1973 Legislative Session: 2nd Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, APRIL 4, 1973

Night Sitting

[ Page 2203 ]

CONTENTS

Night sitting

Routine proceedings

Regulations Act (Bill No. 1). Second reading.

Hon. Mr. Macdonald — 2203

Mr. Smith — 2203

Mr. Williams — 2203

Mr. Gardom — 2204

Hon. Mr. Macdonald — 2204

An Act to Amend the Constitutional Questions Determination

Act (Bill No. 2). Second reading.

Hon. Mr. Macdonald — 2205

Mr. Gardom — 2205

Companies Act (Bill No. 16). Second reading.

Hon. Mr. Macdonald — 2205

Mr. Smith — 2207

Mr. Gardom — 2207

Mr. McGeer — 2211

Mr. Phillips — 2213

Mr. Williams — 2215

Hon. Mr. Macdonald — 2218

WEDNESDAY, APRIL 4, 1973

The House met at 9 p.m.

Introduction of bills.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move that we

proceed to public bills and orders.

Motion approved.

HON. MR. BARRETT: Second reading of Bill No. 1, Mr.

Speaker.

REGULATIONS ACT

HON. A.B. MACDONALD (Attorney General): Mr. Speaker, it

gives me pleasure to move the second reading of this minuscule

little bill (laughter) intituled the Regulations Act ,

whose principle can be very shortly stated — once it has been

located. (Laughter). But it does provide that a man can't go to

jail under a regulation that he had no means of knowing

anything whatsoever about. And that has been the case before —

when regulations were not filed in one place, or properly

published. We're protecting the citizens from Star Chamber

justice in ensuring that a regulation will have no effect

whatsoever until it has been properly filed and properly

brought to the attention of somebody who might be properly

judged to be in infraction of it. I take pleasure in moving

second reading of this bill.

MR. SPEAKER: The Hon. Member for North Peace River.

MR. D.E. SMITH (North Peace River): Thank you, Mr. Speaker.

The official Opposition will support this bill. I know the

Attorney General will be pleased to know that at least this

evening, after a rather long day that started at 10 o'clock

this morning, Bill No. 1 will have the official support of the

Opposition, even when we don't have time out for lunch any more

it seems.

I would like to address myself to the bill itself for a

moment. I note that in reading the provisions of the bill and

the Act as it's before us, that the several provisions of the

Act will come into force on a date other than when the bill is

given royal assent. It's included in the last

section of the

bill.

It also provides that different sections may come into force at different dates

and at the pleasure of the Lieutenant-Governor. The only question that I have

to pose to the Hon. Attorney General this evening, through you Mr. Speaker,

is if he would, in closing second reading on the bill, give us some indication

of what his intentions are in this respect to the actual

enactment of the different sections of the Act.

Is it his intention, after it has been given royal assent,

to bring in all the sections, or do it on a piecemeal

basis?

MR. SPEAKER: The Hon. Member for West Vancouver–Howe

Sound.

MR. L.A. WILLIAMS (West Vancouver–Howe Sound): Thank you,

Mr. Speaker. A minuscule bill it may be, as the Hon. Attorney

General has pointed out, but not one deserving of such

minuscule debate as we have heard so far. The Hon. Attorney

General has indicated that henceforth in this province no one

will be incarcerated as a consequence of any regulation. I

would hope that the Hon. Attorney General, learned in the law

as he is, would be pleased to indicate in the closing of this

debate the extent to which any person in this province has ever

been incarcerated, imprisoned, fined or otherwise penalized

under any of the laws heretofore passed in this province. As a

matter of fact, Mr. Speaker, I challenge him to delineate the

people who have been so penalized under regulations of this

province.

HON. MR. MACDONALD: Amor de Cosmos is one example.

(Laughter).

MR. WILLIAMS: Well, Chevrolet coupe to you too, Mr. Attorney

General. (Laughter). I defer not in the second language of this

country to any man. I offer you those kind words with the

greatest of good will.

The concern that we have about this bill, so long it has

been in coming — and I point out to you, Mr. Speaker, that it

was the very first bill introduced in this Legislature in this

session. I would also point out to the Members that having been

the first bill introduced, it was also the first bill in

respect of which amendments were placed on the orders of the

day of this House. It raises some doubts in our minds as to the

consideration which has been given by the Attorney General and

by his staff on this momentous occasion, when suddenly

regulations are to assume a new importance in this

province.

One of the concerns that we have in approaching this new era

of public information concerning legislation and regulations is

the fact that what will or will not be a regulation still

remains in the hands of the Minister. The Minister is given

power to determine whether what heretofore might have been a

regulation is or is not to be designated as a regulation.

We come back, however, to this word "designated" which seems

to be a word to which the government of the day is unseemingly

attracted. "Designation" seems to be the word. Now we're

[ Page 2204 ]

giving to a Minister of the Crown the right to determine

whether a regulation is a regulation or is not a

regulation.

It reminds me of whether or not a rose is a rose is a rose.

(Laughter).

Surely, Mr. Speaker, if a regulation is pronounced under any

one of the many statutes we have in British Columbia, whether

an order-in-council is passed by the cabinet in its wisdom, it

should not be left to the choice of a Minister of the Crown as

to whether or not that order-in-council is deemed to be a

regulation, and therefore is to be published and filed and made

available to the citizens of this province to save them from

the penalties which the Attorney General has mentioned. This is

only one of the concerns that we have about this

legislation.

Another concern that we have is whether or not in the future

of this province we are to continue to have these unreadable

publications with regard to regulations, where suddenly it

appears in the Gazette of this province that a

regulation heretofore passed does cease to be a regulation and

something else has been changed. Are we to have a continuing

compendium of regulations as they are produced with a proper

definition of what the regulations may be from time to

time?

To publish is one thing; but to publish in a clear way in

which all citizens of this province can understand what the

regulations may be is a far, far different thing.

We have so many statutes in this province capable of virtual

amendment by regulation. I say "virtual" advisedly, because

there's no question that the cabinet does not truly have the

power of amendment by regulation. But they can make so many

consequential changes by regulation that unless they are

published in the clearest possible way so that persons can

determine what the regulations may be from time to time, it

will be incapable of meaning to the average citizen. I hope

that the Hon. Attorney General will be pleased to answer these.

Because depending upon the quality of his answers will depend…

AN HON. MEMBER: How you vote.

MR. WILLIAMS: …whether we may accept this bill in second

reading. This is not a matter to be trifled with. While we are

approaching something new — and I give the Hon. Attorney

General this credit that heretofore we have had no legislation

such as this in the province — but how well you perform your

responsibilities under this Act will depend upon the words

which you may utter in the closing of this debate.

MR. SPEAKER: The Hon. Second Member for Vancouver–Point

Grey.

MR. G.B. GARDOM (Vancouver–Point Grey): I'd just like to make a couple

of observations, Mr. Speaker. During his time in Opposition the Hon. Attorney

General made a great deal of "sunshine."

MR. WILLIAMS: Moonshine.

MR. GARDOM: In this particular bill, it's not really a kind

of bill you could call the "son of sunshine," or the

"daughter of sunshine," or even a "cousin-once-removed

of sunshine," because we find under the magnificent kind

of legislation that was earlier advocated by the Attorney

General — and he was a great freedom fighter and a great

"sunshine" fighter in the Opposition — that the records and the

correspondence and the decisions and the awards of any kind of

board or tribunal or commission would be open to inspection by

interested people at reasonable times and places. Of course we

don't find this within this statute at all. So I would tend to

think that if there's an attempt by the Hon. Attorney General

to link this particular bill into his former very, very popular

"sunshine" bill, it's a very, very weak-gummed attempt

indeed.

I would certainly subscribe to the position taken by the

Hon. Member of the Liberal Party who last spoke (Mr. Williams)

that once again we have here an item that is very symptomatic

of this Government. That is the infamous power of cabinet.

Again we find the cabinet leaving it unto themselves as to

whether or not a regulation may be deemed or "designated", to

use their words, a regulation and be subject to the kind of

notice that this particular Act provides.

I think that if we're going to go ahead and introduce an

expansion upon the doctrine of constructive notice which this

is… We have a doctrine of constructive notice today, which

is filing of materials with the Registrar of Companies or

publication of material in the B.C. Gazette . Those are

doctrines of constructive notice according to the common law.

This is an amplification of that particular fact.

Howsoever, you give on one hand and you taketh back from the

other. We're not too sure how much you're going to take back

from the other. As the Member for West Vancouver–Howe Sound

(Mr. Williams) said, this give us great concern.

