FLAX BONDS SALE

Hokitika Guardian, 2 March 1933, Page 6

FLAX BONDS SALE

HOUSE REVIEWS SITUATION. INQUIRY INTO POSITION. WELLINGTON, February 28. The; isjtuatiou created by the sale of flax bonds in the Dominion lias been receiving; the. attention of the Government’ with: .a' view, to suitable provifioiis being mowporated in the- pending -review ;- of the Companies Act, u'iiich, it is expected, will be intio--1 du.ced dining the nexit.. session of Par-. Lament: j In the meantime the opinion of the. Prime Minister is 'that the pitblioity which,.would result from a question asked in the House to-day by Mr Semple would be sufficient to put the investing public oil its guard. In asking a series of questions concerning the sale of flax bonds, Mr Semple said there was plenty of ftrstclass' - land available at £l2 an acre. Under itho bond -system land totally imsuited for flax ciiture and purchased by bond companies for ia, few pounds an acre had been sold to the public in the form of bonds, at prices as high as, £9O an acre.

•'q Sempleis’ /questions asked the Prime Minister to consider the question ai,s to whether flax bonds could lawfully be issued in> the Dominion, and, if the issue was unlawful, to consider- the question of taking- steps to put a stop to the practice and punish the persons responsible. He also asked, if the issue was:•not considered.to be unlawful, would the Prime Minister take steps .-to make unlawful the future issue of securities of'this kind? Mr Semple also asked' for .an immediate inquiry to he held into all phases of -bond-•selling activities, and as to the financial position of companies already registered for the safe of fla.x bonds, and as to the prorpect : of othose companies ever being able to i meet their obligations to bondholders, in respect of bondholders’ money which the. bond companies’ were virtually holding on trust-.' “The Government is aware that certain organisations? of the nature outlined by Mr Semple have been operated throughout the Dominion on .a basis which caruioik be regarded as sound,” said the Prime Minister “Tiie Government cannot, of course, accept responsibility for the financial soundness .of flax 'companies any more than for other companies generally, and can only deal with the matter from the. point of view of mi srepresentation,, and failure fully to disclose in-foripa-tign in prospectuses.’'’