COMPANY REFORM.

Auckland Star, Volume LXVI, Issue 35, 11 February 1935, Page 4

COMPANY REFORM.

SUGGESTED LEGISLATION. VIEWS OF MR. 'JUSTICE ROGERS. Apropos of the recommendations that have been made by a New Zealand commission id' regard to supervision over company management, the following finding of Mr„ Justice Halse Rogers, who presided over the recent inquiry in New South Wales, is of _especial interest: — It will probably'be generally conceded that in passing legislation for the protsetion of those who subscribe for debentures and shares in public . companies' there should be an endeavour to interfere as little as possible with the internal management of companies and with the conduct of the ordinary business affairs of the community. The New Zealand Commission has recommended the creation of a body to be called VThe Corporate Investment Bureau," whose general functions are set out as under: — "Supervising prospectuses, investigating complaints, demand candid disclosure, prosecute breaches of the Act, apply for injunction against unconscionable and specious schemes and representations, power within statutory limits to relax rigid provisions of the Act, registration of promoters, directors, brokers, salesmen and valuers with power to strike off register, Done to operate save when registered, lull powers of search and inquiry such as those piven by the Companies (Special Investigation) Act, 1934." With all respect to the gentlemen who i ade the recommendation I must say that in my view the reasons against the estaolishment of such a body are very strong. I eay nothing as to the wisdom or otherwise of creating another Government Department with very extensive powers. It appears to me, however, that all the desired results can be obtained by legislative provisions such as I have suggesued without the creation of another Department to operate in a business world W which already complaints are often heard of over-much Departmental interference. 1 am in entire agreement with the passage in the report of the Victorian Committee: "We very definitely do not recommend the establishment of an office or body with power to supervise prospectuses, :n----vestigate complaints regarding company promotion and conduct after their establishment or to vest any such powers m the Registrar of Companies or any official, though such a form of specmc approval is advocated by some writers and has to a greater or less extent been adopted in several States of America, in some of those States the heights of paternal financial control reach-d are such .•>* to become intolerable, white in others the strict observance of all the requirements is found to be so difficult and productive of so much delay that, the system lias practically broken down. We lee! that it is undesirable to £0 further in the matter of official supervision over the issue of prospectuses than to place such statutory obligations upon directors and promoters as would inculcate into their minds the necessity for a larger measure of cautionary reserve and practical responsibility than at present prevails."