MR. SPEAKER: The Hon. Attorney General closes the

debate.

HON. MR. MACDONALD: Mr. Speaker, the bill will be proclaimed

as quickly as we can, dependent upon setting up the central

compilation of regulations. In all seriousness, we want to make

the complicated business of government as simple for people and

as accessible to people as possible.

The Member for West Vancouver–Howe Sound says that when the

bill came in amendments were

[ Page 2205 ]

necessary. But I can assure the Hon. Member that most of the

amendments that were necessary had nothing to do with the

original draftsmanship of the Act, but were necessary owing to

a stenographic error.

Interjection by an Hon. Member.

HON. MR. MACDONALD: Another one was to do with what is a

legislative regulation. This was raised by both Members of the

Liberal Party who are here tonight — the whole party.

(Laughter).

It's not easy to define when a regulation is of a

legislative nature. Sometimes it's directed toward a particular

event or a particular company or possibly a particular

individual. That's not something that we're dealing with in

this Act. That requires some kind of general publicity with

respect to it. So there must be some leeway.

Some of the best legal minds in the Province of British

Columbia have contributed to this Act in the form in which it

will appear when it has been through committee and the

amendments have, hopefully, been adopted by this House. I ask

that the question be called.

MR. SPEAKER: In moving that the bill be read now a second

time, are you ready for the question?

Motion approved; second reading of the bill.

Bill No. 1 ordered to be placed on orders of the day for

committal at the next sitting of the House after today.

HON. MR. BARRETT: Second reading of Bill No. 2, Mr.

Speaker.

AN ACT TO AMEND

THE CONSTITUTIONAL QUESTIONS

DETERMINATION ACT

HON. MR. MACDONALD: Mr. Speaker, I move second reading of

Bill No. 2, which is another small piece of legislation and

which merely, but importantly, provides that where a bylaw or

regulation is challenged as to its constitutional validity —

not merely

an Act of this Legislature, but a regulation or

order made pursuant to some Act of this Legislature — the

Attorney General's department will have notice of that court

challenge to the validity of the regulation.

Without that, we can get into serious difficulties. As a matter of fact, the

previous administration, Mr. Speaker, got into difficulties running into $300,000

or $400,000 on this point, dealing with private hospitals and the regulations

as to what the subsistence rate should be in those private hospitals. By the

time the government was fully appraised of the situation,

it had not been heard in court, where the validity of the regulation was being

challenged.

So this is the law with respect to Acts of the Legislature.

We say that where somebody claims that one of our orders or

regulations is ultra vires , we should have notice of it so that

we can make our point in court if we see fit to do so. I move

second reading.

MR. SPEAKER: The Hon. Second Member for Vancouver–Point

Grey.

MR. GARDOM: A thoroughly correct premise and a thoroughly

correct bill. We support it entirely.

MR. SPEAKER: The Hon. Attorney General closes the

debate.

HON. MR. MACDONALD : Question.

Motion approved; second reading of the bill.

Bill No. 2 ordered to be placed on orders of the day for

committal at the next sitting of the House after today.

HON. MR. BARRETT: Second reading of Bill No. 16, Mr.

Speaker.

COMPANIES ACT

HON. MR. BARRETT: Oh, oh! (Laughter).

HON. MR. MACDONALD: Mr. Speaker, I have pleasure in moving

second reading of this again — notwithstanding its length —

fairly simple piece of legislation.

Quite frankly, I think it has to be discussed more

particularly in committee but I'd like to say one or two things

about it.

MR. CHABOT: Look at the amendments.

HON. MR. MACDONALD: Yes, in connection with what the Member

for Columbia River (Mr. Chabot) has just said, may I say this.

The labour that went into the preparation of this bill to

modernize and democratize our company legislation in the

Province of British Columbia extends back to 1971. We had the

very worthwhile assistance of two very excellent members of my

department, Mr. Dennis Shepherd and Mr. Mel Smith, and Mr.

Peter Manson of the Vancouver Bar. In addition to that,

representations were received over a period of time from the

public and from interested bodies ranging from the accounting

profession to the legal profession to business to the

securities business.

I make no apologies that from the time this

[ Page 2206 ]

legislation was introduced into this session of the

Legislature, with changes over the previous draft of the bill

as submitted by my predecessor in office, there have been other

changes. I think I should enumerate them in opening second

reading — that is, the changes that have been made really as a

result of further representations and close study over the last

six weeks.

Before I mention those new changes, let me just say that I

think this bill — which can more properly be discussed

section

by

section where it is of interest to the Hon. Members — will

provide greater shareholder democracy. It will provide greater

shareholder protection. It will provide greater protection for

the members of the public who deal with companies. It will

require companies and their officers to establish standards of

conduct in their affairs, for breach of which they may be

liable for damages and ordered to pay compensation, possibly to

members of the public but more likely to their fellow

shareholders. So I think it is a very progressive and a modern

step to bring the company law of this province into the latter

half of the twentieth century in the form in which it now

appears before Hon. Members.

I don't think I will attempt at this time to give the

detailed sections which enumerate and reinforce the principles

that I have said are expressed in this bill. It has this about

it: increasingly we are leaving company law enforcement to the

parties concerned and to the courts. We know perfectly well

that the old company system, where people were required to file

returns with the Registrar of Companies, had broken down.

lnterjections by some Hon. Members.

HON. MR. MACDONALD: Oh, the Hon. Members know perfectly well

that company after company that they themselves made a search

of in the office of the Registrar of Companies was found to

have returns that were two or three years out of date. Many of

those cases turned up in searches.

Of course, they could be prosecuted. Through the Registrar

of Companies, we could have had possibly 1,000 prosecution

cases going on. But here we're requiring — and this is sunshine — every company in the Province of British Columbia to have a

records office and to make available, not only to their

shareholders but to members of the public, the essential

information regarding their operations and their shareholders

and their directors and their capital share structure. For a

modest fee — I think 50 cents a page is what is proposed — a

person searching in the records office of a company will be

entitled to abstract that information and take it away with

him. We think that's an important gain in terms of public

Now let me say something about some of the ideas that are now on the order

paper with respect to further representations that have been received in the

last six weeks and which have had careful study. We're concerned about the question

of a company buying its own shares or, as someone may put it, trading in their

own shares. That has been part of the law of Ontario for some time and they

say that there is no difficulty.

But we do see a difficulty. We propose an amendment to

declare that the company itself will be an insider, with all of

the obligations and penalties that are attracted to improper

insider dealings if such should occur. We will watch the

situation carefully. It may be that in the future we'll bring

in greater controls over this particular facet of the

legislation. But this is a protection in respect to a company

trading in its own shares.

The next thing that we plan to do in a new way is to require

that the smaller companies — not the large public companies but

the non-reporting companies — when they allot new shares, make

those shares pro rata available to existing shareholders on an

equal basis. In this way, those in control of a company cannot

reduce to a minority position and impotence and dilute still

further the minority position of a group of shareholders in

that company. So in new allotments of shares, all of the

shareholders will have a right to pick them up pro rata and

maintain their respective position within the company

structure. We think that is an additional safeguard.

With respect to the provisions in the present Act that a

majority of the directors of a British Columbia company shall

be Canadian citizens resident in Canada, we see a difficulty

there. For example, there are a great many landed immigrants

who are coming into the Province of British Columbia from other

lands of the world, bringing their capital with them, starting

enterprises in this country, fully intending to put their roots

down in this country and in this province, but who are not

technically Canadian citizens.

So without in any way diluting the force of what we said in

the earlier bill, we should now say that the majority of the

directors of every British Columbia company shall be persons

ordinarily resident in Canada.

We believe we're protecting Canada and ensuring that those who run the companies

of British Columbia will have their roots in Canada and their interest in Canada,

and that a majority of their directors must be so resident in Canada. But citizenship

as such will not be the criterion because of the difficulties, particularly

with respect to new citizens, which would be unfair to those people who are

developing business enterprises in this province.

[ Page

2207 ]

So having said that, Mr. Speaker, I repeat again, although

naturally I am interested to hear what Hon. Members may have to

say about the general principles of the bill, that it is really

a rather complicated bill which probably can be dealt with best

in committee. I therefore move second reading of bill No.

MR. SPEAKER: I recognize the Hon. Member for North Peace

River.

MR. SMITH: Sitting here this evening and realizing the

interest that you have yourself, Mr. Speaker, in the

proceedings of the Department of the Attorney General because

of your vocation, I was wondering if perhaps you would like to

change places with me this evening. I can take the chair and

arbitrate the arguments and you can take my place in the debate

respecting opinions on some of these points of law.

