COMPANIES BILL

New Zealand Herald, Volume LXX, Issue 21641, 6 November 1933, Page 11

COMPANIES BILL

THREE IMPORTANT POINTS THE HAWKING OF SHARES AUDITORS' QUALIFICATIONS [BY TELEGRAPH—SPECIAL REPORTER] WELLINGTON, Sunday The second reading debate on the Companies Bill, which will be initiated when tlie House resumes on Tuesday, will probably centre oil three topics — share-hawking, requirements of the bill in respect to the issue of company prospectuses and the provision limiting the choice of auditors, except with the Minister's special ' approval, to members of three accountants' organisations.

The third of these matters has been fully discussed following the announcement a fortnight ago that certain Coalition members were making strong representations to the Government for tho elimination of the clause in its present form. There is no similar provision in the British Act of 1929, on which the New Zealand bill is based, and it is extremely doubtful whether the clause will pass the House without substantial amendment. Even the Government, it is believed, is not

altogether convinced of its justice. A special feature of the bill is the prohibition which it imposes on the hawking of shares from house to house except where shares are approved by a registered stock exchange. In this respect, the bill closely follows the British legislation, but the question has been raised whether conditions in New Zealand are not so different from those In England as to make the application of the same lawunfair. ♦

In England, it has been pointed out, there are underwriting companies which take over'the whole of company issues and act as a medium for the sale of shares to the public. In New Zealand, these companies do not exist. It appears possible that the clause imposing absolute prohibition on share-hawking may be modified, 'but the modification will not bo made unless the Government can satisfy itself that the public will still be adequately protected. It is understood, incidentally, that the Government contemplates taking action to tighten the regulations governing the licensing of sharebrokers. The change may possibly bo in tho direction of requiring applicants for sharebrokers' licences to be approved by a magistrate.' Another point at issue in the bill is the schedule which sets out new regulations governing the issue of company prospectuses. In some quarters tho opinion is held that these requirements are too stringent, but the Government is believed to be anxious to have them passed as they stand. The hill contains 384 clauses and 12 schedules, so that it may be expected to occupy the House for several sittings during the next fortnight.

VIEWPOINT OP ACCOUNTANTS AUDITING SECTION SUPPORTED The section of the Companies Bill which states that only members of three accountant' organisations shall be eligible for appointment as auditors of companies is supported in a statement issued by the council of the New Zealand Society of Accountants. t "No doubt attempts will be made by persons not possessing the necessary qualifications for membership of the society to urge amendments to the clause," says the statement. "During the past 25 years ovef 1200 persons have qualified by examination and have been admitted to membership of the society. Those few persons practising accountancy in the Dominion to-day who are outside the society's membership have had an equal opportunity with these 1200 of qualifying by examination. "One Qf the main objects of the Companies Bill must be the protection of the public, especially .those who inTest in companies, and the audit clauses in the bill are designed to give this protection. We submit that this protection can best be secured by legislating that the duties of auditing the accounts of companies are to be carried out only by members of tho bodies mentioned in the bill as introduced. The records of these societies over a quarter of a century show that their councils are fully alive to tho obligations imposed on them. Disciplinary action is taken immediately against any member who infringes the strict code laid down; newlv-formed bodies have not proved themselves and tho public is entitled to the protection now set out in the bill."

The statement ends with a request that members of Parliament should rote for the clause without amendment.