SPECIAL LEGISLATION

Manawatu Standard, Volume LIV, Issue 288, 2 November 1934, Page 2

SPECIAL LEGISLATION

FOLLOWS COMPANIES INQUIRY. Per Press Association. WELLINGTON, Nov. 2. Introducing in tho House of Representatives to-day, by Governor-Gen-eral’s message, special legislation oil the lines of that in New South Wales for the control of trust companies, Rt. Hon. J. G. Coates said communication was held with the Government of New South Wales regarding the desirability of appointing a receiver and manager and that action had probably already been taken New South Wales. Many people had invested money in good faith. The object of the Bill was to appoint a receiver and manager in New Zealand to watch the interests of debenture-holders in New Zealand. It did not take a great deal of imagination to see it would be possible at very short notice to transler any of the securities held in New Zealand to another country unless action was taken which would prevent it until the whole position was cleared up. Mr Coates said that events and the information gained in the intervening period of 12 weeks had revealed six things which were a justification, in his opinion, for this present legislation. Firstly, tho interim report of the Now Zealand Commissioners, with its recommendation that there was a case for inquiry was fully vindicated; secondly, it had been proved that the books and records of securities and other properties of New Zealand companies almost wholly financed by the money of New Zealand debentureholders had been removed to New 'South Wales; thirdly, it had been made clear ’that it was the intention of the directors and managers of these companies, if they were left in control, to administer the affairs of these companies permanently from Australia; fourthly, the position created by the conflicting rights and claims of these directors and managers on one hand, and of the Now Zealand debenture-holders on the other hand, iiad been a difficult one that will probably require legislation in New Zealand and in Australia to provide for an equitable solution; fifthly, there was a danger that after determination of the control exercised by the New South Wales Royal Commission and before the filing ol the reports of the New Zealand inspectors in the Supreme Court ol New Zealand, the affairs and properties of the companies in question would, as a matter of ordinary legal right, pass back to the unfettered control of those persons whose transactions had been the subject of the inquiries referred to; sixthly, that in view of the evidence tendered before the Royal Commission in Sydney it was undesirable in tho interests of New Zealand debentureholders that the control of the companies in question should so pass back to the present directors and managers before the Supreme Court had bail an opportunity to consider the reports of the inspectors appointed under the recent legislation and any application to the Court that might ho based on those reports.

‘‘This Bill, therefore, places possession and contrc* of the property of these, companies in the hands of our Public Trustee. It provides that in the meantime the Trustee will hold it and such tilings as are necessary to preserve the property and business of the companies as nearly as possible in their present form. “The Bill provides for the determination of,the Public Trustee’s receivership by tlie Supreme Court. The appointment, control and removal of the receiver all fall within the ordinary, equitable jurisdiction of the Court and our Court will deal with this matter in tho light of the information brought before it and according to the provisions of this Bill and established principles,” the Minister said. “The Government has adopted tho procedure of asking this House to make the appointment of a receiver by this special Aid because it is fully convinced it is in tho public interest to do so. The difficult position that has been revealed by the evidence in Sydney is such that no debenture-holder or group of deben-ture-holders can he expected to bear tho possibly heavy exjien.se of seeking by private litigation to move for the common good. Debenture-holders have supplied practically all the 1 unils of these companies, but they have no control. The directors, on the other hand, have risked nothing, but have full control and through their counsel in Sydney have plainly indicated their anxiety and intention t.:> retain their control. If they regain temporary control they may increase the difficulties of the .position and in these circumstances it seems to the Government that it would fail in its duty to the community if it did not take steps to preserve the slatus quo until a clear and final statement of the facts of the case has been made by a disinterested and skilled body of men. When the facts are thus known tho facts can he judicially considered by the proper authorities. It may he added that the amount of the debenture ca|iital subscribed to the Investment Executive Trust of Now Zealand, Ltd., by New Zealand debenture-holders is over £400,000,” Mr Coates concluded.