FINANCE AND
INVESTMENT
By NICHOLAS DAVENPORT IN admiration and respect for the work of the General Council of the TUC I am second to none but 1 am bound to say that their objection to shares of no par (i.e., no nominal) value is just plain silly. The Gedge Committee which has recently reported was unanimous except for Mr. Beard, the TUC member, and not one of the witnesses examined was against the idea except the two stalwarts from the TUC. All the tech- nical witnesses representing investors were strongly in favour; only the accountants were lukewarm. The majority of the Com- mittee declare that there is..a "substantial demand" for the change—Mr. Beard, in defiance of the.evidence, denies it—and state , emphatically that "there is no substance in any of the objections which have been made" by the TUC. The great advantage claimed Ifor the no par value share, namely, that it is more honest, expressing more exactly what it really is, a fraction or aliquot part . of the equity without a fixed, nominal value and avoiding, therefore, that potent source of misun ierstanding — the dividend ex- pressed as a percentage of an unreal nominal value—all this is twisted by the TUC into the opposite, namely, that it is dishonest and makes for sharp practices among the directors and suspicion among the work- people. Is this wishful thinking on the part of the TUC? Does it want to see more commercial dishonesty and more labour suspicion? It would be very foolish if it did, for it would be playing into the hands of its Communist enemies. The truth is that the Companies Act and the Stock Exchange regulations, coupled with the Gedge Com- mittee recommendations, give adequate protection to the investor. Now it is up to all of Us, especially the TUC, to try to remove suspicion of the no par value share.
What Are Excessive Dividends ?
I admit this is going to be difficith. Take, for example, the suspicion of high percentage dividends and bonuses. What is an excessive dividend? Pressed for an answer the TUC witness at the Gedge Committee replied: "1 could not say what I mean in terms of a figure but it is something which, for our purpose, would strike an average trade unionist as being excessive." As Humpty Dumpty said: "When I use a word it means just what I choose it to mean—neither more nor less." This seemed to me conclusive proof that the time has really come to express dividends as so many shillings or pence per share of no par value. We must compel trade union leaders to face reality, namely, the actual amount of prof.1? earned, and not mislead their members OM dividends expressed as a percentage of is share with an unreal token value.
Bonuses and the No Par Value Share Mr. Beard's final objection that no value shares make bonuses and "splitting easier and that bonuses always lead to t,1!.I increase in total money distributions is sew contradictory. If bonuses are given, as 110, alleges, to reduce dividend percentages aria Increase money distributions they could not for that reason be given with no par value shares. As a percentage rate does not arise with them so there is no need to capitalise profits or reserves in order to present reduction in the rate of the dividend Per share. The present system of token value' equity shares makes for concealment of the truth. Company directors could help the TUC to educate its, members by issuing statements which are intelligible to everyone and by inviting representatives of then' w. orkpeople to attend their company meet' ings as associate (non-voting) members. The British worker is no fool about moncY. If he had a simplified copy of the corw pany's accounts he would quickly pick 1111 the A B C of the no par value share.
Previous page