Not having the benefits of the legal training of some of the

Members who will be discussing these bills, it is a little

interesting to listen to the type of arguments that we have

raised in the House. I agree with the Attorney General that it

is a long and complex bill, with some 375 sections involved,

and that the really serious debate could best take place in the

committee stage when we can go through it

section by

section.

Perhaps the best argument that we can see or use at the

present time for the introduction of this legislation is the

fact that the old Companies Act was one created some

years ago, based upon law and company practices as we knew them

then. Certainly it was in need of revision. The fact that it

was first introduced a year ago by the then Attorney General

and allowed to sit on the table and be circulated among the law

profession probably will result in a much better Act than if it

had come through the House and been debated and proclaimed as

law at that time.

One of the main reasons that I can see for it being a good

idea to review the practices of companies in the Province of

British Columbia is the obvious desire of the Government of

this province to themselves get into private enterprise

businesses. It would seem that the regulations that will apply

to any corporation in the Province of British Columbia will

also have to apply to any corporation that the present

Government either has indicated that they will create by

statutes on the books and by bills before this House, or

perhaps will in some way acquire by one means or another in the

next term of a year or more.

We support the principle of the new Act. We would certainly

appreciate discussing more this matter of the requirement that

a person be a resident of Canada or that the majority of the

directors be residents of Canada, but that can certainly be

done in the committee stage of the bill when we get to that

particular section.

It does seem to me when we place that requirement of our

books that we may be placing companies in a position where they

will do by an indirect manner what the Act will not allow them

to do directly, and that is that they can certainly set up

their directorship in Canada with Canadians, using them as the

majority of directors within the company, but that does not

really tell us the story of how the corporation will operate or

who is actually in control. It would perhaps be better, in my

opinion, to have a situation where we truly knew not only the

relative shareholdings but the actual directors. If they happen

to be from some country other than Canada, why shouldn't that

be known to us? If we're going to set up a situation which will

put them in a position of doing indirectly what they cannot do

directly, I don't know that we've really protected anyone,

particularly if all the assets of the corporation that we are

dealing with are in the Province of British Columbia. However,

as I have said, we will certainly canvass that particular

matter and others as we get into the bill in the committee

stage.

We support the idea of the new Companies Act . We know

that the Attorney General's department should be complimented

for the great amount of work that went into preparing this

document. Certainly a lot of the work originated and was

actually done prior to the new government taking office last

August.

We'll support the Act, Mr. Speaker, and we'll be prepared to discuss it further

in the committee stage.

MR. SPEAKER: The Hon. Second Member of Vancouver–Point Grey.

MR. GARDOM: Well, Mr. Speaker, we have here very much a bill

which is inherited legislation — one that was presented by the

former Hon. Attorney General (Mr. L. Peterson) and that has

also been, to a degree, somewhat sifted and screened by certain

of the professionals in the Province of British Columbia. But I

would mention tonight that I have not seen any great

contribution on the part of the new administration to this

particular bill save and except the amendments, many of which

are to a great extent housekeeping, and some of which are

not.

I do note, Mr. Speaker, that we have here a 157-page bill.

There are 375 sections, apart from regulations and schedules

and apart from forms.

We also have, which has not been mentioned so far tonight, a

140-page critique of this bill by the Corporate Legislation

Committee of the Canadian Bar Association which bears date

October of 1972, and this is a very, very complicated critique

of the bill. As I said, it contains 140 pages and literally

hundreds of recommendations and just about the same number of

amendments.

Now, apart from this one great in-depth study

[ Page 2208 ]

given by this particular group of people, there have been

independent suggestions and a variety of suggestions on many

topics such as watering of stock, transition requirements,

audit requirements, filing requirements, citizenship

requirements, directors' codes of responsibilities, the buying

back of shares, the inspection of records and so forth and so

on.

We find in the orders of the day seven pages of amendments,

all minutely detailed. I would suggest, Mr. Speaker, that one

would need a microscope and a slide rule and indeed a PhD in

semantics, if nothing else, to dovetail the amendments into

this Bill 16. Not only is this a difficult if not

insurmountable task for the Members, but it has obviously

caused the Attorney General's draftsmen quite some grief.

Because we note on p. 5, Mr. Speaker — and I am not going to

dwell on this point because I well appreciate we are not

considering the bill in committee — that it refers to amending

section 293(3) "by deleting the word 'up' and substituting the

word 'up.' " (Laughter). Now I just want to ask you, Mr.

Speaker, as to whether or not this is progress.

AN HON. MEMBER: Onwards and upwards!

SOME HON. MEMBERS: Upupupupupupup!

MR. GARDOM: Or is it a message? But at least perhaps we're

glad to see one thing — that weariness is not a unique

characteristic unto the legislators.

But this is a very, very complicated branch of the law,

notwithstanding the wish to delete the word "up" and substitute

the word "." The corporate structure is one that didn't really

come down in a beam of light. It is man-designed, and there are

well over 100 years of varying statutory history of the

corporate structure and just about the same amount of the

common law

interpretation. But I really do feel, Mr. Speaker,

that before passing this bill the Government, in all

practicality, apart from all fairness, should furnish a

comparative analysis between our existing company statute which

has served the Province of British Columbia well, save and

except certain items that I'm going to speak of before I sit

down.

Furnish a comparative analysis between our existing statute,

which is very, very similar to the companies Acts in other

provinces and you know none of that came about by accident, Mr.

Speaker. A lot of work has been expended over the years to

attempt to de-Balkanize and better standardize the company laws

in Canada.

I'd like to hear from the Hon. Attorney General whether

there is comparative legislation across Canada along the lines

which is proposed today.

I would ask him whether or not we have gained any benefit from the Ontario

experiment, which is the Ontario Act, which I gather provided very much

of the spark for this particular bill which the Attorney General inherited

from the gentleman who precede him.

But I don't think, under the circumstances that I have

mentioned, that a hoist to the fall of this particular bill

after second reading would indeed be at all inappropriate.

The company laws we have in this province of B.C. have got

to be better enforced. This has perhaps been the greatest fault

of company law in the Province of British Columbia over the

past 20 years — the fact is that the law was there but there

was not the staff, there was not the expertise, and there was

not the desire or the interest or the philosophical or the

practical direction of the former administration to see that

company laws we had in the Province of B.C. were effectively

enforced.

I think if we go ahead to beef up our invigilation forces

and perhaps this is somewhat forecasting the next bill that the

Attorney General will be introducing tonight…but if we beef

up our invigilation people and the services of government, and

increase the penalties, and fight fire with fire in order that

we can go ahead and protect the little man and bring in the

kinds of programmes to nip what I call "legal-stealing" in the

bud, we'd be taking a step in the right direction.

There is no question of a doubt, Mr. Speaker, that no end of

private companies in the Province of B.C. have gone down the

drain and unfortunately public companies too; and with so many

of them being in the mortgage and savings and loans field,

we've found life-savings disappearing completely into the

night. This is indeed wrong and indeed cruel and people of B.C.

need better assistance from the law than they have received

before.

But I can't see, really, all of that assistance within this

remedial legislation that is being introduced tonight. You know

I have to read very quickly to illustrate the point that I am

making now an excerpt from a letter. This is one of the

Commonwealth Trust situations where two people stood to lose

and did lose the better part of $34,000. The man writes

this:

"I am 56 and my wife 53. The money was made the hard way — construction work and clearing land. We

sold out in the fall of '67. This is our life-savings now gone.

I understand that there is a disaster fund of considerable size

and I can see no greater disaster than losing your

life-savings. This is all we had after a life of hard work in

Canada.

"The government and the financial circles must have know for sure at least two years ago that any investors

in these companies could only stand to lose…"

He's

speaking of the Commonwealth Trust Companies and this letter

Was written a couple of

[ Page 2209 ]

years ago. Now I continue on with the excerpt from the

letter:

"…and still they were even allowed to go ahead with elaborate advertising and not a word of warning from any quarter."

This is the point that I wish to

make:

"I'm afraid," he says, "we have not enough justice."

"I'm afraid we have not enough justice". There indeed is the

indictment and how right that is.

I say there should be proper systems and I say there should

be much more proper systems provided under this companies Act

than you are providing. I don't think it is enough for you just

to go ahead and take it off the desk of your predecessor and

say, "fine and dandy, I'm now going to introduce this."

