Since the company that became Bushland Conservation Pty Ltd was formed over 40 years ago many things have changed, including the cost of living and the value of land. We have two important documents that guide our Company. The first document is our Charter, a document that sets out our guiding philosophy and principles. The second is a formal Constitution, required by law under the Companies Act.
Our Charter, emphasising our fundamental principle, states “the sole object for which the company is established is to purchase and/or lease land in its natural state in order to secure the same from agricultural exploitation and to protect and preserve existing landscape, flora and fauna.” This is our fundamental guiding principle. We are not a regular company trading for profit.
At present Item 5 of our Charter states that we aim: “To seek no gain from the investment in the company other than maintaining the value of shareholder investment through linking the share price to the Consumer Price Index.” This CPI link was adopted by members at foundation and reaffirmed in 1991 and it is currently used to determine the value of our shares when they are sold and purchased.
We can no longer assume that CPI gives “fair value”. Legal advice we have received (advice that is in accordance with our Constitution) states that the price of a share should be fixed by the member selling the share, and should represent the “fair value” of the share. We have also been advised that the Company (Bushland Conservation Pty Ltd) must not itself value the shares.
So how should a seller value their shares? Apart from our dedicated and generous shareholders our only asset is the land. There is no official schema for valuing land held for environmental heritage. As we cannot use it to produce an income it could be said to have little dollar value. Or it could be argued that our land is of exceptionally high value because it is rare and because natural habitat is ever diminishing.
A guide to fair value could be gained from recent similar sales of heritage land. In this case the value depends on the condition of the trees and scrub, the amount of restorative and maintenance work required and the convenience of the land for visiting and camping etc. There are some of our members who have knowledge of recent such sales but these are not common and not definitive. In reality, as in any other market transaction, shares are only worth what a buyer is willing to pay. So a member who is selling shares needs to set what they think is a fair asking price and negotiate with the buyer from there.
The Directors therefore strongly believe that it is essential to rescind the CPI link. At the 2019 AGM on October 12th we will, as an interim measure, propose that our Company NOT adjust the share price according to the CPI for the last financial year (+1.3%). We will set aside time for members to present their views concerning the general issue of the CPI link and the concept of the fair value of our shares. Our present intention is to convene a special General Meeting of our Company at a time and place to be decided at the AGM. At this special meeting the Directors will propose that the link between the CPI and our share price be abolished.
We ask that you think about these issues with some urgency. We hope that members will contact our Secretary (Graham White- email firstname.lastname@example.org or mobile 0404 038 852 or land-line 8370 7951) to share your thoughts.
Bill Blessing (Chairperson)
Graham White (Secretary)
ps: we thank Margaret Brown for her wise input into this Newsletter