PROTECTION.

Auckland Star, Volume LXV, Issue 267, 10 November 1934, Page 13

PROTECTION.

COMPANIES BILL. BONDHOLDERS' INTERESTS. CONVERSION OF CAPITAL. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. That the interests of the.bondholders were being safeguarded under the legislation was the point strongly made by the Minister of Finance, Mr. Coates, who in explaining the provisions of the Companies Bill, indicated that the Jegielation had been asked for by some df the companies to enable them to concert their capital. Mr. Coates said that although the bill was required urgently, it would not be passed this session, but was made available for circulation purposes only. Parliament would be asked to pass the measure when it met next year.

"Will that be in February 1" asked Mr W. E. Barnard (Labour, Napier).

"Yes, or perhaps sooner," was the noncommittal reply of the Minister.There were between 40 and 50 bondissuing companies operating actively in New Zealand in timber, flax, tung oil, .and so forth, said Mr. Coates, and justification for the legislation was to be found in the ' investigations of the Companies Commission. The solicitor to one of the big companies and representatives of four other companies had asked that the bill be passed at once, for the reason that some of the concerns wished to devote capital to the installation of mills and were unable to get into "touch with their bondholders who were scattered throughout the world. They had asked that a commission be appointed to siipervise and consider recommendations for the purpose of converting the bonds into share-holding capital; The companies could agree among themselves as , to the methods to be adopted, and it

was for the commission to see that the interests of the bondholders were not prejudiced by the rearrangements. No Cost to Government. The companies had reached a stage from which they could not move and could not legally turn any of the capita] into commercial undertakings. Approximately £500,000 would, it was estimated, be available when the bill was passed, and most of it would be utilised in labour. He did not think that postponement of consideration of the measure would prejudice the interests of the bondholders. Parliament would pass the legislation when it reassembled. Mr. Coates emphasised that the duty of the commission would be to see that the interests of the bondholders were protected. Four of the companies wished to start immediately. In the long run it was quite possible that some of the companies would go out, but that had nothing to do with the commission. Mr. F. Jones (Labour, Dunodin South): Will there be any Government examination of balance sheets?

"No," replied the Minister, who added that the costs of the commission would be borne by the companies. There would be no cost to the Government. "The companies themselves have asked for this," said Mr. Coates. "There is no State help, nor is tlipre any warranty for the statement that the State is interested in any way. It is not. It is merely setting up the machinery, and the- companies are paying for it." Mr. A. J. Stallworthy (Independent, Edeii) asked whether it was correct that a prominent Aueklander had seen the legislation about four clays ago. The Minister replied that that was quite possible, as a number of solicitors saw the bill in memorandum form. It was the result of negotiations which had extended over a long period. The bill was read ai first time.