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Thursday, 19 May 1960

Sir GARFIELD BARWICK (Parramatta) (Attorney-General) . - Mr. Chairman, I suppose I shall have to get used to the sort of remarks that I have heard from the honorable member for Kingston (Mr. Galvin). In the long run, the people will know that I will serve this Parliament and them as faithfully for a small salary as ever I did a client for a high fee. Any attempt to flick me with a reference to my past fees will just whizz over my shoulder.

This bill begins by picking up the existing provision, which is section 91 of the principal act, in clause 27, and restates it as proposed new section 92. It is quite true that I wrote an opinion - which was correct, if I may say so humbly - that under the section as it stood, insofar as you wished to demonstrate that a person was in control of a company by means of a shareholding, it would be necessary to show that he had 5 1 per cent, of the voting power. It is precisely because of that situation that this division of the bill has been brought forward with respect to some of its aspects.

It has been necessary, because of what I wrote in that opinion and because of the legal conclusions that are there expressed, to state, by a definition, what amount of voting power will be treated as sufficient to control a company. However you look at it, you have to choose an artificial figure. There may be very many circumstances where you could not possibly control a public company by the use of 15 per cent, of the voting power. There are other circumstances in which it may be possible - very unusual circumstances, I should think - to effect control by a voting power that was slightly less than 15 per cent. In the broad - and that is all we can take - 15 per cent, is selected as the artificial amount, more than which will be artificially treated as giving control of a company.

I have some sympathy with those who are untrained in understanding closely expressed language - and this language is closely and very precisely expressed. If honorable members will turn to proposed new section 92b, they will see there a reference to a person who is in a position to exercise control of more than 15 per cent, of the total votes. If honorable members want to discover what is meant by the words " exercise control of more than 15 per cent, of the votes", they must go back to proposed new section 91 (2.). The definition of " control " given in mat proposed section is very wide. It is so expressed as to enable you to fasten on a person as having control if he is, in fact, in control. You can look at all the circumstances. It does not matter that he may be exercising his control, in fact, through arrangements or understandings which are not legally enforceable. The definition of " control " is, I suppose, as wide a definition of control as I have ever seen. It is designed to leave the matter as a straight question of fact unencumbered by what you might call legal considerations. You cannot sidestep it by any argument that the control is not legally enforceable or that there is not a legal arrangement. For example, if a man had shares in his wife's name amounting to 10 per cent, of the total shareholdings, and 5 per cent, in his own name, there would be no trouble in determining that, in fact, he had control of 15 per cent. It would be no good the man saying that some of the shares were in somebody else's - his wife's - name. That is the kind of thing which is covered by the definition of " control ".

Mr Bird - Do you think a man's wife would agree to that sort of arrangement?

Sir GARFIELD BARWICK - Any person who had to decide the fact would readily draw the conclusion that a man could persuade his wife to vote the way that he wanted her to vote. Turning then to proposed new section 92a we find that a person shall be deemed to be in a position to exercise control of a licence if that person is in a position to exercise control of the company that holds the licence. So, control of 15 per cent, of the voting strength in a company that holds a licence is regarded as control of the licence.

It may well be that a person has less than 15 per cent, of the shareholding but nonetheless, because of other arrangements, is in a position to control 15 per cent. I have already cited the instance of a husband and wife. You could have the instance of partners or people who have all sorts of arrangements whereby one will vote at the wish of the other. All those people are caught by this set of words. The provisions to which I have referred will, to state the matter bluntly, put teeth into section 91 to meet an attempt to exercise control of a licence through shareholding or voting power in a company. This has been done because of the circumstances which were' set out in the opinion that I gave some time ago, which has found so much favour with so many people. It was done because the existing section was limited to legal control through 51 per cent, shareholding.

Of course, you may control a licence by means other than voting power. One means of doing so is by having common directorates. Proposed new section 92c is designed to prevent control by this means. It provides that a person shall not be a director of more than two companies each of which is in a position to exercise control of a different licence. I invite honorable members to see just how far that goes. If company A has 30 per cent, of the voting power of one station and, say, 20 per cent, of the voting power of another station, none of the directors of that company could be a director of a third company which had more than a 15 per cent, interest in another licence.

Mr Cope - But it does not stop dummying, does it?

Sir GARFIELD BARWICK - I shall come to dummying in a moment. I suppose that dummying is the hardest thing of all to prevent, but this bill has gone a considerable way towards doing that. I shall indicate in a moment how far it has gone. To return to what I was saying, besides having common directorates, there may be an endeavour to control a licence by agreement or arrangement which may or may not be legally enforceable. Proposed new section 92A(l.)(b) states that a person shall be deemed to be in a position to exercise control of a licence if he is in a position to exercise control of the operations conducted under or by virtue of the licence, the management of the station in respect of which the licence is in force or the selection or provision of the programmes. The net has been cast extremely wide to cover any agreement as to management of the station which will put the party, for the purpose of this act, in control of the station. So if you had a person who was in a position to exercise control of two licences, he could not have an agreement with respect to the management of a third.

The CHAIRMAN - Order! The Minister's time has expired.

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