LOTTERY COMPANIES

Hawera Star, Volume LIV, 25 October 1934, Page 6

LOTTERY COMPANIES

INVESTMENTS IN FOREIGN SCHEMES

COMPANY COMMISSION’S VIEWS

Reference is made in the Companies Commission’s report to the ingenious, type of company which combines the investment-trust idea with proposals to run a lottery in a foreign country. The commissioners observe that “promoters of such companies appear to be men of little financial reputation or substance, with little to lose. The financial schemes of such companies are unsound. They are adequately condemned on the grounds that they are incorporated in New Zealand to engage, in another country, in an undertaking which is unlawful in New Zealand.” The commission recommends: —

“That no company incorporated in New Zealand; shall be permitted to raise moneys in New Zealand or elsewhere for the pursuance in another country of any object which is unlawful in New Zealand; and any existing company having any such object may be wound up by the court on the application of the Attorney-General.”

Attention is also drawn to the action of at least one company in inviting subscription for shares as a condition of employment. The company has wide powers to terminate the contract, subject only to arbitration in the event of dispute as to the interpretation of the contract.

■Such a scheme, says the report, is dangerous, unless controlled, because it maj' enable unscrupulous or over-san-guine promoters to obtain the small savings of workers, under conditions onerous to the workers, for investment ia enterprises which may have little prospect of success. The commission recommends that all companies whch invite subscription for shares as a condition of employment must obtain the approval of the Department of Labour to the schemes proposed.