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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

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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

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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

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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 accessibility to company information.

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.

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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. 60.

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

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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

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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

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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

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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…

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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 in 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.