Hon. FERNAND RINFRET (Secretary of State) moved the second reading of Bill No. 9, to amend the Companies Act.
He said: This bill, Mr. Speaker, with the exception of a few unimportant changes and clerical corrections, is the bill which was presented last year in the Senate, examined by a special committee of that house, and passed on to the Commons too late for consideration before prorogation. As it is my intention if this bill secures second reading to refer it to a
special committee, perhaps I may be permitted to make a brief reference to the provisions of the bill.
The main purpose of the bill is to make such improvement in the existing company legislation that it may become a more efficient instrument for the advancement of Canadian enterprises and industries. Conditions in respect to company management are constantly changing, and it is necessary that our legislation also be changed from time to time, in order to adapt it to new conditions. For instance, I might mention that the amending act of 1917 introduced into our legislation what was then a modern method of providing for shares without nominal or par value. This class of security, however, was not at that time developed to the extent that it is to-day, and it is now found necessary to amend our act so that recent developments in that regard may be met. Such methods have been introduced widely in other countries as well as in Canada.
I might also mention that in the amalgamation of companies, quite a new thing is to have shares without par value. There is no provision by which the surpluses and unearned profits of the amalgamated companies may be carried forward by the new company as reserve and undivided profit. A recent change in the method financing has been the introduction of redeemable preference shares. It frequently happened that at the outset of the business insufficient profits were earned to pay the bond interest. Now the method is rather to issue common and preference shares with cumulative dividends, and that also requires some changes and modifications in the Companies Act.
In the amending act of 1924 provision was made for arrangement between Shareholders and creditors of companies. This provision had its advantages, but difficulties often arose in respect to the approval of the arrangement by the provincial courts. Moreover, in some cases the arrangements under this provision as presented to the department did not come within the terms of the act, and here again it is necessary to provide some new form of control.
Other companies have appeared in the Canadian field known as investment trust companies, and these will come up for consideration in this bill. The bill contains a provision under which returns may be called for by the Secretary of State for the purpose of ascertaining whether the company is living up to the limitations which are contained in the chapter. In this connection I may say that inasmuch as the investment trust companies have come in for considerable comment lately in the
Companies Act Amendment