"(b) During the construction of the line, of interest, as it becomes due, on the bonds issued by the Company, subject to the conditions of their issue, and the Company shall pay the sums necessary for the above purpose within the limits of the amount realized by it in the issue of its bonds.

"Shares.-§ 13. On the payment of the first allotment on the shares, the founders shall receive temporary certificates on which subsequently, when the Board of Management of the Company shall have been formed, the receipt of the further instalments on the shares will be inscribed.

"When the shares shall be fully paid up the temporary certificates issued to the founders shall be replaced by shares.

"The shares of the Company are issued to bearer, under the signature of not fewer than three members of the Board of Management. To the shares will be attached a coupon sheet for the receipt once yearly under them of any dividend that may be payable.

"On the coupon sheets becoming exhausted new sheets will be issued.

"A dividend on the shares out of the net profits of any year, supposing such accrue, shall be payable on the adoption by the general meeting of shareholders of the Annual Report for that year, and the dividend shall be payable at the offices of the Company, or at such places which it may indicate.

"The Company shall notify for general information in the 'Official Gazette' and in the 'Finance Messenger,' as also in one of the Chinese newspapers, the amount and place of payment of the dividend.

"Reserve Capital.-§ 14. The reserve capital is destined

"(a) For the capital repair of the railway, its buildings and appurtenances;

"(b) For defraying extraordinary expenditure of the Company in repairing the railway and its appurtenances.

"The reserve capital of the Company is formed out of annual sums put aside from the net profits of the working of the railway ($17).

"The reserve capital must be kept in Russian State interest bearing securities, or in railway bonds guaranteed by the Russian Government.

"At the expiration of the term of possession of the railway by the Company the reserve capital shall be first of all employed in the payment of the debts of the Company, including among them.

sums due to the Russian Government, if such exist; after the debts of the Company shall have been paid, the remainder of the reserve capital shall be divided among the shareholders. In the event of the redemption of the railway by the Chinese Government this reserve capital becomes the property of the shareholders.

"Net Revenue.-§ 15. The net revenue of the Company shall be the remainder of the gross receipts, after deduction of working

expenses.

"Under these expenses are classed :—

"(a) General outlays, including assignments towards pension and relief funds, if such be established on the line;

"(b) Maintenance of the Staff of the Board of Management, and of all the services; as also the maintenance of employés and labourers not on the permanent list;

"(c) Outlays for materials and articles used for the railways as also expenditure in the shape of remuneration for the use of buildings, rolling-stock, and other various requisites, for the purposes of the railway.

"(d) Outlays for the maintenance, repair and renewal of the permanent way, works of construction, buildings, rolling-stock, and other appurtenances of the railway;

"(e) Expenditure connected with the adoption of the measures and instructions of the Board of Management for insuring the safety and regularity of the railway service;

"(f) Expenditure for the improvement and development of the railway, as also for creating and developing its resources.

"Additional Payments by the Russian Government Under the Guarantee, and the Order of Settlement of Accounts between the Company and the Russian Government in Respect of these Additional Payments.-§ 16. Should the gross receipts of the railway prove insufficient for defraying the working expenses and for meeting the yearly payments due on the bonds, the Company will receive the deficient sum from the Russian Government through the Russian Minister of Finances. The payments referred to will be made to the Company as advances, at a rate of interest of 6 per cent. per annum. Sums paid in excess to the Company in consequence of its demands and on account of the guarantee will be deducted from succeeding money payments.

"On the presentation to the general meeting of shareholders of the annual report of the working of the railway for a given year the Company shall at the same time submit to the general meeting, for confirmation, a detailed statement of the sums owing by the

Company to the Russian Government, with the interest that has accrued thereon. On the confirmation of this statement by the general meeting, the Board of Management shall deliver to the Russian Government an acknowledgment of the Company's debt, to the full determined amount of the same, and this acknowledgment, until its substitution by another, shall bear annually interest at the rate of 6 per cent.

"The acknowledgment above mentioned given by the Board of Management to the Russian Government shall not be subject to bill or deed stamp tax.

"[Subjects of minor importance are dealt with in the following sections:

" 17. Distribution of net profits of the railway.

"§ 18. Functions of Board of Management, the seals of which will be at Peking and St. Petersburg.

"8 19. Constitution of the Board, which is to consist of nine members elected by the shareholders. The Chairman is to be appointed by the Chinese Government; the Vice-Chairman is to be chosen by the members of the Board from among themselves.

