PARLIAMENT IN SESSION

Dominion, Volume 27, Issue 38, 8 November 1933, Page 10

PARLIAMENT IN SESSION

Reform of New Zealand’s Company Law MEASURE ACCORDED SECOND READING Budget and Estimates to be Presented To-morrow Night An indication of the Government’s desire to expedite the work of Parliament was given in the House of Representatives yesterday, when the Prime Minister, Rt. Hon. G. W. Forbes, moved that for the remainder of the session Government business take pie cedence on Wednesdays. After several late sittings during the past week members enjoyed a day of normal sitting hours, the adjournment being taken at 10.30 p.m. The second reading debate on the Companies Bill was inaugurated in the afternoon by the Minister of Finance, Rt. Hon. J. G. Coates. In giving a broad outline of the legislation, Mr. Coates stated that every opportunity would be given interested parties to make representations, and to enable this to be done the Government intended to allow about a fortnight to elapse before proceeding with the committee stage. He acknowledged the indebtedness of the Government to those gentlemen constituting the special advisory committee which had been concerned in the preparation of the Bill. Any proposed amendments would be submitted to that committee for its opinion. Most of the subsequent discussion centred around the clause in the Bill restricting the appointments of auditors in future, except with the Minister’s special approval, to members of three organisations, the Society of Accountants, the Institute of Accountants, and the Accountants and Auditors’ Association. With the exception of this clause, on which opinions were divided, and one or two others, there was almost unanimous agreement that the Bill was a desirable measure. Little interest appeared to be taken in the debate, and on one or two occasions during the afternoon it seemed almost as if the discussion were going to lapse. On the House resuming in the t evening, however, there was a temporary revival of interest, but by 9 o’clock speakers were exhausted, and after a few minutes’ reply by Mr. Coates the Bill was read a second time. The House then proceeded to the Coinage Bill. The Budget and Estimates will be presented to-morrow even7 in ?- ./ ’

COST OF EDUCATION I ; Decrease in Expenditure i INTERMEDIATE SCHOOLS The total educational expenditure in rhe Dominion, including endowment revenue, during the calendar year 1932, amounted to ■£2,893,802, as against £3,469,843 in the previous year, a decrease of £606,041. This was stated in the annual report of the Minister of Education, Hon. R. Masters, presented to the House of Representatives yesterday. During last year the net capital expenditure on the erection of school buildings was £52,623, as against £259,148 for the previous year. Owing to the limited funds available, it was not possible to consider favourably all the proposals submitted. ■ The report refers to the establishment of intermediate schools, the purpose of which is to remove the pupils a t the age of 11 or 12 from the environment of the primary school and place them in separate schools or in departments attached to post-primary schools where they will be given the opportunity of displaying their natural aptitudes and of indicating in which direction they should continue their education. While the financial depression continued, it would not be possible to establish intermediate schools freely throughout the Dominion, but where the conditions were suitable schools of this new type would be established. ' Owing to the financial stringency, it was necessary early in the year to abandon the practice of awarding university buysarles to all holders of higher leaving certificates issued by the department. A survey of the system of accrediting for senior free places in second-’ ary, technical, and district high schools was carried out by means of the intermediate examination. The results of the examination were very satisfactory, a high percentage of candidates qualifying for free places, and much valuable information being obtained. NO FIXED~MINIMUM Admission* to Picture Theatres ■ Leave of the House of Representa- | tires was sought by Mr. J. A. Lee | (Lab., Grey Lynn) yesterday afternoon to introduce a Hire of Films Bill, which is a brief measure providing that “No covenant or condition shall bind the proprietor of any theatre to charge a minimum admission fee as a condition of the hire of the film.” Mr. I-ee stated that at present theatres were bound by contract to charge a minimum of one shilling, although many of the films showed for 10 cents in the United States. The fixed charge was keeping suburban theatres empty and denying people a measure of cheap amusement. Mr. Lee proposes that the Act shall come into foijce next New Year’s Day. GAMING PETITIONS “No Recommendations to Make” No recommendation' was made by the M to Z Petitions Committee in its report to the House of Representatives yesterday on 59 petitions praying for an amendment to the Gaming Act so as to provide for the double totalisator, the telegraphing of bets, and the publication of dividends. The committee stated that as a matter of policy was involved, and the subject matter of the petitions was being dealt with in the Gaming Amendment Bill now before the House, it had no recommendation to make. GISBORNE RELIEF PAY Reduction in Allocations A request that steps be taken to cancel the reductions made in the allocations of relief work pay for the Gisborne district was contained In a question Mr. D. W. Coleman (Lab., Gisborne) asked the Minister of Employment, Hon. Adam Hamilton, in the House of Representatives yesterday. Mr. Coleman said he had been informed that In some cases the present allocations meant a reduction of 33 per cent. Mr. Hamilton said it was not possible to meet the request. The reduction was nothing like the percentage mentioned by Mr. Coleman, and the allocations were the best possible at this time of the year.

