The Waikato Times AND THAMES VALLEY GAZETTE. TUESDAY, JULY 21, 1801.

Waikato Times, Volume XXXVII, Issue 2967, 21 July 1891, Page 2

The Waikato Times AND THAMES VALLEY GAZETTE.

TUESDAY, JULY 21, 1801.

Kauai and exaet justice t" aU men, Jt whats(v.;ver state or porsuusiou, religious or poiv.io '.I.

Ax Act defining tiio liabilities of directors and promocers of companies lias practically passed through Parliament. Those who have had the sparo capital nocessary and the enterprise to iuvo&tin companies in this colony, if their experience has been extensive cau hardly fail to have suffered in consequence of exaggerations of facts having induced the in to invest their money in fo >lish schemes. They have accepted the statements of men who from their experience should have understood what they were doing, and whose reputations led to the belief that what thoy statod, they believed to bo fact. Carelessnoss in some cases and dishonosty in others have led to many companies being floated on utterly falso promises, and as a natural result the capital invested has been lost by all, but the directors and their few chosen friends who wero furnished by them with plenary information. The Act is based ou that which was passed by the Imperial legislature last year. It provides in tho first place that eveiy promoter or director who has authorised the issue of a prospectus or notice shall be liable to pay compensation to all person i who sub.-cribo for shares on the faith of such prospectus for au\ loss 01 damage chey may have sustained through an}' untrue statement theroin, or any memorandum or report appearing on tho face there., of. If a director can prove that he had reasonable ground to believe that the statement made on his authority was true, or that any report of an engineer, valuor, or other expert was made by a person whom tho director or promoter had reasonnblo ground to believe was competent to make it. Three years is fixed as the limit during which action shall bo tnkon. If a director

is found liable lio is acconlo l right of action against his co-iiirmjlors. Any inserting in a prospectus th(3 liumo of any porson as a director, promoter, or .solicitor, without written authority 1 ivndoM himself liable to bo imprisoned for three years, or to a tine not exceeding .1100. Any engineer, valuer or accountant who wilfully gives a false certificate or makes a false valuation may be imprisoned for three years with or without hard labour. The fact of such a report having been made is not sutlicient to protect the directors or promoters unless they can show that the person making the report was competent to make it. The above are the main provisions of the Act. It has been urged that men of substance and standing will now refrain from lending their names to secure the floating of companies, no matter how genuine the statements put forth to induce subscriptions, or however brilliant may lie the prospects of paying high interest on the investment. We are by no means of this opinion. The Act is so drafted that a man who conscientiously exercises the caution which is due to himself and the public will he as free from risk of loss as he was previous to the passing of the Act. In fact it is only too apparent that as the onus of proof rests with the fleeced shareholder in each case, the flagrantly careless or designedly dishonest will, as hitherto, only too often escape the punishment they have justly earned. When a man's innocence or guilt turns upon a matter of opinion, it will be difficult to get a jury to convict unless the case is a very glaring one indeed. As was pointed out by one of the speakers in the debate on the Bill, the result will be that directors and promoters will only employ men of established reputations as experts to report upon the property involved, or in the eas.i of a mercantile business, of the volume of trade to be taken over and the profits which have previously accrued. The effect will be bad in that it will lengthen the period during which a young man will be compelled "to live upon the crumbs which fall from the rich man's table," but this is not a matter for consideration by the Legislature. The heavy penalty of three years' imprisonment for making false reports is calculated to keep experts from drawing on their imagination for facts or utilising the same gift for matter to so colour those which exist as t.o make them shine resplendent to the eyes of inexperienced investors. The Act will, to an extent, protect the public against unmistakeable dishonesty, but will fail to do so against the trained cunning of the professional promoter and the unscrupulous conduct of unprincipled men not yet found out and exposed. At any rate it is the first step in the right direction.