fall below this percentage, the balance at credit of this account may be utilized to make ood this deficiency, and at any time when a revision of tariff takex place, the Dalaneo at credit of this account shall be taken into consideration.
Amongst the many alterations and additions, as compared with the former franchise, is the cancellation of the 20 per cent. rebate on telephone tariffs enjoyed by holders of four or more shares in the Shanghai Mutual Telephone Ca.
Alterations in the franchise now permit of many more pairs of wires to be carried along any one thoroughfare, while in. the French. franchise it is stipulated that the company shall build in the French Concession, before March 31, 1934, central station, and subsequently sufficient new stations necessary to. make sure that the independent telephonic network in the Concession rive a first-class service. The network will normally be connected that of the International Settlement and Chinese territory, in the words of the franchise.
The power of pure by thei 4 M. Council is provided for in Article 26, stating that the company shall sell to the Council at the expiration of 40 years from April 1, 1990, or thereafter of any successive period of ten years, providing the Council has given notice two years previous to this date.
Text read from the printed page and cleaned; old type leaves the occasional error.