NEW SILVER COINS Minister Defends Contract SAVING TO GOVERNMENT “A great deal of discussion has taken place as to whether we should have minted our coins here or not. Whether the matter will ever. be settled to the satisfaction of everybody I can’t say at this stage, but those who investigated the question came-to the conclusion that the local manufacturer was not in a position to compete with the Royal Mint,” said the Minister of Finance, Rt. Hon. J. G. Coates, when moving the second reading of the Coinage Bill in the House of Representatives last evening. Mr. Coates explained that the purpose of the Bill was to replace the Imperial legislation by local legislation. The measure became urgent by reason of the fact that a shipment of the new coinage was due to arrive here any day now. The Bill covered all the technical points not provided for in the Finance Bill passed last year. ■ The ultimate aim was to withdraw from circulation in. New Zealand both the Imperial and Australian coinage. “At the present,time.” he said, ”we are having an argument with our Australian friends as to the rate at which it should be withdrawn.” In referring to the argument as to whether or not the new coins should have been minted in New Zealand, Mr. Coates said that a committee competent to decide the issue had come to the conclusion that the local manufacturer could not come anywhere near competing with the Royal Mint.” The consensus of opinion was that the right thing had been done. Mr. E. J. Howard (Lab., Christchurch South): Didn’t the local people make a definite offer? Mr. Coates: Yes, there were several offers made, but they did not compare with that of the Royal Mint. Under the arrangement made there will be a profit to the Government of £lBO,OOO on the first contract; the rest of the coins will cost us nothing. Mr. J. A. Lee (Lab., Grey Lynn) said be could, uot understand why silver coin could uot be minted in the Dominion. He thought the printing of a five-shilling note was necessary. Why not a paper currency down to a halfcrown? There was no reason against it. The Minister should have had sufficient faith in his own country to decide to mint locally. Mr. C. A. Wilkinson (Ind., Egmont) congratulated the Government on at last taking up the question of its own coinage. Certainly a considerable time had elapsed since this matter was brought forcibly before the Government. New Zealand was the only British country, with the exception of Northern Ireland, that had not a mint of its own. The manufacture of silver presented no difficulties and could easily be done by a Wellington firm which had the facilities or could get them. The statement that it was cheaper to have the coin manufactured at Home should be supported by details. Information was sought by Mr. Wilkinson as to the arrangements for the retirement of English silver. He realised that the coin had been slipping away through the silver being taken out of the country illicitly to get the exchange premium. The large quantity of Australian silver in circulation was also a question that had to be dealt with in a systematic way. Mr. Coates said he had gone to some pains to see if it were possible to arrange for the orderly retirement of English silver. During the past twelve months, however, it had transpired that the British Government was unable to arrange for the retirement of English silver from overseas. Efforts to make arrangements for the orderly retirement of this silver had not been successful. The position had to be looked at from the British Government’s point of view. Tf the silver were retired ii would mean that the. British taxpayers would be paying something for nothing, although the intrinsic value would be In the meantime Australian and British silver would be allowed to clrcu-. late. Ultimately it would be collected by the banks and then melted down and re-coined. That was the best that could be done. Australian sliver coin was not legal tender in New Zealand. It was similar coin to British coin and the public accepted it as such. Mr. W. E. Parry (Lab., Auckland Central) : It does the job. Mr. Coates: Yes, that is so. The Bill was read a* second time.

