TERMS OF BILL

Evening Post, Volume CXVIII, Issue 34, 9 August 1934, Page 8

TERMS OF BILL

TUX INVESTIGATIONS

APPOINTING INSPECTORS

PRODUCTION OF DOCUMENTS

Six clauses and a schedule comprise the legislation which gives effect to the Commission's recommendations.

Fifteen companies arc covered by tho legislation and tho ■ Governor-General' I in Council is empowered to extend the schedule should the Commission subsequently recommend in that direction or should the Government reccivo a request on those lines from any outside Administration. The companies comprising tho schedule are: —• Incorporated inN.Z. The Investment Executive Trust of New Zealand, Ltd. The Sterling Investments Company (N.Z.), Ltd. The Investment Securities Association, Ltd. The British' National Investment Trust, Ltd. Tho New Zealand Shareholders Trust, Ltd. Wynwood Investments, Ltd. Tho Pacific Exploration Company, Ltd. Farms and Farmlets, Ltd. The First Mortgage Freehold Security Company of N.Z., Ltd. The Transport Mutual and General I»-' suranco, Ltd. Tho V. B. Melnncs and Co., Ltd. Alc'onv Trower and Company, Ltd. Financial Publications, Ltd. Incorporated Outside of New Zealand. Tho Southern British National Trust, Ltd. The British National Trust, Ltd. Tho power to add the names of com* panics to the schedule by Order ia Council is exercisablc if the Commission recommends an investigation of the affairs of a company, or if a similar request is at, any timo received from tho Government of :my other country. This clause is inserted at the roquesfc of tho Australian Government. In addition, the Governor-General ia Council is empowered to appoint at any I'nio competent inspectors .to investigate the affairs of any company covered by the legislation with a view to reporting to the Supreme Court. SUPEEME COURT ORDER. A copy of the Act, together 'With a copy of the order appointing inspectors, has to be filed in the Supreme Court at Wellington, as a consequenco of which the instrument of appointment becomes equivalent to an order for an investigation undor the Companies Act, which authorises the jSuprenug

Coiirt, on the application of a certain proportion of shareholders, to investigate tho affairs of a company. According to the Minister of Finance, those whoso interests at present may be in jeopardy are not shareholders ■ but bondholders, and tho section in tho Companies Act could not bo availed of, to meet tho position disclosed in tho Commission's report. Thus any appointments made, onco tho filing process is completed, will have all the effect of an order made under the Companies Act and will clothe inspectors with all tlie powers conferred on those appointed by the Supreme Court. To avoid any possible delay in the advice of appointment reaching inspectors^ .validity i? invested in tho method of giving, notice of appointment by telegram from the Minister of Finance. Thtf production of such a telegram will be equivalent to tho production of the original instrument of appointment. Inspectors are authorised to employ clerical assistance and to confer on their assistants: any of their own powers, otlior than the right to examino on oath.' Befusal to produce documents to assistants will render the offender liable to the same penalty as applies to a refusal given to tho inspector himscU. It is explained by tho Minister of Finance that, tho provisions of the Companies Act impose on the officers and agents of companies whose affairs are under investigation the duty of affording all information in their power, including the production of books and documents. An agent or officer refusing to give the information or pr6ducc the documents is liable to be prosecuted and punished as though his refusal were a contempt, of the Court. Under the new legislation, the same provisions will apply in the case of officers or agents of companies whose affairs are being investigated by the inspectors. In addition, the definition of officers is extended to include former officers and agents to include the bankers, solicitors, and auditors pi tho company inspected as well as former bankers, solicitors, and auditors. The costs of the investigation aro to bo'defrayed by the companies whose affairs are being investigated, unless tho Supreme Court orders payment to bo mado out of the Consolidated Fund. Provided. it is certified as correct by the Registrar of the. Supreme Court, the reports of inspectors are to bo admissible as evidence. . WINDING UP COMPANIES. The' Bill further provides that after the inspectors have made their report on any affected company tho AttorneyGeneral may petition tho Supreme Court to havo tho company wound up, and power is given to the Supremo Court to deal with the winding-up petition in the same way as if it had been presented..to the Court by the company The final clause of the Bill is important. It provides that if any director, officer, or agent of .tho company whoso affairs are being investigated, or.any other person, with the. object of defeating the purposes of the legislation or delaying or obstructing the prosecution of an investigation, destroys or alters any records of the company or sends or attempts to send out of New Zealand any such records or any other property of the company ho shall be guilty of an indictable offence, and liable-to imprisonment for two years, or to a fine of £500. The onus of proving that any sue!, destruction, alteration, or dispatch from New Zealand of tho company's property was not for the purpose of defeating the legislation or delaying or obstructing an; investigation is to rest on the person concerned.