TRICKS OF THE TRADE.

Gisborne Times, Volume VI, Issue 251, 31 October 1901, Page 2

TRICKS OF THE TRADE.

HOW MINING COMPANIES ARE FORMED. By Telegraph—Press Association. Wellington, last night. The report of the Joint Goldfields and Mines Committee on the petition of Herbert E. Easton, of Dunedin, was laid on the table of the House to-day. The petitioner asked that legislation be passed in order to prevent what he alleged were acts of commercial immorality in certain mining companies known as the “ Cook Group.” The Committee, in its report, summarises various charges made, and says some have not been proved, and others arc matters that should he dealt with by tho Law Courts.

In regard to certain charges made in connection with the flotation of the Golden Grey Company, the Committee says that the part of this charge which concerns it is the formation of a company merely for speculative purposes on the share market. This is against public policy, and is purely a species of gambling, and should he stopped by legislation. All parties knowingly entering into such a transaction are “ participis criminis.” Tho Committeo thinks legislation is necessary to prevent an occurrence of such a case as that aileged to have taken place. In regard to the formation of secret rings for speculative purposes by promoters and directors, the Committee suggests that the law should be altered to the effect that where any money for application, allotment, or calls is due upon shares, then the same should ho noted on the transfer of these shares before it is completed. The Committee recommends proceedings should ho instituted hv the Crown to test the legality of certain companies which had been formed by less than seven shareholders as required by the Companies Act. The law should also he amended to prevent the “ safety ” clauses of the Act being over-ridden, and to ensure that all shareholders should he treated alike when rails are sued for.

In regard to the charge of “ shareholders voting and directors acting when their calls were unpaid,” the Committee found that Cook, acting as director for several companies, had actually passed to himself large sums for brokerage, while he was i still owing large sums for allotment charges. The Committee says that the law certainly requires amending in the direction of depriving a shareholder of the'right to vote or act as a director until ho has paid his allotment money. The Committee found that Cook had paid ior his and Mrs Cook s shares in the seven companies whose hooks were put in evidence tho sum of .£2140, hut Messrs Cook and Gray received £lß4l back from tho companies for brokerage, secretary’s salary, and directors’ fees. Tho Committee recommends that the law he altered on the lines it has indicated, and to provide that all mining companies shall he registered under the Mining Companies Act. The House, on Mr Seddon’s motion, decided that the report of the Committee should be published in Hansard.