Dalziel Lianne: Business Law Reform Bill — First Reading 
Dalziel Lianne: Business Law Reform Bill — First Reading 
[Volume:632;Page:4236] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Business Law Reform Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Commerce Committee and that the committee present its final report on or before 19 October 2006. 
The Business Law Reform Bill is designed to give effect to the Government’s overall objectives to clarify and update the intended purpose of various statutory provisions remove unnecessary compliance costs and ensure consistency between different legislative requirements. I am pleased we have been able to effect such substantive change as well as introduce technical amendments through an omnibus Business Law Reform Bill. May I take the opportunity of thanking other parties in this House for the opportunity to introduce a Business Law Reform Bill. It is a good opportunity and one that I hope we will see expanded to allow for other subject areas to take similar advantage and also to allow for regulatory improvements to occur in a timely fashion. 
This bill represents a stage in the incremental improvement of existing business law to achieve the goals of clarity efficiency and effectiveness which I am sure all parties will agree with. This is the third Business Law Reform Bill to come before the House. The bill includes amendments to the Financial Reporting Act 1993 the Companies Act 1993 the Friendly Societies and Credit Unions Act 1982 the Insurance Companies’ Deposits Act 1953 and two technical changes to the Dumping and Countervailing Duties Act 1988. 
As the explanatory note to the bill states: “Most of the amendments contained in the bill are based on suggestions from business law practitioners enforcement agencies and the business community.” One of the key aims of the bill is to reduce compliance costs resulting from administrative procedures. In this regard the bill proposes to exempt some overseas companies from some of the reporting requirements imposed on those companies registered under the Companies Act. 
Another key aim of the bill is to improve the clarity of our existing commercial law statutes. The proposed changes to the Financial Reporting Act 1993 are aimed at generally improving the workability of the financial reporting system and reducing business compliance costs. In particular the bill will remove excessive compliance requirements on some small companies and many overseas companies. As the Minister for Small Business I am very pleased to see more compliance costs being reduced for small companies. 
The bill will also improve enforcement by introducing an infringement notice system for company directors who fail to file their company’s financial statements with the Registrar of Companies by the due date. Overseas it has been found that if directors themselves face the liability the financial statements get filed. 
It is important that the bill adds an exemption-making power to the Financial Reporting Act before international financial reporting standards come into force on 1 January 2007. The Accounting Standards Review Board will have the power to grant limited exemptions from specific requirements of the Act where compliance by overseas companies would be unduly onerous or burdensome. 
In addition the bill will make amendments to the Financial Reporting Act to deal with the problems of excessive filing requirements for subsidiaries of subsidiaries of overseas companies. The Financial Reporting Act currently requires financial statements for every individual company to be filed with the Registrar of Companies when all that is required are the statements for the parent company and consolidated statements for the group of New Zealand companies. The bill amends this problem. 
Changes are also proposed to the exempt companies regime. One change will be to increase the number of companies qualifying for the regime. Companies will have to meet a two out of three test meaning that the vast majority of small companies will be able to produce financial statements in a simple format therefore reducing compliance costs. Proposed changes to the Companies Act 1993 further improve enforcement by extending the management and director banning provisions to persons who have been banned in certain overseas jurisdictions. The exemption of some overseas companies from some of the filing requirements imposed on overseas companies registered under the Companies Act will further achieve a reduction in compliance costs. Both changes will improve the trans-Tasman business environment and promote single economic market objectives between New Zealand and Australia. 
In a similar regard the changes to the Insurance Companies’ Deposits Act 1953 will prohibit an entity incorporated in New Zealand where that entity does not offer insurance in New Zealand from using the word “insurance” or similar in its name or holding out that it is a New Zealand insurer. It will also increase the penalty for non-compliance with the Act from $100 per day to $1000 per day. This is to prevent entities from representing that they are supervised under New Zealand’s insurance regulatory regime when in fact they are not. This is necessary to prevent damage to New Zealand’s reputation internationally. 
The bill further seeks to improve the efficiency of the Friendly Societies and Credit Unions Act 1982 and give credit unions more room to grow their business without introducing unmanageable risks to their members. In addition the field of membership of a credit union will be broadened by extending membership to charities and incorporated societies affiliated with the common membership criteria of the union. The bill also gives credit unions and their associations more flexibility on administrative matters such as the ability to determine the minimum deposit holding of each member and removing compliance costs when seeking to broaden their service base. 
Changes to the Dumping and Countervailing Duties Act will allow the Minister of Commerce to specify the date from which new and reassessed rates of anti-dumping and countervailing or anti-subsidy duty will apply. The bill will also exclude the Christmas break period from the statutory time frame for the completion of dumping and subsidy investigations. This will bring the Act into line with other comparative New Zealand business statutes. 
There are cumulative costs of complying with legislation and difficulties in reconciling different legislative requirements. In aggregate the amendments will reduce some of these costs to promote the efficient use of economic resources and enterprise and innovation in the economy. The benefits provided by the bill are tangible because the business sector legal practitioners and enforcement agencies have put them on our list of things that they believe need to be changed. The introduction of this bill shows that this Labour-led Government is prepared to invest in the incremental improvement of the legal environment for business. This bill is very good for business.