Dalziel Lianne: Business Law Reform Bill — First Reading 
Dalziel Lianne: Business Law Reform Bill — First Reading 
[Volume:609;Page:6524] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Business Law Reform Bill be now read a first time. 
 It is my intention to move at the appropriate point that this bill be referred to the Commerce Committee. It is important to make sure that legislation aids business activity and to ensure that it does so it must remain up to date and relevant. Business law should hinder neither the ability of business to function nor the effective and efficient operation of the markets in which those businesses operate. Given the amount and the complexity of legislation that affect businesses it is inevitable that amendments will be needed from time to time in order to meet the same. As the business environment changes legislation must be updated accordingly. 
This is the second omnibus Business Law Reform Bill. It represents the commitment of this Parliament to the incremental improvement of existing business law to keep in step with the changing needs and requirements of the market. The bill contains various amendments to a number of business law statutes that in their own right would not justify a single piece of legislation. 
It is at this point that I wish to acknowledge all parties in the House with the exception of New Zealand First which have agreed that this bill should proceed. I believe that New Zealand First has done irreparable damage to its reputation with the business community assuming of course that it had a reputation to damage. I can inform this House that many representatives of the legal fraternity and the wider business community have expressed considerable dissatisfaction that one party could stand in the way of legislation that is designed to assist the business community in a number of significant ways. 
In particular the bill will remove unnecessary compliance costs associated with some administrative processes. It will clarify various statutory provisions achieve consistency between different legislative requirements and update various statutory provisions. Although the changes effected through the bill are individually small and therefore would not justify their own statute in totality they will have a significant and positive impact on the body of law under which businesses must operate. For example in the field of compliance costs one of the key aims of the bill is to reduce compliance costs associated with administrative procedures. An example of that is sections 52E and 52F of the Securities Act relating to employer-based superannuation schemes. All such schemes must prepare both prospectuses and investment statements except for “small-employer superannuation schemes” that existed before 1 September 1983 and have assets of less than $5 million. 
A number of industry participants expressed their concern at the unnecessary compliance cost associated with having to register a prospectus for employer-sponsored superannuation schemes under the Act. Indeed one organisation claimed that complying with that provision costs up to $100000 annually. Industry participants commented that they seldom or never have inquiries for the prospectus. In the light of the expense of preparing and publishing a prospectus they consider that the costs outweigh the benefits. The bill contains a clause exempting all employer-based superannuation schemes from the prospectus requirements in the Act which will greatly reduce compliance costs for the operators of such schemes. 
Another example is section 97A of the Building Societies Act and section 210 of the Companies Act 1993 where certain financial documents must be sent to all members of building societies or shareholders of companies. Consultation has revealed that in many cases the members or shareholders are not interested and indeed may not wish to receive all the financial disclosure documents. In that case the cost of printing and posting such documents to them is an unnecessary compliance cost. The bill contains a clause allowing members and shareholders to opt out of receiving certain information. 
One further example is sections 10 and 12 of the Financial Reporting Act which sets out the disclosure requirements for reporting entities and exempt companies. Exempt companies are those with among other requirements assets of less than $450000 and a turnover of less than $1 million. Exempt companies have lesser disclosure requirements than reporting entities. Consultation has revealed that in some instances exempt companies will have prepared fuller disclosure for other reasons yet must also prepare the additional lesser disclosure documents under the exempt company regime. The bill contains a clause allowing exempt companies to opt into fuller disclosure. This will provide exempt companies with the flexibility to make compliance cost savings. 
The second heading is “clarification”. Another key aim of the bill is to improve the clarity of our existing commercial law statutes. Where a statute is unclear businesses and regulators have to waste time and money on either getting legal advice or taking a case to the courts to interpret the statute. One example of that is section 196(1)(a) of the Companies Act 1993 which provides that at each annual general meeting a company must appoint an auditor to hold office until the end of the next annual general meeting. It is not clear in the statute whether an auditor may resign before then. The bill contains a clause clarifying that of course an auditor can resign between annual general meetings. 
Regarding consistency the bill also aims to remove anomalies in the law that have emerged over time. For example section 53E of the Securities Act provides that issuers of equity securities debt securities life insurance policies unit trusts and superannuation schemes must have their financial statements audited annually by a qualified auditor. In the case of participatory securities annual audits are carried out only if the statutory supervisor so requires. The bill contains a clause requiring that all arrangements or schemes to which participatory securities relate should be audited annually to remove that inconsistency. 
Finally the bill is about updating the law. This process is particularly important as among other things it allows business to take full advantage of the new information technology environment. For example section 15(2) of the Commerce Act prescribes that meetings of the Commerce Commission should be held at such times and places as the commission determines. That does not provide the commission with sufficient flexibility to convene meetings using for example videoconferencing tools. The bill contains a clause that will allow the commission to take advantage of technology to convene meetings. 
In aggregate the changes included in this the second omnibus Business Law Reform Bill will achieve the key public policy objective of ensuring that the law affecting the operation of business is clear efficient and effective. The bill will reduce the cumulative costs of complying with legislation and the cost of reconciling different legislative requirements to promote both the efficient use of economic resources and enterprise and innovation in the economy. 
I again thank members of the Progressive Coalition United Future the Greens the National Party and the ACT party for facilitating the introduction of this bill and reference to the select committee. On behalf of the business community representatives whom I have met I say shame on New Zealand First for playing politics with a demonstrably non-political bill. Several months have been lost by that about-face given that the bill was actually agreed for introduction before last year’s election. I thank the Leader of the House for finding a way round the obstructive behaviour of a party that has lost any credibility it ever had over this matter. I commend the bill to the House.