COMPANY PROSPECTUS

Otago Daily Times, Issue 22711, 25 October 1935, Page 4

COMPANY PROSPECTUS

ADVERTISEMENT IN NEWSPAPER TEST CASE BEFORE COURT (Per United Press Association) WELLINGTON, October 24. The legality or otherwise of a commonly established usage in company promotion formed the subject of a reserved judgment delivered by Mr E. D. Mosley, S.M., in the Magistrate’s Court to-day in a case in which the registrar of companies charged Bond’s Hosiery Mills (N.Z.j, Ltd., under the Companies Act with issuing a prospectus in the form of an advertisement without first delivering a copy to the registrar for registration. The admitted facts in the case were that the company registered a copy ofits prospectus on August 8 and that on August 10 it inserted in the Evening Post an advertisement which referred to the prospectus without first delivering a copy of the advertisement to the registrar. The registrar contended that the advertisement was an unregistered prospectus. The company contended that it was not a prospectus. The defendant company was convicted and ordered to pay costs. The magistrate said that a perusal of the advertisement satisfied him that it was an invitation to the public to subscribe for shares in the proposed company and came within the definition of a prospectus in section 3 of the Companies Act and was therefore a prospectus within the meaning of the Act. Mr N. A. Foden said this was a test case. There was no record of any similar case with identical features in the English, Australian or New Zealand law reports. Mr E. D. Blundell, for the company, said the company had acted in a perfectly bona fide manner throughout. It had been chosen amongst other companies and put to the expense of testing whether or not the advertisement was a prospectus. The magistrate said that, as counsel might wish to carry the matter to a higher court, he would fix security for appeal at 10 guineas, plus £3 13s.