I would advocate this: I would advocate that you should

include in this statute the following seven points. I think

companies should be totally obliged to list their true

shareholders and their true directors, and this would make it

far, far tougher for fly-by-nighters and would much help to

prevent people from hiding behind the corporate veil and doing

things in a company which by their reputation would make very

difficult for them to do as individuals.

Dealing with this point, I would emphasize that this is not

a new one. It has been one that has been raised in this

quarter, raised by myself in years gone by, and I've introduced

bills along this particular point.

The Attorney General, when talking, said that people would

have the opportunity to go into companies and find out from the

register what was going on. Mirabile dictu . Heartiest

congratulations to the Hon. Attorney General. There ain't

nothing new in the Act about this. This was under

section 83 of

the former Companies Act which I happen to have, by the

greatest luck and circumstance, right in front of me now.

At that particular time "the register of members shall,

during business hours of any company, be open to inspection to

any person on the payment of 25 cents." There ain't too much

new in what you've suggested tonight there, Mr. Attorney

General.

But I'll tell you one thing that you are doing with this

bill, and it's a very, very bad thing in my view: you are

taking out of the office of the Registrar of Companies the

responsibility of companies to file their annual reports, to

list their shareholders and to list their directors. This used

to be under the doctrine of constructive public notice which we

talked about a little bit earlier tonight in the first bill

that you introduced. This is an effective check and an

effective balance.

Do you think, really and truly, Mr. Attorney General, in all seriousness, that

you are able to go downtown to a top office and knock on the door and

say "I want to see your company register. I want to find out who the

shareholders are of this company. Will you let me see your records?"

Why you'd be met with a muscle-man at the front door and

he'd say "out you go." You couldn't get in whatsoever, let

along the poorest citizen who'd happened to receive a bad deal

at the hands of that particular company. Wherefore, under the

present system at least they would have the opportunity of

going to the Registrar of Companies office and finding out what

was there.

Maybe the whole story is not there. But if the whole story

is not there — and we've had this come up in the Legislature,

and I notice the Premier is listening; he made this point

himself in a few debates a couple of years ago — how strange it

was that certain contracts were being issued under the hands of

secretaries and lawyers who were only nominal shareholders for

the true shareholders.

But at least that fact came to the attention of the general

public. Here, there's poor little Mrs. Jones…you'd expect

her to go ahead and break the lock and key of the office of a

company who is not carrying on a legitimate operation — and I'm

certainly not criticizing those who are — but how difficult it

would be for her to do that.

For goodness sake don't go ahead and try throwing out the

baby with the bath water and saying that this is an

improvement.

There is only one reason this particular measure has been

suggested that I know of; it's by virtue of the fact that the

Registrar of Companies office have had their back broken in

trying to do the work that they've had in front of them. I

would tend to guess that this suggestion came from their

department because they said it's "too tough for us to carry on

with that which we are doing." And you bought it. I don't think

you should've bought it. I don't think, with every respect,

you've given the amount of consideration to it that I would

expect you would have.

Secondly, Mr. Speaker, I would say that in this Company Act

I would like to see it be totally insistent that there be

closer checks and better audits; that there be true values.

There are some improvements along this line. Granted. There are

some improvements, but not enough. There must be closer checks

and better audits, and true value of a company's assets must be

shown on the balance sheet as opposed to face values. True

values as opposed to face values.

Let's get back for an example on that point to the

Commonwealth Trust situation. Put down the true value of that

holding that they had, not it's face value, and the difference

between the two was the better part of $ 2.3 million.

I would say that these values in the balance sheet should be

supported by the statutory declaration of

[ Page 2210 ]

some of the company's directors. It was false, they then at

least would know that they would have to face the appropriate

penalties for swearing a false declaration. My recollection of

criminal law, as maybe the Hon. First Member for

Vancouver–Centre could help me in this, this would well come

within the definition of perjury.

An auditor's certificate is supposed to mean something, and

I say that it should. But there's no way that it ever can if

face values are listed as intrinsic values. This has been one

of the major problems that we've had with companies that have

gone down the drain in the Province of B.C.

Next point: I say that all companies that file a federal

income tax return should be required, under this statute, to

file a copy of their financial statement with the B.C.

Registrar of Companies. I'm aware of your reporting company

definition in the bill, but I think you should give thought to

the suggestion that I'm raising: all companies who do file a

federal income tax return should be required to file a copy of

the financial statement with the B.C. Registrar of Companies,

be they private companies or be they public companies.

As I've said — and I'm going to reiterate this point again

five times if I have to — the directors should also support the

balance sheet on oath. This would indeed make the seamy side of

society, which fortunately we do not have too much of in B.C.,

think twice. This would be another obstacle to the white-collar

crooks, the people that we have to catch and try to catch as

best we can by legislation and by invigilation and by general

public education.

Next point, Mr. Attorney General: I would say that the

corporations also should be asked to file with the Registrar of

Companies records of their guarantees and obligations,

according to similar procedures that are available today, say,

for mortgages, conditional bills of sale and Bank Act

transactions. I'd say that these registered guarantees would

have priority in much the same way that we find priority of

registered documents over unregistered interests in land law in

the Registrar of Titles' office under the Torrens system. I say

these registered guarantees would have priority over those that

were unregistered. This indeed would provide much better public

record and again would at least help to give the defaulters

pause.

I'm not going to get into a long talk about guarantee, but if there's ever

a word that has plagued the law, it's the word "guarantee." You know, I think

that the people who have done perhaps more service to the word "guarantee" recently,

as my friend from the Peace has suggested, are Midas Muffler. At least they've

brought to the attention of the general public how ruddy phony the word "guarantee"

can be, unless one happens to know the worth of the person who gives that guarantee

and the extent of it and their capacity to discharge

it and pay for it.

This is not a new criticism of that word. The first person

to criticize that in my interest in legislative experience in

B.C. was the Hon. Robert Bonner. He talked about that, I think,

way back in 1963 or 1964 or 1965, how very unfortunate it was

that this word was used so loosely and that extensive studies

were being undertaken to see if legislation could come in to

bring in a few cures. Well, we haven't seen any of those yet,

which is indeed unfortunate.

I cannot talk about a bill on the order paper and I'm not

going to. Trust companies, Mr. Attorney General, are companies

the same as any other companies and there's absolutely no

reason why, if you receive their reports, they should not be

filed in the Legislature as opposed to being kept under your

desk and that of the Minister of Finance (Hon. Mr. Barrett). If

we'd had a situation, as the Hon. Speaker himself well knows

when he dealt extensively with the Commonwealth Trust situation

in the Province of B.C., if the inspector of trust companies'

reports had been made public, the Commonwealth debacle would

never have happened in the Province of B.C. Never! If those

reports had been tabled in this Legislature you would not have

found thousands of people losing millions of dollars and being

absolutely financially ruined under the hand of Commonwealth

Trust.

And it's still going on today. I'm not saying we've got

Commonwealth Trust situations going on today, but the Minister

of Finance and the Attorney General are still getting those two

little reports and they're kept within their desks. If anybody

in this Legislature thinks that's right, I'd ask them to raise

their hand. I haven't seen a hand, so I hope that the Attorney

General and the Minister of Finance will agree to see that the

reports of the inspector of trust companies are filed in the

Legislature as opposed to being kept in their own desk

drawers.

AN HON. MEMBER: Hear, hear!

HON. MR. MACDONALD: It's a good point, but it's different

legislation.

MR. GARDOM: Oh, yes. It's different. Indeed it is. I

transgressed there for a moment. The only reason I transgressed

was just to emphasize the point that we're dealing with a

company there as we're dealing with companies here.

HON. MR. BARRETT: You could go to jail for transgressing,

according to Bill No. 1.

MR. GARDOM: I could go to jail for transgressing? Now, Mr.

Premier. Is that a springtime offence! (Laughter).

HON. MR. BARRETT: No, it's about a 10 o'clock

[ Page 2211 ]

in the evening offence.

MR. GARDOM: The next point, Mr. Speaker: I'd ask again that

there be much more disclosure in audits. I'm happy to see that

this bill is a step along that line. I think it has to be

compulsory under the law and I'd like to see more teeth in your

Companies Act , insofar as this is concerned, for an

auditor to report any breach of the law that comes to his

attention and also certify that if any particular statute

governs a company that such statute has been fully complied

with.

Again, if we had had that rule that I've spoken of right now

as a rule of our company law of the Province of B.C., it would

have been mandatory upon the auditors of Commonwealth Trust

Company to disclose the fact that there was a breach of the

Trust Companies Act which was known and apparent to

them. So I am asking that you go ahead and make sure that this

measure that I'm speaking of now comes into this bill. It's not

there.

