June 24, 1935

CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

No, we are getting nearer to it. I am perfectly willing, and if the hon. gentleman wishes, I think there will be no objection to strike out all the words of the proviso:

Provided that this subsection shall not apply to any mining company ...

Companies Act Amendment

Then the directors will have to make this solemn affirmation and be responsible if it is not-

Topic:   COMPANIES ACT, 1934, AMENDMENT
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LIB
CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

-a fair statement. We will strike out all the words after the word "services."

Topic:   COMPANIES ACT, 1934, AMENDMENT
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LIB

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

The minister is aware of the blue sky laws, that are very drastic as far as mining propositions are concerned. This law is likely to conflict with mining. In Ontario we have the blue sky law, very drastic.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

But they apply to all these companies, and I am not infringing on provincial jurisdiction.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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LIB
LIB

James Lorimer Ilsley

Liberal

Mr. ILSLEY:

There is no conflict with any blue sky law. My amendment does not make it easier for directors of mining companies, it makes it harder.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

There is no conflict.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Ernest D'Israeli Smith

Conservative (1867-1942)

The CHAIRMAN (Mr. Smith, Cumberland) :

Amendment carried without the

proviso.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

Did you change the words "just and adequate"?

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Now coming to the other section, I suggest and move, that section 96B be amended as shown in section 96B of section 15 of the bill, by striking out the first subsection, that is the one that remains. I think we have passed the other subsections, because we dealt with the word "speculate" and with the restriction to public companies. I suggest that we strike out subsection (1) of 96B and substitute the following therefor:

(1) The directors of a public company shall not authorize the issue and allotment as fully paid of shares in the capital stock of the company having a nominal or par value, except for a consideration payable in cash to the total nominal amount of the shares so issued, or for such consideration payable in property or services as the directors may determine by express resolution to be in all the circumstances of the transaction a just and adequate consideration therefor.

Then this amendment will correspond with the previous amendment. It should read "such services as may 'be deemed just and adequate," so as to correspond with the former amendment. Then, I also move -to strike out the words " of promoter."

Topic:   COMPANIES ACT, 1934, AMENDMENT
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LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

That word appears in

subsection (2) of section 96B?

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Yes, in subsection (2). I

am moving to strike out the word "promoter" because it does not apply in that subsection at all. We make the directors responsible.

Then, another suggestion made the other evening wTas to add to subsection (3) the following words-

And no such suit shall be commenced after the expiration of three years from the date of allotting such shares.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Ernest D'Israeli Smith

Conservative (1867-1942)

The CHAIRMAN (Mr. Smith, Cumberland) :

Shall the amendments carry?

Topic:   COMPANIES ACT, 1934, AMENDMENT
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LIB

James Lorimer Ilsley

Liberal

Mr. ILSLEY:

I should like someone

to explain what directors will be liable for, if the section passes as amended. Are they liable for not passing the resolution for which provision is made in section 5?

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I am simply amending the

first sifbsection. But if they comply with that subsection, then if you will' turn' to page 10 of the bill you will find that they are liable "at the suit of any director, shareholder or creditor of the company, to make good to the company the amount by which the consideration actually received by the company for any shares so issued1 and allotted as aforesaid, is found by the court, after full inquiry into the circumstances of the transaction, to be less than the amount of the consideration which the company ought to have received for such shares." So in the case of the par value shares the liability is for the difference, because now that amount is the full amount of the par value shares issued.

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LIB

James Lorimer Ilsley

Liberal

Mr. ILSLEY:

In the case of cash. But

in the case of property or services there is no obligation to get the full equivalent, if the amendment proposed is carried.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

We provided for that in our amendment to section 5 of the bill when we stated that they must receive the just and adequate equivalent. We provide in this instance that if they do not receive the just and adequate consideration they are liable for the difference.

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LIB

James Lorimer Ilsley

Liberal

Mr. ILSLEY:

I would not think so. I

would think that by law all they are obliged to receive is what they say, by resolution, is a just and adequate consideration.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I beg the hon. member's

pardon. I do not wish to be petulent, but I must direct bis attention to the top of page 10 of the bill, where he will find these words:

Every director of a public company who is a party to authorizing the issue and allotment of any shares of the capital stock of the com-

Companies Act Amendment

pany as fully paid iip shall be liable, jointly and severally with his co-directors, at the suit of any director, shareholder or creditor of the company, to make good to the company the amount by which the consideration actually received by the company for any shares so issued and allotted as aforesaid is found by the court-

Not by the directors-

-after full inquiry into the circumstances of the transaction, to be less than the amount of the consideration which the company ought to have received for such shares.

Then it goes on to impose conditions as to knowledge, and that sort of thing.

Topic:   COMPANIES ACT, 1934, AMENDMENT
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June 24, 1935