Mr. J. L. ILSLBY (Hants-Kings):
Mr. Speaker, I realize that the atmosphere of the house is such that it is difficult to make a speech on such a subject as the Companies Act at this hour of the evening, but there are a few observations that I would like to make on the bill. I want to congratulate the Secretary of State (Mr. Cahan) on the very full explanation that he gave of the bill on the second reading this afternoon and tonight. He took the recommendations of the price spreads commission one by one, stated the reasons why he disapproved or approved of them, as the case might be-he did not approve of very many-and explained the-bill very fully.
Companies Act-Mr. Ilsley
I do not intend at this stage to deal section by section with the bill that is before us, but I think the time is opportune to review the history of this companies legislation. About a year ago the Secretary of .State introduced a bill Which he regarded as the last word in a companies act, a bill upon which he put a great deal of time and a great deal of work, which embodied the suggestions he was able to get from the profession, and which he considered1 was as good a piece of work as could be done by this parliament on company legislation. Members from this side of the house offered certain suggestions. One of those suggestions was that no-par shares should be prohibited. Several amendments were proposed, notably by the hon. member for L'ast Mountain (Mr. Butcher) who had made a particular study of company legislation, but very few if any of those amendments were accepted by the Secretary of State. That was the first chapter in the attempts of the government to put the Companies Act in shape.
The second was the radio speech of the right hon. the Prime Minister (Mr. Bennett) in the early part of January. In the reform speeches, so called, which went out over the radio in the early part of January the Prime Minister made a great point of the defects in the Companies Act. By implication he attacked the work of his colleague the previous spring. I have his words hero, and so that there may be no mistake about it I want to put them on Hansard. Speaking of the Prime Minister the report in the Ottawa Citizen says:
Turning then to what he termed "the social and economic evil commonly called 'stock watering.' " Mr. Bennett said this constituted a definite impairment of the economic system.
"Notwithstanding the legislation of recent years, the protection of the investor must be improved," the Prime Minister declared. "It is still inadequate. There must be stricter government regulation of finance in this field so that improper practices may be detected in time and effectively dealt with. The ravages of the promoter who operated in the period of 1922 to 1930 cannot now be repaired'. But we can at least see to it that he does not again operate in the same way.
Our Dominion Companies Act will, therefore, have to be strengthened. There must he drastic simplification of capital structure so that the investor will be able to understand the nature of the stock or security he is purchasing. At the next session of parliament, the Companies Act will be amended so as to abolish the right to issue shares of no par value. The searchlight of publicity must be focussed on every issue of securities offered to the public. Adequate machinery must be set up to inquire into and report on corporate developments which tend towards consolidation
and concentration. In other words, the door must be locked before, not after the horse is stolen.
Between 1922 and 1930 a great many of our people were the victims of practices against which the law provided no adequate safeguards. From time to time, attempts have been made to cure these persistent and recurring evils. None have been wholly effective. The many victims of stock promotion, in the years before the crash, are the certain proof of that. The problem bristles with difficulties. But the government will enact legislation at the next session of parliament which it confidently expects will, with the wholehearted cooperation of the citizens of Canada, stamp out this evil in corporations operating under dominion authority.
Those are the resounding words which the Prime Minister uttered in January last. That is the second chapter in the government's activities in the reform of company law.