My sixth point of seven: I say that for cause any

shareholder should be able to request a government audit or a

government inspection. You provided the means for government

inspection, but I'd say he should also be able to request a

government audit of a company that is in default — for example,

mortgage companies not paying their interest or principal

payments as they're supposed to. This indeed would catch an

awful lot of borderline operations at the outset before they

become incapable of salvage.

The measure that you have here I hope will catch it. I'm not

too sure at the present time whether it will or it won't, but

at least you've got a step in the right direction here.

HON. MR. MACDONALD: One shareholder can ask that the

government go in and audit their books?

MR. GARDOM: Yes, for cause. He's got to make his case to the

government department.

The Hon. Attorney General asked me whether or not one

shareholder can request that the government go in and audit the

books of a company. For cause, certainly. Not under a

capricious situation.

HON. MR. MACDONALD: The government determines the cause?

MR. GARDOM: What determines cause?

HON. MR. MACDONALD: The government just determines the

cause?

MR. GARDOM: No, no. The shareholder would say what his cause

was and if it's a just and proper cause the government

conceivably would act.

Lastly, there have to be regular educational publications

keeping our citizens very abreast of the major changes in the law. In this particular

statute we have indeed proposed a very, very major change in the law. The public

should be informed of the major pitfalls to beware of, such as the

interpretation

of the word "guarantee," which I've just mentioned, and the dirty deals that

we run across in the Province of B.C. I think that these things should be better

exposed. I really and truly think that there should be a little

article run

in the Press almost every other day where we find these kinds of transgressions

that I'm talking about.

As long as we give the public the means themselves to be

interrogative, the means themselves to know the law, I suppose

it's impossible to prevent them from taking unnecessary steps

if they so choose to do. But we have been terribly remiss in

this province from the point of view of performance. There's no

better example of how disgraceful we have been from the point

of view of performance than from the Commonwealth Trust

situation. The Commonwealth Trust situation would never have

happened if we'd even had these two which appear to be somewhat

small safeguards in the Province of B.C. — their reports would

have been made public and the second one which I mentioned

earlier.

Mr. Speaker, there's no question that we intend to support

the principle of the bill, but I would reiterate it is a very

complicated measure. I have not seen an extrapolation of the

material that has been proposed by the Bar association into the

bill. I can't find really too much of this being covered in the

amendments that have been suggested. I think, indeed, when we

are facing seven pages of amendments in a bill as long as this

one, with some rather major changes in the law — and

unfortunately not enough — that it would be the best thing for

the Province of B.C. — and certainly no harm to the Government — for this to be introduced, go into second reading and

hopefully with amendments to the Constitution Act it could stay

in that position and come into committee in the fall.

MR. SPEAKER: The Hon. First Member for Vancouver–Point

Grey.

MR. P.L. McGEER (Vancouver–Point Grey): Mr. Speaker, I only

want to speak briefly on this bill to support the things the

Second Member for Vancouver–Point Grey (Mr. Gardom) has already

presented to the House and to the sponsor of the bill, the

Attorney General.

HON. MR. BARRETT: What did he say?

MR. McGEER: He gave a number of important points — seven

lucid reasons why this bill should be postponed for the moment…

[ Page 2212 ]

HON. MR. BARRETT: For a year.

MR. McGEER: …though we support in principle, of course,

amendments to the Companies Act .

I only want to express, Mr. Speaker, my own disappointment

that the Attorney General should not have used this occasion to

commence a completely new approach to the introduction of

legislation in the House.

Involved here is an important matter of principle as well as

an important matter of process. If I could deal first with the

matter of principle in expressing my great regret at what the

Attorney General has failed to do with this particular

bill.

We recognize, Mr. Speaker, that there are many excellent

improvements sufficient for us to wish to support the

legislation. But I recall, Mr. Speaker, the Attorney General

when he sat on the Opposition side of the House, making

passionate speeches on the necessity of having open disclosure

of the beneficial owners of companies. I think if there is one

major principle that needs to be introduced above all in the

Companies Act it is the…

HON. MR. MACDONALD: Read

section 33.

MR. McGEER: …well, you may say it is but we don't read it

that way, Mr. Speaker. We think it absolutely important that we

not continue on the practice of people hiding behind a lawyer

and a secretary as the beneficial owners of some company when

indeed some other anonymous persons are actually behind the

operation.

I recall the Attorney General when he sat in that seat right

there on the Opposition side of the House decrying a situation

where B & W Holdings, Northlands, Savemore, to name a few

companies, where the beneficial owners were listed as a lawyer

and a secretary…

HON. MR. MACDONALD: Name names.

MR. McGEER: …at 208 East Hastings. And when the Attorney

General suggested that B & W Holdings might stand for "Bob and

William Gaglardi," the former Minister of Highways (Mr. P.A. Gaglardi)

said that it stood for, as far as he knew, "Butter and Worcestershire

sauce." So butter and Worcestershire sauce were not the true beneficial

owners of that particular company, nor were the lawyer and secretary at

208 East Hastings. There were other individuals who were the beneficial

owners and who used this disguise for personal gain by going into areas

in northern British Columbia along the Yellowhead Highway, purchasing

property from people who otherwise would not have sold to that

company because they would have suspected the motives for the purchase.

This is perhaps a flagrant example, a very political

example, but one I suggest that can and is repeated in endless

ways in British Columbia, where people nominate someone from

the legal profession and that poor lawyer's captive secretary

as the beneficial owners for some company in order to disguise

their own investment objectives. If ever there was a sin and

something wrong with the Companies Act in British

Columbia, this is it.

No one, Mr. Speaker, recognized this more clearly than the

Attorney General when he was an Opposition Member. I would have

thought the first thing that he would have done when he took

office in British Columbia was to attend to this abuse in no

uncertain terms.

HON. MR. MACDONALD: Well, I did.

MR. McGEER: Mr. Speaker, the Attorney General may suggest

that he's done this, but that's not the way we read the

legislation. And it brings me to the second matter, which is

not a matter of substance but a matter of process.

AN HON. MEMBER: You haven't read the bill.

MR. McGEER: You say I haven't read the bill. It's some 350

sections long and I can claim to have read more of the bill

than most of the Members of the House. I'm not sure how well

the Attorney General has read the bill.

Certainly I've read the amendments that appear on the order

paper. The Second Member for Vancouver–Point Grey (Mr. Gardom)

has drawn attention to some of the astonishing wording in these

amendments:

section 68, line 29, we delete the word "members"

where it first appears and substitute the word "members,"!

Again in

section (

b) we delete the word "members,"

and substitute the word "members."

Section 93, line 13, we delete the word "recovered,"

and substitute the word "recovered".

AN HON. MEMBER: Oh, oh! (Laughter)

MR. McGEER:

section 128, line 3…

HON. MR. MACDONALD: So what's lost? (Laughter).

MR. McGEER: …we delete the words "or place" and we

substitute the words "or place,"

Section 133 we delete the word "shares," and

substitute the word "shares".

[ Page 2213 ]

Section 133 (b), line 14, we delete the words "proxy form"

and substitute the words "form of proxy".

Section 149, we delete the word "of," and substitute

the word "of".

Section 182, line 3, we delete the word "at" and substitute

the word "at,".

Section 192, line 5, we delete the word "Court" and

substitute the word "court".

Mr. Speaker, if I hadn't seen the date April 4 on the orders

of the day, I would have thought these were brought in on April

Fool's Day.

MR. SPEAKER: I think the Hon. Member knows that he's really

infringing upon the committee stage of the bill. It may very

well be that some magic may occur by the date that the

committee deals with this. I don't know.

MR. McGEER: Of course, Mr. Speaker. I understand that.

In line 23, when we delete the word "aggragate" and

substitute the word "aggregate", probably the Members on this

side of the House will think that that's not too great a

substantive change. (Laughter).

But the point that I'm driving at, Mr. Speaker, and I said

this when I first got up, that I wanted to deal with this

method of process. When seven pages of amendments appear on the

order paper of this nature, what it does is to make a mockery

of the legislators.

I suppose everybody in British Columbia realizes after 20

years of doing business the way we do it in this House that

legislators are not really legislators. We have an opportunity

to get up and say a few words for or against the bill, but

someone else does the drafting. The Government is in the

unfortunate position of having to defend it, while the

Opposition, if it is plainly ridiculous, stands up and

criticizes it.

MR. SPEAKER: Hon. Member, on the point of order. The Hon.

