BOND COMPANIES.

Auckland Star, Volume LXV, Issue 267, 10 November 1934, Page 14

BOND COMPANIES.

SPECIAL LEGISLATION. CONVERSION INTO SHARES. COMMISSION'S WIDE POWER. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. Legislation designed to enable holders of bonds in forestry, flax and other companies of a similar nature to convert their bonds into shares in a bondholders' company was introduced in the House of Representatives last night by the Minister of Finance, Mr. Coates. It is not intended to proceed with it at this stage of the session, but the Government proposes to pass it early next year. The legislation follows on recommendations of the Companies Commission, and provides for the setting up of a Bondholders' Incorporation Commission to inquire into-and determine the respective rights of bondholders, bond-issuing companies and any persons interested in the subject matter of any bonds. It is proposed that the commission shall consist of three persons. Within three months of the passing of the bill, every,bondibsuing company is to send to the Registrar of Companies full details of the company, including the names and addresses of the trustees for the bondholders and the number and face value of bonds and the area "of land affected by bonds. This commission may at any time order that a scheme for the incorporation of holders, of bond ? s issued by any boiid-issuing company, or of the holders of any specified classes of bonds be submitted to it by the bond-issuing company at any time within three months of the date of the order. Before any order is issued, the bond-issuing company, or the trastees for the bond- - holders, if they are not parties to the application, must have the opportunity to appear before the commission. Neglect to appear before the commission is to involve the person responsible in a fine of £100,., and £20 during every day that the offence continues. Orders for Incorporation. While general powers are given to the commission in respect of the formation of bondholders' companies, an order for the formation of these companies is to include details of the amount of share capital to be registered, its division into shares, and, if necessary, into classes of shares, the persons to whom the shares are to be allotted and the amount to be deemed to be paid up on each share. Loans to bondholders' companies by the trustees of any trust funds established for the purposes of bonds may also be. prescribed, or, if there is no trust fund from the bond-issuing companies, there may also be included in the order loans to provide for the promotion and incorporation of bondholders' companies and ftoy other matters that the commission thinks fit. Authority is given ror an order to' contain the terms of repayment of expenditure incurred for purposes beneficial or likely to be beneficial to the bondholders, and an order issued by the commission may require the surrender of any bonds, or the delivery of any title deeds or other documents of title relating to any property affected by the tender. Allotmenrs to Bondholders.

The provision for the formation of a bondholders' company lays down that the order for incorporation shall provide for the vesting in the bondholders' company of the bonds to which the order relates, aird any beneiits attached to them, and the order is to provide for the allotment to each bondholder of .1 share or shares which shall entitle him to the same proportionate interest in the same property as he was entitled to ur-der.his bond. The liabilities of any bondholder in respect of Uie unpaid balances of purchase money or liabilities

incurred on behalf of the whole of the bondholders are to be deemed to become liabilities of the bondholders' company. Powers of surrender of bonds are to be mado applicable to shares in new companies, and .any disputes in this connection are to be settled by the commission. Any rights which the bond-issuing company may have in land affected may bo translated by the commission into shares in the bondholders' company. Realisation Schemes. Power is to be given to the commission to approve of any scheme of realisation submitted by the directors of the bondholders' company, after a statutory meeting of shareholders and after the calling of a further meeting of shareholders or the taking of a postal ballot of them. The commission may order the reconstruction of a company, attaching to it any special conditions as to its assets and procedure. Bond-issuing companies are to be subject to a levy, not exceeding £200, within two years, if an order is made for the formation of a bondholders' company, while fees are also to be paid in respect of any proceedings taken under the measure, the fees providing for the whole of the cost of the commission. Actions Not to be Questioned. Any order made by the commission is to affect the rights or liabilities of all bondholders of aiiy bond-issuing company or the shareholders of bondholders' company, and proceedings before the commission are not to be impeached for want of form, or appealed against, reviewed, quashed or called in question in any Court- on any account. The Government, its Departments and the commission are expressly exempted from any implication that any of them warrants the commercial or economic soundness of any company's scheme or policy, or is responsible for the- carrying out of any scheme. ■ It is specifically provided that the appointment of any member shall not be questioned on any ground whatsoever. Its sittings shall neither be open to the public nor be reported, except by its permission. A penalty of £100 is provided. for disregard of this latter stipulation.