COMPANIES BILL

Bringing Law Up to Date RECEPTION IN HOUSE Speeches on Second Reading Full opportunity is to be given interested thirties to make representations.on the Companies Bill, which is now before Parliament. An announcement to this effect was made by the Minister of Finance, Rt. Hon. .1. G. Coates, in the House of Representatives. when moving the second reading of the Bill yesterday. Mr. Coates said that the Government proposed to allow about a fortnight to elapse before taking the committee stage. Any proposed amendments would be submitted to the advisory committee for an expression of opinion. Mr. Coates admitted quite candidly that lie did not possess the qualifications to discuss the technicalities of the Bill. He proposed to leave that to others more competent than himself. For many years there had been a demand for amendments to the Companies Act, and it was very important that the law of New Zealand should be brought up to date and to ensure that it should safeguard the community within and without. Private and Public Companies. In 1922, when a Bill was introduced, there was an outcry that not sufficient notice had been given the public. He hardly thought that argument would apply to the position to-day. In recent years comment had . been made not only in New Zealand, but in other countries, as to whether’ the law in operation here really gave sufficient protection to investors. lie quoted figures to show that apart from companies in liquidation, there were at present on the register 7823 companies with a combined normal capital of £145,750,000. Of that number 6083 were private companies with a total nominal capital of over £48,000,000; 1740 were public companies with a total nominal capital of £97.500,000. At present annual registrations were about 800. of which 100 were public and 700 private. The amount collected by the Registrar of Companies for registration, annual filing returns, mortgages, etc., was approximately £BOOO annually. Under the Bill a greater amount would be collected annually on the returns of private companies. which bad not now to file them. Need for General Revision. It would be seen, said Mr. Coates, that private companies were much in excess of public companies, the proportion'being about seven to one. Nevertheless, public companies still absorbed most of the capital. He was not able to give the proportion of companies registered each year that went into liquidation, but be was informed that at the present time 1100 companies were in the process of liquidationfl These facts alone showed the importance of the economic system of a sound body of company law. “In New Zealand,” continued Mr. Coates, “we have had no general revision of our" company law since 1903. It seems hardly creditable to a country like New Zealand that we should have had no general revision for 30 years. In the United Kingdom, on the other hand, the law was amended and consolidated in 1908, it was comprehensively amended in 1928, and in 1929 the Act was consolidated and passed. This Act of England (1929) remains in force without alteration, and the primary purpose of the Bill we have before us is to adapt , the Imperial Act of 1929 to suit conditions in New Zealand. “The importance of the subject matter of tho Bill will be appreciated when we remember the great preponderance of small over large shareholders. The investments of these small shareholders represent the savings of thrifty wage-earners and other persons of small means, and they are entitled to every reasonable protection the law can afford them.” Mr. W. E. Parry (Lab., Auckland Central) : Is it proposed to send the Bill to a select committee? Mr. Coates: No, that is not the intention. The Bill has already been considered by a committee of experts. Mr. Parry: Was evidence called? Mr. Coates: “No.” It was not to be expected that the law drafting office staff should include an expert in company law. The committee, which had considered the Bill, was composed of experts. He wished to acknowledge the indebtedness of the Government to those gentlemen for the time and care given and the work performed over a period of three years. They had held more than fifty weekly meetings, each meeting lasting upward of three hours. Moreover, much time had been spent individually in preparation. He could not -praise too highly the helpful criticism submitted to them by the law draftsmen. “It may be argued,” said Mr.-Oates, “that too much time has been taken in completing the work. The answer Is that emergency legislation, with two sessions in the years 1931 and 1932. and the very urgent work connected with the reprint of statutes, made such heavy demands on the law drafting office that, important as tbo Companies Bill unquestionably is. this other work had to take precedence.” Hawking of Shares. He thought that with a few exceptions the Bill was generally accepted by the business people as being a very satisfactory production. • The House should think very carefully before it allowed special agents skilled in pleading to go round the country persuading farmers and others to transfer their money from the Post Office Savings Bank to bonds and shares. Mr. ,T. A. Lee (Lab., Grey Lynn) : I wish you would do the same for the political advertiser. Mr. Coates: “So far as I know any agent who has ever represented the party to which I belong would have got the sack unless be spoke the truth.” (Laughter.) He did not think there was need, in moving the second reading, to attempt to summarise the contents of the Bill. The explanatory memorandum referred to most important changes contemplated, and to the most Important modifications made in adapting the Imperial Act. He wished to point out, however, that, by an oversight, provision had been made which would permit of the registration with limited liability of companies formed to carry on accident insurance business. This was not in accordance with the Government’s intention, and amendment would be made in committee. Mr. Coates said that a question had been raised as to whether they were not giving the stock-brokers too much power. Since he had been Minister of