Member is trying to deal with the kind of details that are

really examined in the most scrupulous debate in the committee

stage. For example, whether you put a comma outside the

quotation marks or inside the quotation marks. That's what

you'll be debating with the most minuscule care in the

committee stage; but please do not do it on the question of

principle.

MR. McGEER: Mr. Speaker, if I may, I appreciate your

comments, and I must state that I admired your passion for this

kind of thing when you too were on the Opposition side.

(Laughter). But what I am trying to do…

MR. SPEAKER: I always knew where the comma went, anyway.

MR. McGEER: What I am trying to say here, if I may, Mr.

Speaker, is that I think there's a way of saving yourself

effort and me effort and effort at the time of the Whole House

by entertaining a completely different way of going about this

kind of thing.

MR. SPEAKER: I don't think the Hon. Member should be worried

so much about details that are not for the purpose of this

debate. Would he kindly get back to the general principles of

the bill.

MR. McGEER: Well, Mr. Speaker, if I can just take the

general principle of this bill and expand it into the principle

of legislation itself and to say what we should do is take a

bill such as this one — and, Mr. Speaker, if I may recommend

that this be the process for this particular bill — that we

take it and refer it to a special committee of the House where

they can examine this kind of nonsense and straighten it out

before it appears as pages and pages of garbage on the order

paper.

HON. MR. MACDONALD: That's not garbage at all. Read it.

MR. McGEER: Well, it may not be garbage, but when you

substitute "aggregate" for "aggragate" and "of," for

"of", I submit that that is absolute nonsense to appear before

this Legislative Assembly, that we're going about the whole

process of introducing and debating bills in a completely wrong

fashion, that I had hoped the new Premier and the Attorney

General would have embarked on a different and more

sophisticated way for legislation, that while we support the

bill it is with regret because of this lack of principle in not

requiring that company directors be openly declared, and that

we have this kind of drafting garbage tossed on the floor of

the House to be dealt with individually by Members.

Mr. Speaker, it's entirely wrong and I would plead with the

Government to take this bill back, do the job properly and

bring it forward in the House in the fall.

MR. SPEAKER: The Hon. Member for South Peace River.

MR. D.M. PHILLIPS (South Peace River): Mr. Speaker, I'll

have to speak as a layman for the people — the common, ordinary

person in British Columbia. I can't speak as a lawyer because

I'm not a lawyer.

I think, Mr. Speaker, that the Premier summed up this whole

bill very well just a few moments ago. Probably what 99 per

cent of the legislators in this House think of this bill when

after the Hon. Second Member for Vancouver–Point Grey (Mr.

Gardom)

[ Page 2214 ]

after speaking at quite some length on the bill, and the

Premier says, "What did he say?"

HON. MR. BARRETT: It'll cost you $500 to find out.

(Laughter).

MR. PHILLIPS: That's the very point that I'm trying to make,

Mr. Speaker. What we need in British Columbia are lawyers to

protect us from the lawyers.

Mr. Speaker, there are probably only seven out of 55 people

in this Legislature that understand truly…

AN HON. MEMBER: Which ones?

MR. PHILLIPS: I'm not going to name names. Oh, no!

Mr. Speaker, I mean this sincerely. There are probably only

seven people in this Legislature who truly understand what are

in the 157…

AN HON. MEMBER: Does that include the Attorney General?

(Laughter).

MR. PHILLIPS: And that includes the Attorney General.

…the 157 pages of this new Companies Act . I

consider, Mr. Speaker, that sometimes we're going in British

Columbia to, I call it, "law by exploration." We take this bill

and we run through it and we send it out to all the corporate

lawyers in the province, and as soon as somebody runs into a

snag or gets thrown in jail he runs back to the Legislature and

says, "We'll change

section (a), this isn't right."

Do you know how many pages of legal forms there are in this

bill, Mr. Speaker? They run from page 131, 132 — just strictly

legal forms — to 157, which the ordinary person who's going to

start a company is never going to use.

I'm going to make some suggestions here. Number one is, Mr.

Speaker, that on a bill like this I think it would be very

responsible for the Attorney General, who is introducing this

bill, to lay out a short, concise form of the bill. In other

words…

Interjections by some Hon. Members.

MR. PHILLIPS: No, that's not very short. Now listen! I won't

plead complete ignorance, Mr. Speaker, about the Companies

Act , because I've done a little bit of work with a couple

or three companies and changed a few and I have some small

understanding.

HON. MR. BARRETT: Use the original.

MR. PHILLIPS: But really I think, Mr. Speaker — and I'm making a sincere

recommendation — that we could have had on maybe four

or five pages a short, concise view of this new Companies Act . That's number

one.

Number two is, Mr. Speaker, I think we could have had on

maybe two or three pages a concise list of the changes. In

other words, there are a lot of presidents of small companies

throughout the province and small corporate lawyers too who are

good in company law, who know the old Act, but who would like

to know the changes in the new Act. In other words, they know

every page in the old Act; then they look at this and the whole

thing is completely changed.

Interjection by an Hon. Member.

MR. PHILLIPS: Did you suggest that? Well, if you'd have put

it in layman's language, we could have understood it. That's

point number two.

Point number three, Mr. Speaker, is that the ordinary person

on the street, who we just discussed a moment ago, would really

not know — or even the small shareholder in the company — how

this protects him. Because in 157 pages of it there's no way

he's going to study it. If he got past page 4 he'd throw it all

in the waste paper basket, give up and pay $500 and go see a

lawyer. So the little man who this bill might purport to

protect is really not protected at all.

HON. MR. BARRETT: It's a guaranteed employment bill.

AN HON. MEMBER: Oh.

HON. MR. BARRETT: For lawyers.

MR. PHILLIPS: Employment for lawyers, yes.

Mr. Speaker, I know of an instance in our area where a

fellow was thrown in jail because he didn't do the right thing

under the Companies Act . So he went to jail and he was

in there for three or four years.

When he went into jail he had in his back pocket a copy of

the Companies Act . During those few years in jail, when

he was sitting in his cell, he studied that Companies

Act . And I want to tell you when he came out that guy made

more money by fraud — not by fraud — but, by knowing the

Companies Act , he took more small companies and more lawyers

than you could shake a stick at.

I wrote the Attorney General about him and the Attorney

General says — well this was a few years ago — "He's within the

Act." Because he studied the Act.

AN HON. MEMBER: That's initiative.

HON. MR. BARRETT: Your Government hired

[ Page 2215 ]

him to draft the Act.

MR. PHILLIPS: Now this actually happened. If a person wanted

to — and this is how these big companies do, they hire

specialist lawyers. What we need is more teeth in the

Securities Act as well as the Companies Act .

Just one other point that I want to make and that is that

here is the Government bringing in this Companies Act and I'll

bet you that there isn't 10 per cent of your own backbench that

understand what they're going to be voting for. Because if you

had taken the time to properly caucus this bill you wouldn't

have done anything else this session.

Therefore, Mr. Speaker, I have to recommend the following

points:

1. From this bill we should have written out by the Attorney

General the rights and responsibilities of company presidents,

in concise form. If you're company president you can look at

this bill and say under this bill I have to do A, B, C and D. I

have to put in my company report once a year. I can't take

money from my partners and I, you know…(Laughter).

But seriously, if you had it all listed out, A, B, C, D, the

rights of the small companies, service industries particularly,

rights of minority shareholders; if the company president or

the majority shareholder tries to take him, what are his

rights? He can do it, or he can't make laws or he can't take

out money and put it in his hip pocket without them knowing

about. He must go to the lawyer. He can't appoint other

directors without, you know what I mean, Mr. Attorney General…do you understand this, Mr. Speaker? You don't understand

it?

lnterjections by some Hon. Members.

MR. PHILLIPS: The rights and duties and responsibilities of

majority shareholders, the rights and responsibilities of

minority shareholders, duties of the president, duties of the

company lawyer. We're talking about the company lawyers not

filing the annual reports. Well, have it listed; the duty of

the company lawyer — he must file the report, he must tell the

minority shareholders how much the company made…

MR. GARDOM: They've taken it out of the Act.

MR. PHILLIPS: They've taken it out of the Act? Is that what

you said a few minutes ago?

MR. SPEAKER: Order, please.

MR. PHILLIPS: Yes, Mr. Speaker. All right. I've just got a

couple more points.

Duties of the company lawyer, duties of the company auditor.

You know, I've got a small company and I wanted some answers

with regard to income tax. They said, "We can't tell you.

