May 31, 1934

CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Is that preferred or common stock?

Topic:   DOMINION COMPANIES ACT
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LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

There were 4,500 shares of preferred stock and 3,000 shares of common stock of a par value of $100 each. That meant that the preferred shareholders had $450,000 and the common stockholders had $300,000 in the company. The provision was that whenever dividends on the preferred stock were in arrears for a period of one year the preferred shareholders obtained a vote in the company.

Topic:   DOMINION COMPANIES ACT
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CON
LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

Yes. In the last year apparently the common shareholders who had the management of the company saw that they were not going to be able to pay dividends on. the prefered stock and they then passed a by-law changing their 3,000 shares of common stock of a par value of $100 each into 15.000 shares of no par value. When the preferred shareholders stepped in and expected to take over the management of the company they found that they had only 4,500 votes as against 15,000.

Topic:   DOMINION COMPANIES ACT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

But that is exactly what this clause is intended to preclude and prevent. We are saying by statute enacted by this parliament that that thing cannot be done except with the consent of two-thirds majority of the holders of the 4,500 preference shares.

Topic:   DOMINION COMPANIES ACT
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LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

The way this clause stands now, the only shares dealt with were the common shares. The preferred shareholders' dividends were not in arrears at the time this was done, so they had no say, their shares were not dealt with in any way, but they were most seriously affected.

Topic:   DOMINION COMPANIES ACT
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CON

Ambrose Upton Gledstanes Bury

Conservative (1867-1942)

Mr. BURY:

They were affected in respect of voting power.

Topic:   DOMINION COMPANIES ACT
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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON (York-Sunbury):

Would it not meet the hon. gentleman's difficulty if both terms were used, "dealt with, or affected"? In one case you are dealing with shares actually changed, and the other shares would be affected. "Dealt with or prejudicially affected."

Topic:   DOMINION COMPANIES ACT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I am in the hands of the committee, but I do not agree with the hon. member for York-Sunbury (Mr. Hanson) in his construction. Although the common shareholders may have had their votes increased I do not yet see how that prejudices the rights of the preferred shareholders who had not the right to vote. Under the by-law they were given the right to vote in certain contingencies, but those contingencies had not arisen. I may be very stupid about it but I do not see how those preferred shareholders were affected, prejudicially or otherwise.

Topic:   DOMINION COMPANIES ACT
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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON (York-Sunbury):

I think the hon. member for Swift Current (Mr. Both-well) made his point very plain. Three thou-, sand common shares, par value $100, were by virtue of a by-law passed in the ordinary way changed into 15,000 shares each having a vote. They multiplied the voting power of the common shareholders by five. I think it was a pretty sharp device to keep control of the company and prevent it falling into the hands of the preferred shareholders, so depriving the preferred shareholders of the rights contemplated when the fully paid preferred shares were set up and sold to the public.

Topic:   DOMINION COMPANIES ACT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I am not going to discuss the thing at length, but if the preferred shareholders took their stock on the clear understanding that they had no vote, I fail to see how, it matters to them, not having a vote, whether there were 15,000 votes in the common shareholders or 3,000. But I am willing to accept any suggestion in order to make progress.

Dominion Companies Act

Topic:   DOMINION COMPANIES ACT
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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

I know my hon. friend is an excellent draftsman, and would like to use the same terms all through. Section 123 uses the word "affecting." Should not that word be used in both places?

Topic:   DOMINION COMPANIES ACT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I am quite willing to accept that. Section 123 does not use the words "dealt with."

Topic:   DOMINION COMPANIES ACT
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CON

Onésime Gagnon

Conservative (1867-1942)

The CHAIRMAN (Mr. Gagnon):

The amendment moved by Mr. Butcher is that subsection (d) of section 48 be struck out.

Topic:   DOMINION COMPANIES ACT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

That is withdrawn.

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CON
LIB
CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

No, the next amendment

is to subsection 2, in the third line, which is the 39th line of the page. I accept the suggestion of the hon. member for Shelburne-Yarmouth (Mr. Ralston) that we strike out the words "dealt with" and in lieu thereof insert the word " affected."

Topic:   DOMINION COMPANIES ACT
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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON (York-Sunbury):

I am

opposed to that. I think we should keep both in, if we want to meet the situation visualized by the hon. member for Swift Current.

Topic:   DOMINION COMPANIES ACT
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LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

If this would be satisfactory to the Secretary of State (Mr. Cahan) I would move:

That the words "or affected" be added after the word "with" in the third line of that subsection.

Topic:   DOMINION COMPANIES ACT
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May 31, 1934