Hon. C. H. CAHAN (Secretary of State) moved the second reading of Bill No. 85, to amend the Companies Act, 1934.
He said: The revision of the Companies Act was commenced about September, 1933, preparatory to the submission of the draft of a new act to the interprovincial conference, which assembled at Ottawa on January 17, 1934.
The printed draft of a new bill, as then prepared, was presented to the representatives of the provincial governments who attended that conference from January 17 to 19 inclusive, and, at the request of the attorneys-general of the provinces, the further consideration of this draft bill was postponed till March 1, 1934. During that period the provincial governments were to prepare and forward any suggested amendments to the bill as first prepared.
Between January 19, 1934, and April 26, 1934, when the new bill was introduced to this house, printed copies of the proposed bill were widely circulated throughout Canada to economists, accountants, lawyers, universities, companies and corporations; and, after due consideration of all relevant suggestions and their incorporation into the draft bill, a bill intituled An Act Respecting Dominion Companies was introduced to this house on April 26, 1934. This bill was enacted as The Companies Act, 1934 on June 28, 1934. Three months were then allowed to all companies to re-adjust their accounting systems to conform with the requirements of the new act, which came into force by proclamation on October 1, 1934.
In the meantime, on February 2, 1934, a select special committee of the House of Commons was appointed by resolution of the house to enquire into and report upon certain matters. By order of His Excellency the Governor General in council, dated July 7, 1934, the eleven members of said select special committee were appointed as a royal commission to continue, complete and report on the enquiry ordered by the House of Commons on February 2, 1934. It is clear, I think, that the resolution of the House of Commons of February 2, 1934, appointing the select special committee, did not authorize the committee to report upon the dominion companies acts, which were then under the consideration of the representatives of the provincial governments, who had participated in the interprovincial conference of January 17 to January 19 inclusive. It is also clear, I think, that neither the order in council, P.C. 1461 of July 7, 1934, appointing the royal commission,
Companies Act-Mr. Cahan
nor the terms of the royal commission which issued upon said order, conferred any specific authority to investigate, consider or report upon proposed amendments to the Companies Act, 1934.
So far as I, as Secretary of State having supervision of the administration of the dominion companies acts, was concerned, I had no knowledge or notice that an enquiry into the terms of those acts or into the administration of those acts was proceeding. So far as the evidence submitted with the report of that royal commission discloses, no general enquiry was made by the original committee of this house, nor by the royal commission, which succeeded to the work of the house committee. I was surprised, therefore, when the report was submitted to the Minister of Trade and Commerce and laid on the table of this house, to find incorporated therein a long list of proposed amendments to The Companies Act, 1934, of the Dominion of Canada.
I am very confident that if it had been known that the committee had undertaken such a work of revision even without express authority, many representatives of Canadian companies would have sought leave to appear before the commission for the purpose of making representations on their behalf, which would not be entirely consistent with the recommendations of the commission.
In order that these recommendations may be considered fully by this house, this bill has been prepared and is now moved for second reading. But I am authorized to state on behalf of the government that each and every member on this side of the house is free to approve or to oppose each and every section of this bill and to move any amendments thereto which may be deemed advisable or expedient. The bill is placed before the house and it is wide open for consideration by all members.
I propose, therefore, to consider in sequence the recommendations of the royal commission on price spreads as shown in the summary to the report of the commission and to direct attention to the corresponding provisions of this bill in order that the house may have before it a clear statement of each and every recommendation made and a statement. by reference to the bill, of the extent to which these recommendations have been embodied in the terms of the bill.
The first recommendation for an amendment to the Dominion 'Companies Act was the abolition of shares of no par value or, in the alternative, a requirement that the full consideration received for no par value shares be credited to the capital account. In con-92582-232
sidering the proposal to abolish no par value shares it was ascertained that measures to make that recommendation effective would compel the reorganization of the capital structures of a large number of dominion companies at present engaged1 in industrial and commercial pursuits. If the house or any member so desires I will lay on the table Of the house later the names of some hundreds of these companies that are actively operating from day to day and whose interests are vitally concerned with the summary abolition of no par value shares.