"8 20. Order of transaction of the business of the Board. "§ 21. General meetings of shareholders and the subjects that shall come under their notice.

"§ 22. Order of convening general meetings.

"§ 23. Conditions under which general meetings shall be recognized as legally held.

" 24. Participation of shareholders in proceedings of general meetings.

"8 25. Local management of works of construction.

"§ 26. Local management of railway when in working order. "827. Questions to be submitted for confirmation by Russian Minister of Finances.

"§ 28. Committee of audit.]

"Gratuitous Entrance into Possession of Railway by Chinese Government.-§ 29. In accordance with the Agreement concluded with the Chinese Government, the latter, after the expiration of eighty years of possession of the railway by the Company, enters into possession of it and its appurtenances.

"The reserve and other funds belonging to the Company shall be employed in paying the money due to the Russian Government under the guarantee (§ 16) and in satisfaction of other debts of

the Company, and the remainder shall be distributed among the shareholders.

"Any money that may remain owing by the Company to the Russian Government at the expiration of eighty years in respect of the guarantee shall be written off.

"The Russo-Chinese Bank will incur no responsibility in respect of the same.

"Right of the Chinese Government to Acquire the Railway on the Expiration of Thirty-six years.-§ 30. In accordance with the agreement concluded with the Chinese Government, on the expiration of thirty-six years from the time of completion of the whole line and its opening for traffic, the Chinese Government has the right of acquiring the line, on refunding to the Company in full all the outlays made on it, and on payment for everything done for the requirements of the railway, such payments to be made with accrued interest.

"It follows as a matter of course that the portion of the share capital which has been amortized by drawing and the part of the debt owing to the Russian Government under the guarantee and repaid out of the net profits (§ 17) will not constitute part of the purchase money.

"In no case can the Chinese Government enter into possession of the railway before it has lodged in the Russian State Bank the necessary purchase money.

"The purchase money lodged by the Chinese Government shall be employed in paying the debt of the Company under its bonds and all sums, with interest, owing to the Russian Government, the remainder of the money being then at the disposal of the shareholders."

APPENDIX VII

Russian Imperial Ukaz regarding Jurisdiction in Chinese Eastern Railway Zone.-August 2, 1901.

"The construction of the Chinese Eastern Railway and the realization of the enterprises dependent upon it have attracted a great number of Russians to the line of the railway, which passes through the territories of China, where Our subjects, by virtue of the treaties concluded between the Imperial Government and the Government of the Bogdokhan, have the right of being judged

in accordance with Russian laws. Desiring to place on a firm basis of justice the actions that may arise between Russian subjects on the line of exploitation of the above-mentioned railway, We have found it good to submit these actions to the competence of the nearest tribunals of the Empire.

"Having studied and approved the proposals elaborated on this subject by a Special Commission under Our orders, We decree:

"1. In order to enforce justice and preventive measures upon the line of exploitation of the Chinese Eastern Railway, in matters which are within the competence of the Russian judicial authorities, to establish the posts of Justices of the Peace, submitting the above-mentioned line of exploitation to the jurisdiction of the nearest district courts of the Empire.

"2.-To define as follows the jurisdiction of the judicial institutions mentioned in § 1:

"a) The competency of these institutions includes matters arising on the line of exploitation of the Chinese Eastern Railway between Russian subjects exclusively, and particularly, in criminal matters, where the accused and the injured parties are Russians, and in civil matters, where both sides, plaintiff and defendant, are Russian subjects: the judicial institutions act, in the examination and decision of cases, as well as in preliminary investigations, in accordance with §§ 84, 88, 89 and 90 of the Temporary Regulations for the Administration of the Kwantung Region.

"b) The Russian judicial authorities have the right to make preliminary investigations in criminal matters arising on the abovementioned line, when the identity of the accused person is unknown but the injured party is a Russian subject; but if in the course of the inquiry it appears that the accused person is not a Russian subject, the case should be referred to the proper quarter by the official of the Ministry for Foreign Affairs stationed in Manchuria, or by the Russian Consul in Newchang if the matter arose within the limits of the above-mentioned open port.

"c) To extend the arrangement outlined in this paragraph to the Southern Branch of the Chinese Eastern Railway, with the exception of that portion of it which traverses the Kwantung Region.

"3.-To transfer to the Governor-General of the Amur Region, in so far as concerns matters that arise within the jurisdiction of the Justices of the Peace, who are under the control of the district courts of the Governor-General of the Amur Region, the rights and duties attaching to the chief of the Kwantung Region in those