Capital Issues Changes

Press, Volume XCIX, Issue 29263, 22 July 1960, Page 14

Capital Issues Changes

(From Our Parliamentary Reporter) WELLINGTON, July 21.

Some relaxation in capital issues control were announced tonight by the Minister of Finance (Mr Nordmeyer) in his Budget speech. “General business confidence bias led to plans for considerable expansion in all types of enterprise. Approvals by the Capital Issues Committee of new finance during the year ended June 30, 1960, were £22 million, compared with £9 million the previous year. A large proportion of issues was to finance industrial expansion. Numerous flotations of public share issues were successful.

The raising of finance in this manner has been encouraged, particularly for enterprises which will increase exports or decrease the need for imports. “Suggestions have been made from time to time that capital issues control should be abolished or, alternatively, that issues requiring consent should be raised from £lO,OOO to £30.000 or more. The Government considers that some control over capital issues is still necessary, but that in

future direct control should be limited to a much smaller area. It is therefore proposed to take a number of related measures designed on the one hand to ease substantially existing controls over capital issues, and on the other hand to hold interest rates generally but to reduce them on certain transactions.

“The Capital Issues Committee has been instructed to grant a general consent to most ordinary share and other capital issues where interest does not exceed certain maximum rates. “These rotes will be those which the committee has been approving for some time, namely, 5} per cent, for preference shares, debentures, and notes, and 5J per cent, for first mortgages.” The committee’s specific consent would, however, still be required in the following cases:—

Where proposed interest rates exceed those stipulated. For overseas companies wishing to commence business in New Zealand. Fop a New Zealand company to obtain capital overseas. And for any issue of capital in excess of £lO,OOO which is to be used for the financing or discounting of hire-purchase or credit sale agreements. “This means that, with the exceptions and subject to the maximum rates of interest which I have mentioned, companies wishing to make issues of capital will no longer have to submit applications to the Capital Issues Committee. Further details will be announced by the committee tomorrow.”