PARLIAMENT

Grey River Argus, 15 February 1935, Page 6

PARLIAMENT

MORTGAGE BILL Provisions for Corporation (Per Press Association.) WELLINGTON, February 14. At the first sitting of the House. Hon. Mr Smith tendered his resignation as Chairman of Committees, following his appointment to the Ministry, and on the motion of Mi Forbes, Mr J. A. N’ash was appointed Chairman of Committees. Mr 11. S. S. Kyle has been chosen to sue<p“d Mr Nash as Reform Party whip. The Bondholders' Incorporation Bill and Mortgage Corporation Bill were introduced by Governor-Gener-al ’s message.

Both Bills were read a first time. The House rose at 3.30 till to-day, to enable members to study the provisions of these two Bills. Mr Coates said it was intended to take the second reading of the Bondholders’ Bill to-day. The reason for the introduction of the Bill was that

at present no machinery had been laid down by legislation to enable bondholders to have a say as to what should be done. CORPORATION CAPITALISATION. The other Bill provides in the first part for ,the establishments of a Mortgage Corporation, with head office in Wellington, and power is given for the establishment of branches and agencies elsewhere. The original capital will be one million sterling in £1 shares. Half the shares will lie allotted at par to the Minister of Finance on behalf of the Crown. The remaining shares will be offered at par for public subscription in New Zealand. Not more than 5000 shares shall be allotted any one person. If any shares offered the public are not 'taken up, the Minister may subscribe for them, but shall offer them for sale to the public soon Hr desirable. The dividend is fixed at four per cent, per annum, or where the Corporation issued securities during that year at a. rate which exceeds by one per cent, the interest payable by the Corporation in respect of sucTT securities, whichever is treater. The capital may be increased from time to time, pursuant to a resolution passed nt a general meeting of shareholders. THE DIRECTORATE.

The management of the Corporation will be a Board of eight directors. Four, including the Chairman, will be appointed by State, and from this number two will bo appointed as joint managing directors. There will bn throe shareholders’ directors, and the eighth member will be an officer nf the Treasury approved by the Minister. The joint managing directors will be appointed for seven years. Of the other two, one will retire in 1939 and the other 1940, the order of retirement to be decided by lot. Thereafter. the term of the State direct ors will be~ five years. The first shareholders’ directors, like the State directors, will be appointed bv the Gov ernor-General-in-Council, and 'will re lire successively in 1938, 1939 and 1910, the order of retirement to bo by lot. Thereafter, the term of these directors will also be five years. The remuneration of the first man aging directors will be fixed by the Governor-General-in-Council, and subsequently bv the Board. The managing directors shall be the principal executive officers of the corpora tion. Tt is anticipated that they w’ll devote the whole of their time, to the duties of tfieir offices. THE BOND ISSUES. The principal business of the Corporation will be the making of loans The Corporation mav issue bonds, stock or other securities at such rate of interest and s/eh other terms and conditions as it thinks fit, to provide funds for carrying on the business. The total amount so borrowed, and for the time being outstanding, shall not at any time exceed 15 times the sum of the subscribed capital, and the amount then standing to the credit of the general reserve fund. All securities issued by the Corporation shall constitute a floating charge on 'all its assets. The securities shall be for such term not exceeding 50 years, as the Board may determine. The Corporation mav at any time purchase and cancel any security is sued by it.

SECURITY FOR MONEY LENT. Monies lent by the Corporation sh ill be secured by way of first mortgage on land in New Zealand, or on an interest in any such land with oi without any other security, as the Board may think fit. provided that the Board may lend money on the security of mortgage.of stock or other chattels if it considers the interests of the Corporation will thereby be more adequately safeguarded. N*> monies shall be lent by the Corporation in excess of two-thirds of the value of the security as determined by the Board. Where the security consists of mortgage 'on land, used principally for agricultural, horticultural or pastoral purposes, the value shall be determined primarily by reference to the earning capacity of the land

An exception to the two-thirds mar gin is provided for where the .ap plication is made to the Corporation for a loan to repay a mortgage debt existing when the Bill comes into force, and the security 'offered is a mortgage of land used principally for agricultural, horticultural or pastoral purposes. In such instances, the Corporation may grant a loan not ex ceeding two-thirds.

INTEREST ON LOANS. The Board shall fix the rate of interest to be paid under mortgages to provide adequately for the pawof d’vidends and the cost of administration, provided that the net rate of interest shall not exceed by more than one per cent, the rate payable bv the Corporation on its last issue of bonds before the date of the mortgage. Generally, every mortgage of land taken a s security for a I'oah shall be •i table mortgage providing for the repayment of debt by half-yearly or more frequent instalments. Tn special cases the Corporation may grant a loan secured by mortgage of land f »r 'a t‘*rm not exceeding five years, the amount to be repayable in one sum at the end of the term. Any

mortgage under that arrangement may be renewed for a further period ur> to five years. It may be made -a condition of any such mortgage that the. principal monies secured thereby may be called up by the Board and immediately become payable in the event of a sale or other disposition of the mortgaged property, or on the happening of any other specified contingency or event. Any mortgage held by the Corporation shall have priority over any mortgage previously registered, if the mortgagee under the prior mortgage consents in writing, endorsed on the mortgage of the Corporation. Procuration fees will not be charge;ble in respect of loans from the Cor poration. Mortgagors are required to pay to the credit of the general reserve fund, established under the Bill, an amendment equal to two per cent, of the amount of the Joan. In such ease it shall be secured by mortgage as if it forms part of fhe loan. TRANSFER OF STATE SECURITIES The Bill provides for the transfer of securities from the Crown to the Corporation. These consist of mortgages in respect of advances made by the State Advances Superintendent, under the Discharged Soldiers’ Settlement Act and by the Land Development Board, and debentures or other securities in respect of advances made by the State Advances Superintendent to local bodies. The transfer of securities belonging to the Land Development Board is governed by Order in-Council and any specified security nray be excluded.

A mortgagor is given the right, within three years, to require that the rate of interest is adjusted to current rate, that the capital amount secured by mortgage shall be increased by two per cent., and that the mortgage shall be converted into a table fmortigage prepayable within n period not exceeding 50 yea>s.

The directors of the Corporation are to constitute a Rural Tntermedi ate Credit, and to effect this, certain sections >of the Rural Intermediate Credit Act are repealed, among them those dealing with the status of th" Public trustee and one limiting the amount of a loan to £1000?“

The Corporation is to be liable to rates and taxes just as an ordinary company, T)iit in its capacity as mortgagee under any mortgage transferred to it, if is to enjoy the same ex emptions and protection in respect, of rates as the original mortgagee AUCKLAND. February 14.

The Chamber of 'Commerce has to dav decided to 'ask the Associated Chambers to impress on the Government the desirability of not passing the mortgage legislation through all stages until the farming rehabilitation propelhavn boon introduced.