LIQUIDATION OF COMPANIES

Press, Volume LXXV, Issue 22769, 22 July 1939, Page 4

LIQUIDATION OF COMPANIES

Minister Defines Procedure OFFICIAL ASSIGNEE’S j POWERS • (from Our Parliamentary Reporter.; WELLINGTON, July 21. The Minister for Justice (the Hon. H. G. R. Mason), in an interview today, made an important statement relating to the liquidation of companies. He said that during the last few years many complaints had been addressed to him on this subject and he thought that it might be helpful if he were to outline what he considered to be u proper procedure in such matters. He wished to make it clear that his remarks had no reference to the wind-ing-up of a company which failed through no fault of the directors or its officers, or which was being wound up for some reason other than failure, and where both the conduct of the company and the winding-up of the liquidator were satisfactory. Most people knew, said the Minister,, that there were formed every year a number of companies for a purpose not so much of carrying out some genuine commercial or manufacturing enterprise as of obtaining money from credulous investors. After the shareholders’ money was gone the company had to be interred and in order to save the reputation of the directors, to be interred as decently as was possible. This was done by going into voluntary liquidation, appointing as the liquidator a nominee of directors. These abuses of the Companies Act were not without their remedy. The principal remedy of the shareholders and creditors was to petition to have the company wound up by the Court or wound up subject to the supervision of the Court. If a creditor or contributor did not care to petition in his own name he could place a statement of the position before the Official Assignee of the district. Then the Official Assignee might petition to have the company wound up by the Court. The Court would not make an order unless it was satisfied that voluntary winding-up could not be continued with due regard to the interests of the creditox and contributories. The Minister then outlined the legal procedure for the investigation of the company’s affairs by the assignee, the Court’s powers in such cases and the Minister’s and the department’s duties concerning them. The Minister made it clear that proper machinery existed for punishment of frauds on the public by abuses of the Companies Act. Everything in his power and in the power of the officers of his department would be done to see that the machinery functioned as it was intended to function.