Connell Brian: Securities Legislation Bill — In Committee 
Connell Brian: Securities Legislation Bill — In Committee 
[Volume:634;Page:5479] 
BRIAN CONNELL (National—Rakaia) 
: 
 I will start by asking this question albeit a hypothetical one. Is this legislation necessary? As I examine my own inner feelings on this I have to conclude that the answer is yes. I do add though that if capital markets are to work properly they need clarity and certainty. 
We do risk stifling capital flows with the way this legislation is drafted. I am not sure we could do it any better having said that. What I do say to members though is that we need to be pragmatic enough big enough to come back to the House and make changes to tweak this legislation where and when appropriate as we discover through the course of examining legislation that is so large that we have made errors in drafting in intent or in application. Experience has taught me that that will be necessary. What investors in this country do need though is certainty and confidence in their markets and in the operators therein. I have no problem with supporting the legislation but I do offer that advice to the Minister and to subsequent Governments. I am sure that this is legislation that just by its sheer complexity and size we will come back to sooner rather than later and have to rework in some areas. 
I turn now to Part 2 and look at the powers that the courts have. There is no doubt that the powers inherent in this bill do enhance the powers of the courts to bring convictions; there is no doubt about that. But I say to colleagues let us not assume that because there are enhanced powers we will see a significant number of prosecutions as a consequence. What I think this part will do is send very clear signals to people who are operating in this market that they need to be very careful and they need to be beyond reproach otherwise the consequences will be severe. That is a warning also. It goes back to my concern about stifling capital flows because I think there is a tendency in the way the legislation was drafted to make operators risk-adverse. By that I simply mean that when they are uncertain they will take the no-risk approach and decline to get involved as opposed to shaking their shoulders and having a go just because the consequences are significant. 
I touched on management banning orders in a previous call but it is something that concerns me. I think on balance the Commerce Committee has worked well to come up with a sensible solution. I want to share with members just how significant some of these things are. In terms of management banning orders new section 44DB inserted by clause 51 states: “A management banning order may for a period stated in the order of 10 years or less prohibit or restrict the person (without the leave of the Court) from being a director or promoter of or in any way (whether directly or indirectly) being concerned or taking part in the management of an incorporated or unincorporated body …”. I say to the Committee that that is a hell of a power; it is a hell of a thing to do to ban someone from taking part in what was hitherto his or her livelihood. 
I do not want to be giving confused messages. If someone is engaged in inappropriate behaviour let us throw the book at that person. But let us be careful that we are not getting people caught up under banning orders because of a technical breach an unintended breach because the consequences are very very significant. A person who is banned and cannot pursue his or her livelihood as a manager or director of an organisation in one field will not be able to pursue his or her livelihood in another. 
Hon Lianne Dalziel 
: They have to be convicted of an offence. 
BRIAN CONNELL 
: I agree with that. I understand that point. I am just drawing attention to the fact that this is a very significant issue.