Allan KiritapuKIRITAPU ALLAN (Labour): Madam Chair thank you for allowing me to take a call on this. As the honourable member Todd Muller just noted it is a relatively confined amendment bill but nevertheless one that has attracted some I guess nuanced thinking in terms of the Companies Act. Before I turn to the substance of my remarks in respect of the amendment before us I want to acknowledge the member for bringing forward this issue for our consideration through the Primary Production Committee. It's been a little while now since we considered it in some detail but the member worked closely with the relevant entities in particular Zespri and their board and other key stakeholders.I want to acknowledge as well the legal prowess of David Goddard QC who turned his mind to the issue that the member has been grappling with. It came from his experience as I best understand when he was on the executive or in the senior leadership team at Zespri as they went to go through the delineation of dry and wet shares and found that there was a lot of legal uncertainty or there was a range of grey areas when it came to understanding or analysing the particular provisions between section 36 and section 53 of the Companies Act and how those two particular provisions sat together. I want to just—and I guess the ill of this bill if it goes towards anything was really trying to I guess ensure that other companies particularly companies in the primary sector didn't have to grapple with or pay the costs of or go through such an arduous process to determine the way in which you could delineate or make clear what type of shareholdings a company could have if they wanted to go from the way that they had been structured as Zespri had been and move to another phase.Look we spent a lot of time deliberating about whether there was some legal uncertainty. I must give my regards to those officials from the Ministry for Primary Industries and Ministry of Business Innovation and Employment that did do some work with us. I think they might have found it rather challenging as well and I think the honourable member Todd Muller might agree that they were often as we were grappling to understand whether we might open up some kind of Pandora's box if we were to make substantive amendments to the Companies Act through this member's bill. There are relatively little academic writings in respect of how those two provisions—section 36 and section 53—should be read together. So I want to acknowledge them because I know that they did do a lot of work to try and provide us with a whole range of information.I want to turn to the submission of David Goddard QC. He says that the bill addresses a real albeit technical problem but he was very strongly of the view that this member's bill had to go forward in order to clarify an area within the Companies Act that he and some colleagues had been I think thinking about for some time. So his issue was the way in which section 36 of the Companies Act provides a lot of flexibility in relation to the way that rights to shares are attached to shares and whether they were consistent with the goal of flexibility and internal shareholding arrangements. That particular provision contemplates that shares may carry different voting rights and distribution rights. But the issue that he was speaking to is whether section 53(2) of the Companies Act provides unnecessary restraints or too prohibitive restraints.So section 53(2) of the Companies Act currently reads that: The board of a company must not authorise a dividend—(a) in respect of some but not all shares in a class; or (b) that is of a greater value per share in respect of some shares of a class than it is in respect of other shares of that class—unless the amount of the dividend in respect of a share of that class is in proportion to the amount paid to the company in satisfaction of the liability of the shareholder under the constitution of the company or under the terms of issue of [that] share or is required for a portfolio tax" and so on and so forth.So Mr Goddard's view was that that "provision prevents directors [from] discriminating between shareholders [with shares] who hold identical rights when they declare the dividends."—and that he considers appropriate. I think the bill that the member Todd Muller has here accurately addresses the issues that Dr Goddard QC was concerned about. See because he goes on to say that there's "a difference of views in the profession about whether [or not] in addition to [the] restrictions [in section] 53(2) [whether] that prevents a company constitution from providing that in certain circumstances the board must not authorise dividends in respect of some shares in a class." So what he's trying to say there is that there's a difference in views about whether the provision is designed solely to prevent discretionary board decisions about dividends in respect of the same class of shares or whether it prevents hard-wired differences in treatment and in which the board has no discretion.Look we have had substantive discussions and the member knows that we've kind of gone on a journey. I hope he feels supported in terms of the advocacy that our side of the House has provided to him in ensuring that this bill did stay on the ballot because we wanted to make sure that we were fixing any anomalies without I guess opening that Pandora's box. So I guess my question to the member in the chair Todd Muller is whether he's comfortable—having had some time now to reflect and consider how these two provisions sit together and on the advice that he's received and obviously under the stewardship of David Goddard QC—that we are not creating any unintended consequences in the enactment of this member's bill and whether he's turned his mind to whether there will be any ramifications to current case law or anything throughout the rest of the application of the Companies Act. So I guess those are just a couple of questions that are sitting with me at the moment. I'm sure that many of my colleagues will have other questions to put to that member and I certainly myself will have some in due course.Look to the member thank you for your time and diligence and your service to Zespri in particular and the horticultural sector for bringing these issues and queries forward."