COMPANIES BILL

Press, Volume LXXXVIII, Issue 26857, 9 October 1952, Page 10

COMPANIES BILL

PARLIAMENT

Debate On Second Reading EARLY PASSAGE UNLIKELY (New Zealand Press Association) WELLINGTON, October 8. Some of tne suggestions received since the draft bill was introduced nine weeks ago were quite worth while, but others were somewnat hostile, possibly oecause certain provisions m the bill were misunderstood, said the Associate Minister of Finance (Mr C. M. Bowden), moving tne second reading of the Companies Bill in tne House of Representatives this evening. Mr Bowden said it was intended to reier the bill to the Statutes Revision Committee after it was given its second reading, so as to give ampie opportunity to organisations and individuals to make lurther representations. It would be almost impossible for the Statutes Revision Committee to report bacx to the House tnis session, in wnicn case the committee might be autnorised to sit during tne recess so tnat its report could be ready for the next session of Parliament.

Nir Bowden said it was 20 years since company law was codified. Since then business methods nad considerably. The bill, however, was not called into being by tne wrongiul acts of those who were administering companies, but tne laws had contained some undesirable features which had led to frauds. Tnere were dangers in inter-company holding and indebtedness within the group, particularly where balance dates did not ail fall on the same aay. Tne bill sougnt to ensure tnat consolidated accounts of me whole group snouid be presented as though they referred to the accounts for the individual company. Tnere was, too, a call for the very careful auditing and certincation of accounts. The growtn of the company form of traain-g was a recent development, continued Mr Bowden, and the growth in the number of companies in recent years was remarkable. At the end of last March, 19,257 companies were registered. Ln the 12 montns ended March last 2029 companies were registered. During 1951 tnere were 1987 private companies registered, with a nominal capital of £9,206,000. Few New Public Companies

*While all those private companies were being registered, there were only 28 public companies, and 14 overseas companies, witn a combined capital of £3,532,000,” said Mr Bowden. “Not all of tne companies are in a big way. At a certain date in 1951 there were 16,584 private companies, of wnich nearly half had a capital not exceeding £2OOU. There were 6700 companies with a capital of £2OOO to £10,000 ; 1659 companies between £lO,OOO and £50,000, and 263 companies with a capital exceeding £50,000.” In the 16,584 private companies, 13,323 companies had a shareholding of two, three, four, nr five members, 2191 companies between six and 10, 615 companies between 11 and 15, 287 companies between, 16 and 20, and 168 companies beween 21 and 25. At the end of December, 1951, the number of private companies totalled 19,234, with a capital of £118,422,000. Public companies totalled 1463, with a capital of £110,819,000. All the figures showed the impqrt- . ance of the company form of trading in New Zealand, and justified the revision from’time to time of the companies law, said Mr Bowden. Mr Bowden said that the clause in the bill that had caused the most comment was that which called for an auditor to examine the accounts of private companies. He was prepared to say that private organisations should be given the right to say whether an auditor should be appointed, and he would be prepared to introduce an amendment to that effect. He had an open mind, he said, whether a private company should hold .an annual meeting. Representations had also been made to him that the maximum number of private shareholders in a company should be increased from 25 to permit wider family shareholding and also employee shareholding. Opposition View The Leader of the Opposition (Mr Nash) said that the committee which assisted in the drafting of the bill should have said why certain things were done in the bill. The measure was overdue, and some advantage - might have been gained if the committee had an industrial representative sitting with it Mr Nash said that there ought not to be inside company law any means whereby any company auditor or accountant could be responsible for any income tax evasion. That should be one of the reasons for having the bill. Most companies kept strictly within the law and paid their income tax faithfully and honestly. A highly- aspect of the bill, he aimed, related to the full disclosure of affairs and transactions of subsidiary companies to the shareholders of the principal company. Directors had usea too much the knowledge vWhith had not been available td ..those who had found the money. Referring to the publicity sections .of the bill. Mr Nash said he agreed with this fuller disclosure of the business of the companies. The bill should almost be a “publicity bill.” He suggested that where any sums of money were given by directors of a company to a political party the decision should be referred to all the shareholders and given the greatest publicity. The Minister of Labour (Mr W. Sullivan): Will you apply that to those affiliated to the Federation of Labour?’ Mr Nash: The Minister has already done that. Mr H. R. Lake (Government, Lyttelton) said it was not the purpose of a Government to discourage enterprise in any way. The Government wanted to produce a good bill, and any aid the Opposition could give in achieving that would be appreciated. Mr Lake reviewed the clauses in the measure as they applied to private companies. He suggested that the bill should legalise the use of looseleaf minute books. Mr E. H. Halstead (Government, Tamaki) said that the bill contained very few controversial clauses. There was a case for the smaller private companies being able to contract out of the compulsory audit provisions, as well as room for another type of company—the larger but powerful private company, which snouid comply with the compulsory audit requirement. Mr Halstead was still speaking w’hen the House adjourned.