June 14, 1935 (17th Parliament, 6th Session)

LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

I do not think we shall have any difficulty in doing that before we are through. If the minister would like to see these cases I will refer him to them. I have notes of them here.
Then in section 15 of the act, 96B, we have these words again, dealing with adequate consideration for fully paid shares: "or is to receive what may justly be deemed, in all the circumstances of the case, adequate consideration therefor in cash, property or services." It does seem to me that the shareholders of the company and the public itself that is reading its reports and helping to pay for the stock in order to earn dividends for the company are entitled to know that that company is operating on a sound basis and not on watered stock. Where you see words like that I can readily anticipate what arguments will be advanced in the courts of this country, and I am very doubtful if a judge will be able, to say that dollars or dollars' worth are there.
Then it appears to me that section 16 of the bill is very weak. It says:
Subject to the provisions of any by-law of the company duly enacted under the provisions of this act, eiieh share of the capital stock of any company issued' and allotted shall, subject to the provisions of this part, carry voting rights and entitle the shareholder to one vote for each such share owned by him.
I have referred before to voting on the value of the share instead of on each share, but here it says "subject to the provisions of any by-law of the company duly enacted under the provisions of this act." Surely it is possible there for the company to do anything they like in connection with these voting rights. Then of course there is the other objection to which I have referred. Section 20 provides that certain provisions of the act-
-"shall not apply to any company to which part one of the principal act is made applicable .. . nor to any company incorporated under the principal act prior to the coming into force of this act, and every such company shall continue to be subject to the provisions of the principal act which shall, as regards such companies, be and1 be deemed to be in full force and effect in the same manner as if the foregoing sections of this act had not been enacted.
Now what the price spreads commission found was that certain abuses had crept into business through our Companies Act, and they made recommendations which they thought would tend to abolish those abuses. But some of the most effective sections of this bill are going to apply not to the companies that have been sinning in the past but only to companies incorporated after the coming into force of the act. Surely these provisions ought to be made to apply to acts

Privilege-Mr. Ralston

committed by existing companies after the coming into force of this act instead of exempting them altogether.
I am throwing out these suggestions on the second reading, before we get into committee of the whole on the bill, because personally I am very much in sympathy with the move made by the price spreads commission, although I am not in agreement with everything they said. Most of their recommendations that are of value in controlling a certain type of predatory incorporation were recommended to the minister last year when the main act was being put through. I am only expressing at this time the hope that they will be embodied in the bill and that we shall endeavour to cure the abuses which the price spreads commission found to exist.

Topic:   COMPANIES ACT, 1934, AMENDMENT CONTINUATION OF DEBATE ON THE MOTION OF MR. CAHAN FOR SECOND READING
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