Companies Bill

Press, Volume LXXXVIII, Issue 26856, 8 October 1952, Page 8

Companies Bill

The Government will act wisely if, as appears to be its intention, it defers until next session enactment of its Companies Bill. The Government had excellent intentions when it moved to consolidate the Companies Act, 1933, and other enactments, with amendments and additions; and it took steps to seek good advice on this highly technical legislation. A representative committee was set up to assist the law draftsman, consisting of representatives of the Law Society, the Society of Accountants, the Stock Exchange

Association, the Institute of Secretaries, the Associated Chambers of Commerce and the Registrar of Companies. This committee held more than 50 meetings with the law draftsman. In August the bill was introduced in the House of Representatives. It proved to be a massive compilation, in 16 parts, with 469 clauses, and 84 pages of schedules. On the first reading the Associate Minister of Finance (Mr Bowden) said it was not proposed to proceed further with the bill until the financial debate “ was out “of the way ”. The Minister hoped that “in the meantime ” it would be studied by lawyers, accountants, and businessmen, and that they would submit representations to the Government on “ any possible “ improvements to the bill ”, The Government proposed to keep the expert committee in existence “for “ some weeks ”, believing “ it might “be more practicable ” to refer representations to the committee. However, the examination of the bill that the Minister invited brought out important considerations that clearly called for more time for examination than the Government at first proposed. An article written for “ The Press ” by Mr Claude Evans pointed to weaknesses and anomalies in the bill. In Mr Evans’s opinion, opportunities to simplify company law and give statutory effect to decisions of the Courts had been missed; some of the new obligations placed upon private companies were irksome and restrictive; some of the provisions not only left loopholes for chicanery, but also seemed certain to encourage it. After they had' examined the bill, both the Canterbury branch of the New Zealand Society of Accountants and the Canterbury Chamber of Commerce were critical. The accountants.believed that provisions of the bill, with particular reference to private companies and audit, could hive “ a marked deleterious “ effect upon the interests of the “ general public ” and were “ calculated to lower the existing “ high standard of business morality “ in New Zealand ”, After consideration of the bill by a special committee, the Canterbury Chamber of Commerce said “ the Whole bill ’’ was unsuitable to New Zealand company practice and “ little “ consideration had been given to “the special status of the private “ company in New Zealand ”. The Associate Minister of Finance acknowledged the justice of this criticism by intimating his intention to introduce some amendments, in particular to relax onerous restrictions, on private companies. Further consideration has apparently impressed the Minister with the advisability of more time for study, discussion, and representations. If the bill is deferred until next session, so that the Statutes Revision Committee may work on it during the long Parliamentary recess, there is little doubt that a better bill will appear in Parliament next year.