COMPANIES’ BILL

Timaru Herald, Volume CXXXVII, Issue 19641, 8 November 1933, Page 4

COMPANIES’ BILL

SECOND READING DEBATE LITTLE CRITICISM OFFERED By Telegraph—Press Association WELLINGTON, November 7. In moving the second reading of the Companies Bill, in the House of Representative to-day, the Rt. Hon. J. G. Coates said that there had been a demand for legislation of the kind for many years past, not only so far as the Dominion’s own internal requirements were concerned, but afso so that company law in New Zealand should be such that those who were investing money from outside could be sure that the methods applied were reliable. He quoted figures showing that since 1927, 4471 private companies with a nominal capital of more than £16,000,000 and 656 public companies with a nominal capital of more than £20,000,000 had been registered in New Zealand. The total number of companies registered in New Zealand wl 7823 with a nominal capital of moi than £145,000,000. Of these private companies totalled 6083 with a nominal capital of more than £48,000,000 and public companies 1740 with a nominal capital of more than £97,000,00°. It would be seen that private companies were greatly in excess of public companies, nevertheless public companies still absorbed most of the capital. The importance of the subject matter of the Bill would be appreciated when the great preponderance of small over large shareholders was remembered. The investments of those small shareholders represented the savings of thrifty wage-earners and other persons of small means, and they were entitled to every reasonable protection that the law could afford them. Share Hawking. Dealing with the question of share hawking, the Minister said it was not right that a certain type of person who was an adept at persuasive language should be permitted to entice people to withdraw their earnings from the Post Office, or from, some other form of investment, and place it in companies in a belief that they would secure a return of 20 per cent, or some other fabulous sum. Mr J. A. Lee (Lab., Grey Lynn): i wish you would do the same with political organisers. Mr Coates: So far as 1 am concerned political organisers would get the sack unless they spoke the truth, the whole truth and nothing but the truth. Mr Coates indicated that there were one or two amendments which the Government would move during the committee stages, which he did not intend to take for at least a fortnight. That would give full opportunity for amendments to be considered and, if necessary, submitted to the special advisory committee for its opinion. By an oversight, provision had been made in the Bill which would permit registration with limited liability of companies formed to carry on accide t insurance business. That was not in accordance with the Government’s intentions and an amendment would be made in committee. The Government possessed powers to limit th: formation of insurance companies in New Zealand, and it was proposed to retain those powers. It would be necessary when the Bill was passed to adopt the winding up rules and in order to assist in this work it was proposed to make further use of the services of the advisory committee. Credit vO the Government. Mr F. W. Schramm (Lab., Auckland East) said it was a matter for satisfaction that the company law was being brought up to date. He thought that the Bill was a fine piece of drafting, and it reflected credit on the Government and on the members of the advisory committee. He regarded the clause relating to the names of companies as a very important feature of the Bill. Many people were liable to be misled by the names of companies and the restriction on r he use of such words as “royal,” “imperial, “national,” “banking” and “trustee” commended itself to all those who had considered the matter carefully. There was a lot in a name fo far as companies were concerned, and the advisory committee had submitted the best law on the subject that we had yet had in New Zealand. The clause relating to the .mount of commission that might be paid on the saleof shares was greatly needed in this country. He w T as pleased to see that it was proposed to adopt the English practice of fixing the maximum commission at 10 per cent. Formerly large amounts had been spent by companies in this direction. Auditing. Mr Schramm said that he, in common with other members, had been inundated with communications r n the subject of the Bill’s provisions relating to auditors. Some thought that the provision should stand while others declared that they should be cut out. Certainly they were new. He did not think that there was anything like then, in other parts of the Empire. He believed that the clause might well be held up for further consideration. It might be possible to prepare some claur' which would be satisfactory :o all the professional people concerned He would like to see this clause referred to a special committee. He did not want the Bill to be delayed. He wanted to see it go through as soon as possible. It was a measure that was urgently needed and there was no reason why anyone should hold it up. Mr W. J. Poison (C., Stratford) said that he agreed that shar-' hawking should be stopped, but the provision contained in the Bill would have a erio- i effect on co-operative companies doing business in the country He suggested as an alternative that canvassers be licensed under a suitable bond. Mr H. Holland (C., Christchurch North) said that it would not be possible to support the clause relating to auditing without inflicting hardship on somebody. It appeared to him that there was a desire to establish a close corporation. The Leader of the Opposition, Mr M. J. Savage, said that “wild cat" schemes were sometimes seen on the Stock Exchange. People who had never gone down a shaft in their lives had made money out of goldmining They were not the people who did the work, and he was not sure how Parliament could safeguard the public against them. He did not think that the Bill would do it, but it seemed to be a reasonable attempt at putting company law a better basis. “No Close Corporation.” Mr A. Harris (C., Waitemata) said that no close corporation should be created in respect of auditing. Mr H. Atmore (Ind., Nelson) quoted cases of hardship that might arise as a result of the operation of the clause relating to auditing. Mr W E. Barnard (Lab., Napier* said that on the face of it this clause seemed to be well drawn, and while he was not absolutely committed to it in

it- present shape, the representations made to him inclined him to support it as it stood. “We have to recollect that the note running through the whole Pill is an effort to tighten ip company law and this clause is merely in tune with the general purpose -f the Bill,” he added. Mr H. M. Campbell (C. Hawke's Bay) said he thought the restriction on selling shares was long overdue. He dU not know, what was the position in the cities, but in the country districts share hawkers were a nuisance. Replying to the debate on the second reading, Mr Coates said hr had tak“n careful note not only of the points r-ised during the debate but also of matters which members had discussed with him personally. He would submit them to the Advisory Committee and the amendments considered necessary would be introduced during the committee stage. The Bill was read a second time

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