You'll have to go and check it out with the…you'll have to

get into a situation where you have to go check it with the

Dominion government tax auditors."

I said, "Well, why don't you write them and find out?"

They said, "Oh, heavens, we don't want to do that. We'll wait until we get

into a situation. They couldn't give a cut-and-dried answer."

Now really, this is a very complicated situation, yet all

157 pages we're supposed to understand and vote on…

HON. MR. BARRETT: If you're in trouble come and see me.

MR. PHILLIPS: You're in trouble, Mr. Premier, because you

don't understand it.

HON. MR. BARRETT: Sure I do. I've got my AG here.

MR. PHILLIPS: I think, Mr. Speaker, that we'll probably have

to vote for this and have some "legislation by exploration."

When we find there are things wrong we'll have to bring it back

and get amendments. It hasn't even gone out yet and the

Attorney General brought back how many pages of amendments?

AN HON. MEMBER: Seven.

MR. PHILLIPS: Thank you, Mr. Speaker, for your patience.

MR. SPEAKER: Does the Hon. Premier wish to reply?

Interjection by an Hon. Member.

MR. SPEAKER: I'd like to hear another layman's anyway. The

Hon. Member for West Vancouver–Howe Sound.

MR. L.A. WILLIAMS (West Vancouver–Howe Sound): Thank you,

Mr. Speaker. I was pleased to hear what the Premier had to say.

If he's relying upon the Hon. Attorney General with respect to

this bill, he's in trouble. We're all in trouble. It's been in

good fun, the debate so far. Some worthwhile points have been

made.

But the Hon. Member for South Peace River (Mr. Phillips) is

right. There are probably only half a dozen Members in this

House who have any experience or understanding of this kind of

legislation. Yet it is

[ Page 2216 ]

probably legislation which is of the greatest significance

to all Members in this House and to all people in this

province. I know the Hon. Second Member for Vancouver Centre

(Mr. Lauk) will be paying very careful attention to this

legislation. He's a person of keen intellect.

AN HON. MEMBER: Don't bother him.

MR. WILLIAMS: Perhaps I shouldn't bother him at the

moment.

HON. MR. BARRETT: You just woke him up.

AN HON. MEMBER: He's on cloud nine.

MR. WILLIAMS: He's on cloud nine. That's right.

At any rate, Members in this House have seen fit to draw the

attention of the Speaker to the fact of amendments on the paper — and I don't intend to refer to them.

It discloses the kind of nit-picking legalese that we are so

often involved with when dealing with legislation of this kind.

Yet there is not one area of greater concern than the use and

abuse of the corporate structure in this country. It is my

great concern that the legislation which has been brought

forward for debate tonight is legislation which does not ensure

the removal of abuses of the corporate structure. I know that

the Attorney General has spoken in the House in the past about

the openness government, the desire that light should shine in,

and I seriously regret that the Attorney General is saddled

with this piece of legislation. It was not of his making. We

all in this House know that. Certainly those who were here a

year ago know that.

It was designed by the previous administration. If the Hon.

Attorney General would consider the notes which were delivered

with the first copy of this bill that came forward a year ago,

he would recognize that the whole purpose and intent of the

previous administration was to divest themselves of the

administrative responsibility for overseeing the action of

companies in this province. In fact, what the previous

administration was trying to do was to save a dollar in the

cost of the administration of the office of the Registrar of

Companies.

Certainly they were advised by competent solicitors — two of

them in the Department of the Attorney General, and at least

one highly-qualified corporate lawyer from the practicing bar.

And I make no criticism of any one of those gentlemen.

But the fact of the matter is that the instructions that were given were designed

to divest the government of the day of the responsibility of overseeing, as

I say, the operations of companies of this province. The bill that we have before

us today is nothing more than a pale copy of what was

originally produced, a pale copy with some changes which the Hon. Attorney General

has had to change again by amendments in this session.

A great deal of the legislation which is before us today is

almost a direct copy of legislation with respect to companies

which comes from the Province of Ontario. That's right. Yes, it

is. A very careful examination has been made by way of

comparison of our legislation here today with what Ontario has.

This, Mr. Speaker, is very noteworthy, because the fact of the

matter is that for a decade or more the Province of British

Columbia with regard to its company legislation has stood head

and shoulders above the Province of Ontario. They had to form a

special committee of the Legislature of Ontario back in 1968.

They had to carry out extensive hearings throughout Canada, the

United States, and other countries of the world, in order to

bring back recommendations for legislation which even brought

them up level with what British Columbia already had.

Here we are in 1973 copying what they have done in Ontario.

We were ahead of them before, Mr. Attorney General. No

innovations at all.

AN HON. MEMBER: They maybe got level.

MR. WILLIAMS: They got level with us. That's right. And we

are attempting somehow or other to improve in this document

what we already had before.

The fact of the matter, Mr. Speaker, is that the company law

in British Columbia, while it did need to have some

renovations, some modernization, very capably fulfilled the

responsibility of regulating corporate organizations within

this province as it stood and as it presently stands today.

All that was required was that the Government give to the

Registrar of Companies the necessary staff and funds to

administer the Act that we already have. Instead of that we are

faced with a document now which has all the appearances of

democratizing company law as the Attorney General says, but

truly takes away the disclosure sections which are so important

to ensure that the abuses of the corporate organization are not

allowed to bear upon the community.

That's where the problem lies. The Hon. First Member for

Vancouver–Point Grey has given clear indication of what the

problems were. We had it with Commonwealth Trust; we've had it

with other small companies in this province. Let me say to you,

Mr. Speaker, and let me say to the private Members of this

House, that what we have in this legislation in the hands of

the unscrupulous person is the opportunity to form a corporate

organization to carry on their business in complete secrecy.

Mr. Speaker, the

[ Page 2217 ]

Government of the day in this province is the Government

whose party has made such great headlines and expressed such

great concern about the corporate rip-off. This legislation

will enable rip-offs such as you have never seen before.

That's the kind of legislation that is being offered to you

today.

MR. MACDONALD: Are you going to vote against it?

MR. WILLIAMS: Yes, I'm going to vote against it, regardless

of my party or any other body that is in this House. Let me

assure you that, while under the existing laws in this province

directors and shareholders are obliged to be disclosed in the

offices of the Registrar of Companies in this city, under this

legislation no such disclosure is required with regard to

shareholders.

At least now if you find a company carrying on business in

the Province of British Columbia and you search and you find

that it appears to be controlled by, as the First Member for

Vancouver–Point Grey says, a lawyer and a secretary, and you

can ask questions and you can raise comments; but hereafter

you will never know.

Yes, the Hon. Attorney General says you are obliged to

provide information. Let me assure you that under this

legislation you can have a records office at any place in this

province that you deem appropriate. I would think that in some

areas in the northern part of the riding of the Member for

Omineca, you would have all kinds of record offices

established. Anybody from the City of Vancouver or the City of

Victoria, or Kamloops or wherever, can go to Omineca if they

wish, and they can make inquiries as to who the shareholders

and who the directors are. And lots of luck!

But the fact of the matter is that under our present laws in

the Province of British Columbia you may come to Victoria to an

officer of a department of government of the province and make

that inquiry. If the information is not available then that

officer of a department of the government of this province can

take action with respect to that company, The Attorney General will say, I am sure Mr. Speaker, that

under this legislation there is power for the Minister to make

investigations. Isn't that great!

Let me remind you, Mr. Speaker, of the times, time after

time after time when the Hon. Second Member for Vancouver–Point

Grey (Mr. Gardom) asked the Minister of the government to make

inquiries with respect to Commonwealth Trust and we got no

answers at all from that Minister. That's the kind of answer

that is provided for us in this legislation. Leave it in the

hands of the Minister of the Crown to make an investigation and

see what kind of answers we get.

The fact of the matter is that the legislators get no

answer; and I assure you, Mr. Speaker, that the people, the

general public of the Province of British Columbia, will get no

answer.

But at the moment any person, any man or woman in this

province, can walk into the office of the Registrar of

Companies in this city and for 50 cents — cold cash — can

search the records of any company operating in the Province of

British Columbia. Fifty cents is all it costs. But under this

legislation, never again. Never again open disclosure.

Corporate rip-offs; even with this legislation amended as it is

suggested will be done on the orders of the day, let me assure

you, Mr. Speaker, that corporate lawyers, responsible corporate

lawyers, capable corporate lawyers, can drive holes through

this legislation such as you would never believe.

They have ingenuity, they have skills beyond that of the

Attorney General and any of his staff and anyone he has yet

hired to devise this legislation.

