POWER OF COMPANIES.

Hauraki Plains Gazette, Volume XXXX, Issue 5391, 22 February 1929, Page 2

POWER OF COMPANIES.

STATE INTERFERENCE.

COMMERCIAL BODY'S CRITICISM.

At a meeting of the Auckland Chamber of Commerce on Tuesday attention was given to a striking indictment of legislation passed by the late Government in connection with the Rural Intermediate Credit Act. Mr Alfred Coleman, of Stratford, had wiitten very fully to the Associated Chambers of Commerce in connection with a clause in that Act, whereby sureties under the Act undertake to answer for the default of the borrower. Under this provision any company may, “notwithstanding anything, to the contrary- in its memorandum or articles of association, guarantee the repayment of any loan granted under this part of the Act, or the payment of interest in any such loan.”

The effect of this sub-section, Mr Coleman points out; is most serious, and strikes a blow at the fundamental principles of company law. “Further,” he added, “this legislation, besides being illogical and unscientific, is unjust, and interferes with the hitherto undoubted' rights of Company shares holders and creditors.” Investors in companies, he said, were being robbed of the protection usually given and expected. The contract between companies and shareholders was definitely interfered .with. The council has referred the matter to its Parliamentary and Taxation Committee for a report.