Cosgrove Clayton: Companies Amendment Bill (No 4) Limited Partnerships Amendment Bill (No 2) — Third ReadingsText is incorporated into the Bound VolumeCosgrove Clayton: Companies Amendment Bill (No 4) Limited Partnerships Amendment Bill (No 2) — Third Readings[Sitting date: 24 June 2014. Volume:699;Page:18837. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour):Labour joins with the Minister of Commerce in supporting the passage of these pieces of legislation the Companies Amendment Bill (No 4) and the Limited Partnerships Amendment Bill (No 2). Like the Minister has said we are also a party that is for industry support openness transparency and accountability in respect of our business arrangements in New Zealand and internationally so as to preserve as I think the Minister alluded to the credibility and integrity of our commercial entities in this country.New Zealand does have an international reputation a trusted reputation for doing business. The World Bank and the International Finance Corporation have ranked New Zealand out of 183 countries as the easiest in which to start a business. To be fair much of that work started under the previous Government and has been carried on in a number of respects by this Government. We are trusted in terms of our commerce. We are generally perceived to be clean and open and accountable apart from the odd blip. Without diverting to the negative in this moment of détente between the parties Judith Collins I do not think in her recent activities overseas has contributed in any way shape or form to that trusted incredible relationship that we have in our business arrangements.However moving back to the legislation I would say in passing—and it has become slightly habitual with this Minister—that legislation sits around for a long time. This is an important piece of legislation. This Government has been aware of this legislation yet it has languished for a long long time. It was introduced of course by Simon Power and has languished on the Order Paper off and on as I say for quite a period. It is noteworthy that our reputation has suffered to some extent because the Government has chosen to give this such a low priority. In 2012 we know that New Zealand along with Russia was struck off the prestigious European Union banking and corporate white list over this country’s weak money-laundering and terrorism financing controls. I was Associate Minister of Justice in the last Government when we passed as per our international obligations anti-terrorism anti - money-laundering legislation. This was part of that package in a different portfolio. Being struck off that white list means that banks and institutions in the EU “will not be entitled any more to make simplified research for banks and financial institutions registered in New Zealand”. It also means that European institutions can no longer “accept and acknowledge” customer identification and analysis performed in New Zealand.That would not have happened if this Minister bluntly was on top of his portfolio. I know he is well-intentioned but having this legislation languish and bobble about on the Order Paper and stagger its way through the legislative process has been to the detriment of New Zealand’s reputation. We have had incidents for instance that include a New Zealand - registered company that was used to run a US$25 million Ponzi scheme by its American chief executive owner who is now facing up to 15½ years in a United States jail after pleading guilty. These may be to some relatively insignificant examples of where our system has lost its way but each one of them especially being expunged or struck off that white list in EU terms sends a signal to overseas investors and overseas jurisdictions to put a question mark on New Zealand’s international commercial reputation.Generally these bills—and they are in this case—are bipartisan bills. We all accept and we all support the intent. But what I would say to that Minister Mr Foss is that this legislation and its passage required a heck of a lot more urgency and a heck of a lot more priority than was given by him. He is the Minister of Commerce. He is the person who is in charge effectively of ensuring the credibility and integrity of our commercial and business arrangements. This sat around to the point where we got pinged by the EU. I know and former diplomat Mr Hayes will know that embassies and foreign agencies look at issues like this and they make their own interpretations and they make their own judgments. Mr Hayes of course spent much of his career protecting enhancing and promoting New Zealand’s international reputation in an attempt to progress our commerce internationally. He will know that when things like the EU white list occur capitals others and agencies make judgments and reputations suffer and they take a heck of a long time to repair. It has become a bit of a habit that Mr Foss’ legislation tends to come out with a hiss and a roar and then it simply is put on the back-burner. Maybe it is not considered a priority by Cabinet. Maybe his influence within Cabinet is waning—who knows? Maybe the Government just feels that there are more important things to do. In Government that is always an excuse. There is always something more important to do. But this is integral to the arrangements and the credibility and integrity of our businesses in New Zealand.The Companies Amendment Bill (No 4) of course gives the Registrar of Companies powers to investigate and deal with non-compliance with the Companies Act 1993. This includes the power to flag companies on the register that are under investigation. It allows the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act. The registrar will also be able to ban directors of such companies from taking part in the management of any company for up to 5 years. The Limited Partnerships Amendment Bill (No 2) makes similar changes in respect of the Limited Partnerships Act 2008 so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead. There is better alignment with the Companies Act and the Takeovers Code to ensure that shareholders understand the effect that changes on company control will have on the value of their shares.We know that shareholders now are increasingly becoming better educated and briefed on the nature of the companies they invest in. That is partially born out I think of many shareholders being burnt by the difficulties that occurred with finance companies some years ago. Our communities and investors are becoming more financially literate. They expect to have far clearer information. They expect to have a greater understanding. There was a time when shareholders—and I talk not about institutions but small mum and dad shareholders if you will—would pick an investment but would not get particularly involved or particularly briefed apart from the annual and quarterly reports in scrutinising the activities of directors and the company as a whole. We know there is greater scrutiny now of director and chief executive officer remuneration. Powers are limited in that respect with shareholders but shareholders are increasingly becoming more active through shareholders’ associations and other entities in scrutinising the activities of companies.The Labour Party supports this legislation. We agree it is necessary. We would have facilitated the passage of it if the Government had determined that it wanted to put some horsepower behind it and get it through in a faster fashion. There has been no explanation from the Government. I see the Commerce Committee chair Mr Young who did an excellent job in terms of putting this through. In fact I suspect that maybe he should be the Minister of Commerce because he can expedite legislation faster than his boss through the select committee process. But we have had no explanation as to why this languished why New Zealand’s reputation suffered through the removal from the EU white list—why that occurred in 2012. Could that have been avoided if the Minister had got his act together got his officials sorted and got this legislation through? In the end it becomes a matter of priorities. I am sure business people will welcome the passage of this legislation because their reputation in terms of international trading and exporting is dependent on a sound accountable transparent environment both in New Zealand and overseas to support their activities and arrangements. I do hope this is the second-to-last piece of legislation in the commerce portfolio where we will be forced to make comments about the lack of speed and haste. The Minister has not managed this process well and I hope he will learn from this and become slightly more efficient in his job.