When I consider the kind of amendments which have been

placed on the order paper, the kind of changes — changing "Act," to "Act" and "up" to "up." and "of," to "of" —

if that's the kind of craftsmanship which has gone into this

legislation, let me suggest to you that the most junior of

corporate lawyers in the Province of British Columbia and

elsewhere can drive holes through this legislation.

Yes, we've had academics involved in the preparation of this

legislation. I don't criticize them either.

But until this legislation is placed before a proper

committee so that all Members of this House can be made to

understand the direction that this new companies law is taking

us in British Columbia, then it doesn't deserve to pass through

this House. This is not a piece of legislation for lawyers

alone. It isn't a piece of legislation for auditors alone. It

is a piece of legislation that will dictate the direction that

the corporate organization will take in this province from now

on.

I remember that in 1967, in my first session in this House,

we had significant amendments to the Companies Act as

it then was, brought by the Attorney General of the province of

that day. As a very junior Member, I raised questions as to the

adequacy of that legislation. The Attorney General as he then

was rose in his place and said,"Well, if there are any

problems, we can amend it next year." Is that the kind of

answer we're getting from the Hon. Attorney General now, that

we can amend it next year?

This legislation is not nearly as good as what we currently

have on the books. I say to the Attorney General, rather than

bring this legislation forward at this time, that he postpone

it until the fall session or until the session next spring. Let

him place it before one of the select committees of this House

and let the

[ Page 2218 ]

people who drafted this legislation and the people who have

indicated their acceptance of it come before that committee and

convince any one of these Members you would choose. Let there

be no lawyers on the committee. Let them make these Members

understand how this legislation is an improvement over what we

have today. Then bring it back before this House for

debate.

This is not a companies act. This is a sieve, Mr.

Speaker.

MR. PHILLIPS: A what?

MR. WILLIAMS: A sieve.

MR. PHILLIPS: A sieve?

MR. WILLIAMS: Yes, the kind of thing that you drain things

through. You catch the big pieces and the little pieces get

by.

MR. PHILLIPS: A colander.

MR. WILLIAMS: Yes, a colander. That's right.

Interjection by an Hon. Member.

MR. WILLIAMS: No, the business community of British Columbia

can take care of itself, Madam Member.

Let me assure you that the business community in the

Province of British Columbia doesn't fear this legislation in

the least. But when I think of what has occurred in this

province in the last few years; when I think of the disclosures

there have been on the floor of this Legislature; when I think

of the searches that have been made by Members of this

Legislature, Mr. Speaker — even the Hon. Member for

Burnaby-Edmonds (Mr. Dowding) — the disclosures that have come

from those searches made in the office of the Registrar of

Companies in this city that have brought about significant

changes in the government of this province; I tell you that

when we bring legislation forward which will shut off that kind

of disclosure, it's a disgrace. The Attorney General should not

allow it to happen.

You bet I'll vote against this bill. When you bring the

sunshine into this bill, I'll vote for it.

MR. SPEAKER: Any further debate before the Hon. Attorney

General closes the debate? The Attorney General.

HON. MR. MACDONALD: Mr. Speaker, we've had a good debate on this bill.

Some of it was kind of amusing. You can excuse Members like the Hon. First Member

for Vancouver–Point Grey (Mr. McGeer) in the fun he had about the amendments.

But you can't really excuse the Member for West Vancouver–Howe Sound (Mr. Williams)

because sometimes there are only punctuation changes involved. He makes his

living out of punctuation changes of that kind. All of those are meaningful

changes.

MRS. P.J. JORDAN (North Okanagan): Vicious personal

attack.

HON. MR. MACDONALD: No, I'm just saying that corporate

lawyers such as those who are in this House — and it's kind of

a lawyers' bill — can make much of the arrangement of words in

a section.

The bill was modelled upon the Ontario bill, if I can say

that much. It's modelled upon the Ontario experience. In Ontario

there were 100 amendments after the Act became law, between

that time it became law and the next session of the

legislature. In the amendments we're placing forward, we're

doing our best to make that unnecessary. Members can have some

fun with them.

Interjection by an Hon. Member.

HON. MR. MACDONALD: That's it. We're bringing them in now.

The matter has been subjected not only to public scrutiny but,

as I say, to scrutiny from many groups out in the

community.

MR. WILLIAMS: A special legislative committee sat for two

years in Ontario.

HON. MR. MACDONALD: That's right. The Hon. Member is right.

We've had the benefit of that, plus improvements. Since the

bill came in in 1972, in my own case I have made about 14 major

changes. Now, as I pointed out in my opening remarks, about

three more changes of some significance have been made since it

was introduced six weeks ago.

I don't pretend it's a simple matter. But when the Hon.

Member for West Vancouver–Howe Sound (Mr. Williams) gets up in

this House and says that…. Well, I'll quote his exact words,

He says: "All you need is the same old Act with some additional

people in the office of the Registrar of Companies." Well,

that's got to be the most ridiculous statement that has ever

been made about company law.

That old Act allowed the oppression of minority shareholders

and the suppression of information of vital importance to the

community, the government and the shareholders. That old Act

allowed people, if necessary, to be prosecuted sometimes when

they failed to file returns in the office of the Registrar of

Companies.

What we're suggesting in this legislation is far from being

secrecy. We're requiring companies to open their books and

establish a records office and to give…

[ Page

2219 ]

Interjection by an Hon. Member.

HON. MR. MACDONALD: No, no. They didn't. They give

relatively meaningless returns to the Registrar of Companies.

Now they will have to open their books. They will have to

maintain a records office, where not only information on the

shareholders, the directors and share allotments will be made

available, but also necessary financial information.

This is sunshine. This is far more disclosure. For the Hon.

Member to say that we're supporting secrecy of company

operations is simply ridiculous. This is far more disclosure

than we've ever had before.

MR. McGEER: Which section?

HON. MR. MACDONALD: Read the Act.

MR. McGEER: You don't know which

section because it isn't

there.

HON. MR. MACDONALD: I'm not going to try to educate that

little group. But if you read the sections relating to the

records office and the detail of the information that has to be

filed, you'll see that it's all in the Act.

Another thing with respect to this Act on which that little

group in the Liberal Party have proved themselves to be totally

ignorant is the business about revealing the true ownership of

shares. The debate went ahead from that little group on the

basis that we have done nothing about that; that they were

content with the old Act. Now, for the first time, when things

come up such as the highway speculation we had in this province

a short while ago, we will have the power to require — and I

can give you this

section number; I happen to know it; that's

section 233 — that the real owners of the company…

Interjections by some Hon. Members.

MR. SPEAKER: Order.

HON. MR. MACDONALD: Yes, exactly. In exactly that kind of

case we will be able, for the first time, to require that the

true owners of the company disclose themselves, so that we can

begin to eliminate corruption in this province.

Interjection by an Hon. Member.

HON. MR. MACDONALD: That is something that is completely new

in this Act and something that has been completely missed by

the Liberal Party.

In view of what went on under that old Companies Act in terms of exploitation of the public, suppression of

information, oppression of minority shareholders and dealing by

insiders; when they talk about that old Act being adequate, I

say that if they support that old Act they are in truth an old

party and well on the way out.

Interjection by an Hon. Member.

HON. MR. MACDONALD: In this bill we're drawing on the

experience of other provinces. We're making our own

improvements based upon that experience. We're undertaking a

very thorough examination of the Companies Act . We're

moving from that to a thorough examination of the Securities

Act . We're moving from that to a thorough examination and

reform of the Trust Companies Act . Possibly that may

come sooner because the Hon. Member mentioned Commonwealth

Trust. I quite agree that this Companies Act of this

province is grossly inadequate for the needs of modern British

Columbia.

And I move, Mr. Speaker, I move second reading of a bill

which is a great improvement on the old companies legislation,

which establishes protections and disclosures that we've never

had before, and which establishes for the first time standards

of care on the part of the directors and officers of a company

that we've never had in this province before. I move second

reading.

Motion approved: Second reading of Bill No. 16.

HON. MR. MACDONALD: Mr. Speaker, I move that the bill be

referred to a committee of the whole House for consideration at

the next sitting of the House after today.

Motion approved.

Hon. Mr. Barrett files answers to questions.

Interjection by an Hon. Member.

HON. MR. BARRETT: Yes, 10 till noon tomorrow. I understand

there is a major event at noon tomorrow. And the House will

continue on the very clear debate on these interesting

legislative bills proposed by the Attorney General and enjoyed

so much by the select group of this House.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 10:55 p.m.

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