AN INVESTMENTS BUREAU

New Zealand Herald, Volume LXXI, Issue 21940, 25 October 1934, Page 12

AN INVESTMENTS BUREAU

The corporate investments bureau, which the Company Commission makes the central feature of its final report, is an entirely new proposition for New Zealand, though the report speaks of similar institutions in other countries. The outline of duties and powers which the Commission would give this body demands considerable thought before complete judgment can be passed. It is neither to be endorsed in whole, nor utterly condemned in haste. The purpose is to create a system of control over and supervision of company promotion and company activities which shall be more flexible, more capable of application to all cases, and less easy of evasion than any body of statute law could possibly be. So much the report makes clear. If such a system can be so devised that it will check fraudulent promotion, discover and prevent malpractices in company proceedings, and protect the ignorant investor from those who would take direct advantage of his inexperience, yet, at the same time will place no harassing restrictions on legitimate business enterprise, the innovation will be of great value. Obviously that is a large order to fill. The Commission appreciates the difficulties when it proposes for the bureau functions which normally belong either to the Legislature or to the law courts; for <he right to interpret and apply the law relating to companies is suggested as one of its functions. Here is the point where it is necessary to pause and consider what is involved. The recommendation is that still another bureaucratic body, with exceedingly wide powers and discretion, should be created. It is necessary, therefore, to see that it does not develop into a minor tyranny. With that point reserved as demanding further thought, another, difficulty is approached. The commission visualises the bureau as an agency for preventing fraud and other malpractices. It is to examine the prospectuses of new flotations, and the working of existing companies with this end in view. By doing so, by allowing a proposal to pass, would it endorse its soundness as an investment? The idea that it had done so might easily spread abroad, and e\en be made use of to push the fortunes of enterprises which, while legitimate enough, were highly speculative. That, at least, comes from the experience of. other countries where an attempt has been made to supervise investment in some degree. These considerations do not exhaust the questions which could be raised about the commission's plan ; neither do they mean it should be condemned off hand; but they do indicate why it should have long and sober consideration before final judgment is passed on it..