Finance he had been iu close contact with stock-brokers, and it was his experience that they had always placed the interests of the public first. They were always ready to assist the Government, and be appreciated this very much. The Bill aimed at a tightening up in many directions. This was necessary to preserve the reputation of the country, which must be jealously guarded at all costs. Representations to be Heard. “It is not my intention to take the committee stages for some time,” added Mr. Coates. “Perhaps not for a fortnight. This will enable representations made during the debate to be fully considered, and any necessary amendments to be prepared.and circulated. Any proposed amendments will be submitted to the advisory committee for their expression of opinion. The Bill, when passed, must be implemented by new winding-up rules —that is, for procedure for the Supreme Court. These rules are made by Governor-General-in-Couneil with the concurrence of the Chief Justice and tlie Rules Committee appointed under the Adjudicature Act, 1930.” There was no reason why the Bill should not be passed this session. The business people were anxious to know what amendments would be made to the present law. The Government intended immediately the Bill was passed to proceed with consideration of the rules, and assuming that the advisory committee was willing to continue, the Government would continue to avail itself of their services until the wind-ing-up rules had been gazetted. Labour Praise for Bill. “The Bill presented is one of the best examples of good draughtsmanship that has been before the House for some time,” said Mr. F. W. Schramm (Lab., Auckland East). “It has placed our company law in a more definite position than ever before. It certainly has been, given a lot of attention. and it reflects credit on the Government for bringing it down, and great credit on the committee that prepared it.” Mr. Schramm said there was no reason why the Bill should not be passed at the present session, ns there were only one or two clauses on which there would be any real argument. The law relating to companies was quite a recent thing, dating back only to 1855. One of the most important clauses in the Bill-jvas that dealing with the name of the company. People were often misled by the name into thinking that they were dealing with some respectable banking or trustee company aud that they were protected. The provision dealing with the registration of names was one of the best that could possibly be put forward. It prevented the use of the words “Royal,” “Imperial,” or “National," and'also “Bank.” “Bankers.” “Trust," or “Stock Exchange,” said Mr. Schramm. That was most: important, and would give the best law we had had so far in New Zealand. The provision for changing the name of a company bad been effectively simplified. Another good clause reduced the commission that might be paid on the sale of shares to a maximum of 10 per cent. He. and he supposed other members, had been inundated with representations regarding clause 140, which restricted appointment of auditors in future to members of three organisations, the Society of Accountants, the Institute of Accountants, and the Accountants’ aud Auditors’ Association. He had been asked both to oppose and to support this. It meant that people belonging to other societies than those named would not be able to procure any fresh work except by special permission of the Minister of Finance. This was not a party matter at all, and be was glad the Minister was going to postpone consideration so that this clause could be gone into. It bad been suggested to him that the clause as it stood would create a special monopoly for one class as opposed to another class. He would like to see the clause referred to a special committee before it came before the Committee of the House. Clause 343 restricting the selling of shares would afford protection not only to people living in country districts, but to a great, number of town workers. When the Bill was passed one of the first things that would need to be done was for the law draughtsman to take in hand the drawing up of provisions for the winding-up of companies. These were now about 40 years old. Effect on Dairy Companies. Mr W. J. Polson (Govt., Stratford) said he agreed that share-hawking was pernicious, hut he was afraid the provision in the Bill was going to have a serious effect on co-operative dairy companies doing business iu the country. They could not extend their capital or be established in the first place without, canvassing of private houses. He hoped also that a monopoly of auditing would not be established for members of three organisations alone, but that room would be found for others who had given long and honourable service. No Room for Incompetency. Mr. A. Harris (Govt., Waitemata) said it was imperative that no incompetent person should be allowed to audit a company’s affairs, but it was reasonable that no person should be deprived of earning a livelihood. He realised there were a lot of objections to door-to-door hawking and that there htid been a great many abuses, but the clause in the Bill restricting this was equivalent to telling the farmers that they were a lot of “ninnies” and uot capable of transacting their own business. A Labour member: Aud the city people, too. Mr. Harris said the clause savoured of a close corporation for sharebrokers. If a person wished to take a share salesman into his house he should not be prohibited from doing so. A reasonable opportunity should be afforded people to investigate propositions if they chose to do so. Generally speaking. however, the Bill was a very great improvement on the existing company law’. Protection of Public, The Leader of the Opposition, Mr. M. J. Savage, said it should be a simple matter to protect the public aud do justice to those who had earned their living in the past. It: seemed to him that the Bill would safeguard wageearners in the liquidation of companies. He understood that was an improvement on the existing law. In his opinion the wages of labour were entitled to protection. What they had to do was to safeguard the public without going to ridiculous extremes. It was necessary to safeguard the public from wild-cat schemes, but these were uot always hawked from door to door. The Bill seemed to be a reasonable attempt to put the company law on a better basisj. A part of the Bill tliat interested him was that limiting the choice of auditors to three particula” organisations. He wanted to know what were the qualifications demanded by the Bill, and were certain men to be shut out, not because of lack of qualifications but because they were not members of certain organisations. He

thought a small committee might lie set. un to draft something to meet the position without opening tlie door to people who were incompetent. No one wanted to do that. “Excellent Measure.” Mr. H. M. Campbell (Govt., Hawke's Bay) said that generally speaking the Bill was a most excellent measure. It was a distinct improvement on the old Act, which was very ancient. He thought the restriction on selling shares was long overdue. He did not know what was the position in the cities, but in the country districts share-hawkers were a nuisance. He strongly supported the provision relating to the appointment of auditors. It was only right and proper that the appointment of company auditors should be limited to those with specified qualifications, and to those who would be more or less under control. He did not care who did the work, so long as the public were safeguarded, and for that reason be thought, tlie clause as presented in tbo Bill was on very sound lines. Mr. Campbell said that the English Act.provided that a private company might have fifty members, and there was provision under which employees could become members’of the company He. would like to see twenty-five, the number stipulated in the present Billincreased, on the ground that it was causing considerable inconvenience to some private companies. After other members had expressed their views. Mr. Coates briefly replied, lie stated he would look into the points raised during the debate. The Bill was read a second time.