Faafoi KrisHon KRIS FAAFOI (Minister of Civil Defence): Thank you very much Madam Deputy Speaker. It is my pleasure to speak to the Companies (Clarification of Dividend Rules in Companies) Amendment Bill. Can I do what we usually do when members' bills are debated the first time and congratulate the member Todd Muller for having the bill pulled from the ballot. While in his opening remarks he may have said that an issue like this might not necessarily be worthy of the time of the Parliament he has seen fit to seek some clarification in and around the issue and if there is a real risk in and around the conflict between sections 36 and 53 of the Companies Act then he's seen fit to bring a bill to the House to clarify that. Usually we wait until the end of the first contribution from the Government member to let the member know whether or not the Government will be supporting the bill but because he is such a humble and good man—Mr Muller—we will be supporting this piece of legislation through to select committee because we do believe that it has some merit but also that there are a number of questions that need to be asked in its passage to possibly becoming an amendment to the Companies Act. It is a technical bill and I'm going to try and turn some of the speech that Mr Muller made—because it is his bill he had to refer to the Act itself and obviously the concept of dry and wet shares—into plain English for those people who may be up tonight who are interested in this piece of legislation.Dr Deborah Russell: There's three of them.Hon KRIS FAAFOI: Ha ha! All three of them—one of them being my mum. Everyone will know the concept of owning shares within a company but as Mr Müller did mention and predominantly in agribusiness—Hon Members: Muller.Hon KRIS FAAFOI: Mr Muller sorry. As he mentioned in his contribution heavily weighted towards agribusiness cooperatives the likes of Zespri and Fonterra here in New Zealand there are different types of shares: a wet share and a dry share.Now obviously if you're part of a cooperative you are a supplier to the cooperative—whether it be of milk or kiwifruit in the instances of Zespri and Fonterra—but if you have been a supplier in the past but then cease to supply the cooperative your share class can be changed from a wet share where you would supply and get a dividend if the cooperative were to get a profit. But if you were not a supplier any more you would go to a dry share where you would still own shares in the cooperative but because you're not supplying the cooperative any more—DEPUTY SPEAKER: Very interesting but I don't have any shares.Hon KRIS FAAFOI: Oh sorry Madam Deputy Speaker. I'm glad to clarify that too Madam Chair. But if someone were to formally be a supplier but then not be a supplier but still own those shares they would I guess get the benefit of the increase in the price of those shares but because they are not supplying any more they would not get a dividend from the cooperative itself if it were to return a dividend at the end of the year. So there is a distinction between wet and dry.The problem I think with section 36 is that while it says that classes of shareholders can be treated differently and a constitution of a corporation can say that rights of a shareholder can be negated over in section 53 of the Companies Act there is a lack of clarification as to whether or not companies can actually treat different classes of shareholders in different ways. Mr Muller's amendment bill is a simple I think one-sentence or two-sentence amendment to subsection 2 of section 53 of the Companies Act to make it specific that a company can amend its constitution—as he mentioned that has to be done by 75 percent of its shareholders—and that you can have a different classification or payment or treat those different types of shareholders differently.There are some issues that the officials when they first had a look at this piece of legislation wanted to see addressed in the select committee and I've already had this conversation with the member responsible for the bill in terms of what that does to payments that may have already been made. And while this is not retrospective legislation there may be some call or some lawyers who will look at previous payments that have been made and the clarification that is going to be made potentially through this legislation and question some payments that have already been made via section 36. So that is one question that I think will need clarification during the select committee stage. Every so often a member of the Government will come up with an amendment. I know it's not going to change the world but it will I guess clarify some of the discrepancies that some of those cooperatives mainly here in New Zealand have had when suppliers are no longer suppliers and whether or not they are entitled to get dividends or not. So as I say we are going to support this piece of legislation to the select committee to ensure that if it is a common-sense amendment it goes through and it gets the scrutiny that it deserves. Again I congratulate Mr Muller for bringing this piece of legislation to the House.