Curran Clare: Companies Amendment Bill (No 4) Limited Partnerships Amendment Bill (No 2) — Third ReadingsText is incorporated into the Bound VolumeCurran Clare: Companies Amendment Bill (No 4) Limited Partnerships Amendment Bill (No 2) — Third Readings[Sitting date: 24 June 2014. Volume:699;Page:18840. Text is incorporated into the Bound Volume.]CLARE CURRAN (Labour—Dunedin South):Before I get into the substance of these bills the Companies Amendment Bill (No 4) and the Limited Partnerships Amendment Bill (No 2) in their third readings I would just like to make a comment about what the previous speaker Jonathan Young just said around the underlying themes of this Government. My colleague Clayton Cosgrove touched on this in his speech before mine but I would just like to say that one of those themes—we have discussed this quite a bit during the Committee stage particularly—is how instead of boosting jobs and business activity one of the things that this Government will have as its legacy is how it has dragged its heels on making dodgy businesses otherwise known as white-collar crime accountable. I do want to make that point. I have got other points to make but I want to reinforce that point because it is an important point. I do have some concerns about this. Labour is clearly supporting these bills because it is really important that we do and that we get them passed into law.As for the lack of accountability for the dodgy business practices it has taken 6 years to get to this point and this is not the only piece of legislation that this Minister of Commerce has dragged his heels on around these practices. I think it is important that the public knows that and asks some questions about why that is.I want to go back to talking about the original legislation as it was reported back from the Commerce Committee to the House in the second reading. The select committee made these comments around the criminalisation of serious breaches of certain directors’ duties and how we acknowledged as a committee—and it was a hard-working committee; there is no doubt about that—that we had some dilemmas. The dilemma was around how to create that balance for criminalising genuine dodgy behaviour and not criminalising legitimate business risk-taking behaviour.We said that we had sought an appropriate balance between encouraging positive entrepreneurial behaviour and imposing clear and effective sanctions on behaviour that crossed a criminal threshold. We said we recommended no changes other than minor drafting amendments to the relevant provisions but said we would support further consideration of the drafting of these new offences to ensure that those provisions were expressed in a way that provided clear guidance to directors and did not have a chilling effect on legitimate business risk-taking. However when we got to the Committee stage we had a Supplementary Order Paper that did a bit more than that.I want to return to the comments that my colleague David Parker made during the Committee stage when he expressed some real concerns around a possible loophole that this legislation might create. I will just reiterate the importance of why we have got this legislation which is having limitations on companies limiting the liability of investors and the amount that they invest and the importance of having measures in place to ensure accountability when people put their money at risk.But what we have done I fear—and I think my colleague David Parker also feared—is that we may have created some loopholes that might result in us returning it back to this House. I just want to put this on the record because I wonder whether what we have ended up with may have been a softening. I also want to note that we did not and of course could not return to a select committee process for comment around this. I know that the Minister countered that in his responses but it may have been a softening of the legislation that was returned back to this House. If we have any members across that side of the House who would care to comment on this or who have the capacity to comment on this and reassure the House on this tonight it would be useful because I do not know what it was that actually brought that Supplementary Order Paper 403 to the House.I am just going to quickly go through what it does. It removes—and this is what we are voting on tonight and I think everyone should be really clear about that—the so-called reckless trading offence that was in the Companies and Limited Partnerships Amendment Bill that came back to the House and it replaces it with a new provision that is based on elements of the duty in section 135 of the Companies Act which means that there are accountabilities. The accountabilities are that the criminal provisions apply if the director agrees to or causes or allows the business of the company to be carried on in a manner that causes serious loss to one or more of the company’s creditors where the director knows that a serious loss will be suffered by one or more of those company’s creditors etc. and where one or more of those creditors that suffered the serious loss did not give their prior consent to the carrying on of the business in that manner.That sounds good. All of that sounds good. All of those provisions sound good but there are exceptions and it is the exceptions that worry me. The exceptions are where I fear we have created a loophole and where there has been a softening of this legislation which may require a return to this House at some point. Those exceptions are where the Supplementary Order Paper proposes that directors will not be liable in the following situations. The first is where they believe on reasonable grounds that all the creditors that will suffer the serious loss have been identified and whether they also believe that those creditors have consented to the business being carried on in that manner. The second is where the new offence will not be triggered by the carrying on of the business of the company in accordance with a compromise under Part 14 of the Act a court-ordered arrangement amalgamation or compromise under Part 15; an administration under Part 15A; or a deed of company arrangement made under Part 15A. That all sounds very complicated. The problem I have is that we as members of the Commerce Committee were not given the opportunity to test these changes. We were not given the opportunity to test words such as “the director—believes on reasonable grounds that all the creditors that will suffer serious loss … have been identified; and believes that all those creditors have consented to the business being carried on in that manner.”That goes to intent and I think that criminal provisions where directors are liable have to be really clear under the law. It is my concern—and I think it is also my colleague David Parker’s concern—that there have been some changes brought back to the House that were unable to be tested. They were unable to be tested not only by the members of the select committee but also by any other submitters that might have had a contrary view or a view that would challenge them. We were also unable to challenge the officials who had provided the wording to us.In this sort of legislation where it goes to white-collar crime and where there is the ability for directors who have been implicated in these sorts of dodgy schemes to be really challenged in court we have got problems in our country where they have loopholes to be able to go through. We talk about reputation. Reputation is really important but it relies on really good well-founded well-tested legislation. I have got some concerns about what we have ended up with tonight I have got real concerns about how long it is has taken and I have got real concerns about that Government’s commitment to really addressing white-collar crime.