Belich Camilla; Salesa JennyCOMPANIES (DIRECTORS DUTIES) AMENDMENT BILLSecond ReadingCAMILLA BELICH (Labour): I move That the Companies (Directors Duties) Amendment Bill be now read a second time.It is a pleasure to stand and speak on the second reading of the Companies (Directors Duties) Amendment Bill. I've only recently become the member in charge of the bill and I appreciate that there are many members in the House tonight who have had a longer history than myself on this particular bill. I particularly want to acknowledge the Hon Duncan Webb who became a Minister and so was unable to progress this bill through the House and then passed this bill on to my other colleague who I do want to acknowledge the Hon Rachel Brooking who also became a Minister and so was unable to progress this bill through the House. I intend to look after this bill through its passage through the House but I want to thank both those members for their time and stewardship of this bill especially Duncan Webb Minister Webb who put this bill in the biscuit tin the first time.The purpose of this bill as stated in the general policy statement is that a director acting as the mind and will of a company can take actions which take into account wider matters other than the financial bottom line. It's a simple addition to the Companies Act. I've just got a copy of the bill here and it's so short that I'll just go through its primary provisions. It does amend the Companies Act and clause 4 puts in a section after section 131(4) of the principal Act which is section 131(5) which just adds in that the company when determining the best interests must take into account—and it lists a whole range of matters which we would usually term as environmental or social matters that are not necessarily to do with the profits that a company makes. The ones that Dr Webb has put in his first draft of the bill which were examined by the Economic Development Science and Innovation (EDSI) Committee are: the principles of the Treaty of Waitangi environmental impacts ethical behaviour fair and equitable employment practices and interests of the wider community. So quite a wide-ranging list of considerations that people may take into account if this amendment to the Companies Act 1993 which is the principal Act was to be made into law. So a very simple bill really.If you look back to the first reading of this bill where Minister Webb was discussing his rationale for the bill it came across because of a very common misconception within our law which is that the directors of companies must look to the shareholders of the company and must only look to profit in terms of the best interests of the company. And that as people who have sat on the select committee and looked through this bill is not quite a correct interpretation of the law as it stands but it is none the less a widely held view that has in fact been reported regularly in this House and also—I'm under no illusions—throughout boardrooms throughout the country as well. So this is an important matter to clarify.Since the first reading of the bill which I referred to—it was referred to the Economic Development Science and Innovation Committee and I want to acknowledge the members of the committee for the time and attention that they gave to this bill no matter their personal view as to whether it should progress or not. I want to assure that select committee that I've taken their report seriously and it will be informing the Supplementary Order Paper that I intend to introduce prior to the committee stage of this bill.I now briefly want to turn my attention to the submissions that were made to the select committee. I was not as I've stated the member in charge of the bill when the EDSI committee was considering it so I was not there as is sometimes usual for member's bills to sit alongside that committee and to hear the submissions in person. However I have made sure now that I have stewardship of this bill I have read and looked through the written submissions that were made to the committee. There were 51 submissions 34 in support which included making improvements to the bill and also 15 opposed and two that did not express a position. Some as is the case in many instances considered that this bill went too far and some others thought that it was not necessary at all. And so some would say that that means that this bill strikes the right balance. But others may also say that you need to actually examine the bill and its purpose to see if it is achieving it and so that's what I have done.I want to be clear: I do not agree with the submissions that say that there needs to be further compliance mechanisms included with this bill. There were some people that thought that that should be the case that there should be further duties placed on directors. I don't see that as consistent with the purpose of this bill and that is not something that I will be looking into introducing in any Supplementary Order Paper.The select committee report was very short and it made one recommendation. The overall recommendation—as people aware at the EDSI committee may know that committee is made up I think of an equal number of members from the Government parties and the Opposition parties. And so their report is a little bit different from some select committee reports that we do have. But they did recommend a change if this bill was to pass—and I just will look at that briefly—which was essentially to cross out the majority of the bill and add in a new provision that would say To avoid doubt in considering the best interests of a company or holding company for the purposes of this section a director may consider matters other than the maximisation of profit". I just want to let members of the committee know that I am seriously considering the reasoning for that recommendation the simplicity of their recommendation and will be looking into that in terms of drafting the changes to this bill because I do think that it is important to get these things right.There's a lot of commentary which is available and now published on the website which goes through the official advice on the bill—and I'm sure you'll hear from other members of the House that it was a position held by many respectable organisations including the advisers to the bill that they did not agree that this bill should proceed. In their view—and I summarise—it would not add to the existing law. I disagree. I think the codification of law as of the common law which a lot of their advice relies on often adds clarity and certainty. And in my view that is a matter of utmost importance in relation to clarity. The common law is case law which is made by the courts and so when we codify that that does add a certainty to the law and clarity for people who often probably won't be reading the judgments of the Supreme Court and other very important matters that they do consider.I also have looked at quite a few of the submitters to this bill and one of the overriding changes that I will be taking forward is the issue of clarity. I think there are some significant improvements which can be made to the bill. The matters that I wanted to note in this speech were: taking the point that it's important that people know that the list is not exhaustive if indeed the list is carried through; taking into account the wording change—there was a suggestion of removing that "take into account" to "may regard" and I know Dr Webb also suggested that that would be a valuable change to the bill; and then also removal of the word "recognised" in "environmental factors" which has been confusing for some people. So I do take those into account as well.We do know that a similar provision to this bill has been adopted in the UK—not exactly the same but a similar provision. We do know that in Australia they decided not to introduce a bill similar to this for various reasons. I say New Zealand can make its own decision.I think that there's also been a bit of commentary about what a member's bill should do and some submitters to this bill said that it's not appropriate for a member's bill to look at something so substantive as company law and the duties that affect directors. Some have said that we should go further within the member's bill. And I think it's important to this House to recognise that members' bills do have a purpose. This is a bill that adds one new section of "communicative intent" which is a phrase used legally which is referenced in many journals which is seen as a positive thing in relation to the purpose of the law. It doesn't substantially change the law. It doesn't require cost or compliance. It doesn't require any additional spending. But it does set out the purpose of how we would like directors to do business which is not to only consider the maximisation of profit but to truly and freely decide what is best for them and their business. I think that Parliament should enable them to do that.So my intention is to proceed with the bill and to introduce a Supplementary Order Paper in good time prior to the committee stage in order to address the issues raised through the select committee and to allay any concerns around compliance. I commend it to the House.ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to."