INVESTMENT TRUST

Waihi Daily Telegraph, Volume XXXIV, Issue 8735, 26 February 1935, Page 3

INVESTMENT TRUST

POSSIBILITY OF CARRYING ON REPORTED SALE OF SHARES TO QUEENSLAND COMPANY Developments more surprising than any that have been flung upon the investing public are rumoured concerning the Investment Trust of New Zealand, Ltd. It is reported that efforts by the Federal and States Governments have failed to induce the Queensland Labour Government to fall into line and pass legislation similar to that already enacted by the New Zealand, Federal, New South Wales, South Australia and Victorian Parliaments. Through the attitude of Mr Forgan Smith, the Premier, the State of Queensland may afford

protected territory for an enterprise which hostile legislation has remov-

ed from the Dominion and several Australian States. (It will be recalled, by the way, that when the special Act was before the New South Wales Parliament the Labour Party, under Mr Lang’s leadership, strongly opposed it.) FRIENDLY NEUTRALITY “The New Zealand Financial Times” is of the opinion that the Governments were badly advised in the actions taken, even if only on account of the denial of the right of trial before condemnation. At the same time it cannot be denied that the officials of the Investment Executive Trust committed acts which were indefensible, and that by those acts have done a very great injury to the whole investment trust movement. Advantage has been taken of the friendly neutrality of Queensland, so it is reported. It is known thai;, during the week preceding the passing of the legislation, Mr McArthur was in Brisbane unknown to any but his intimate associates and that he returned to Sydney on the day that the legislation was passed. It is now understood that a company was formed, and to this company an option was given to purchase the whole of the shares, assets and business of the Investment Executive Trust" of j New Zealand. That option has, we are informed, been exercised, and the Queensland company now claims that it is entitled to the transfer of the whole of the property, assets and liablities of the I.E.T.

THE LEGAL ASPECT If the information is correct, then it'is one of the greatest financial sensations in the history of Australia and New Zealand. The dramatic action by five Governments may be defeated. If the rights of the Queensland company can be maintained in law, then the 1.8. T. will continue to function as formerly. A crop of legal questions arises: How far can the rights of the Queensland, company in the exercise of its option—if that option has been given -Snd exercised—be interfered with or denied by the legislation passed in New Zealand and the Australian States? Were the Acts so passed an infringement of constitutional rights, t and would they be upheld on appeal to the Privy Council? Can the Public Trustees in New Zealand and New South Wales maintain their trusteeships against the claim of the Queensland company to the assets of the company? The legal questions are of peculiar interest and may reach far down into basic principles governing the powers of parliaments and the rights of States. In short —can powers granted and exercised under the laws of the State of Queensland be set aside or annulled by acts of other Parliaments?

PIQUENT SITUATION A piquancy is lent to the situation, assuming the information is correct, by the decision of the debenture holders, representing £64,209, in the Southern British National Trust favouring reconstruction, as against the alternatives placed before them by the Court of New South Wales. In New Zealand the debenture holders of the I.E.T. have voted in favour of carrying on the business of the trust. At the moment of writing the reports of the investigating accountants, appointed under the special legislation, have not been presented to Parliament, although it is expected that they will be available soon after the House meets. Then the inside story will be told as it has hot yet been told. But whatever the reports may contain, and -whatever the ; legislation proposed under the Company Commission’s Report, if the shares in the Investment 'Executive Trust have been sold to the Queensland company, cah that company be" denied the rights it acquired under their law? We understand that the names of Messrs J. W. S. McArthur and C. G. Alcorn do pot appear, but on the other hand the directors of the Queensland company Include an official of the State Law Society, and an official of the gqciety of Accountants. It would, therefore, be difficult for any court to hold that these, at least, are not fit and proper persons to carry on the company.