Salesa Jenny; Reti ShanePart 2 InterpretationCHAIRPERSON (Hon Jenny Salesa): Members we come now to Part 2 which is the debate on clauses 14 to 66 including Interpretation. The question is that Part 2 stand part.Dr SHANE RETI (National): Thank you Madam Chair. I would like to speak to Part 2 particularly starting with clause 60 and would like to restart the conversation around fit and proper" persons and the concern that we have with the legislation.The Supplementary Order Paper (SOP) that we have in my name SOP 373 looks to address this. We have no issue with character tests—we think that's important—but ourselves and the industry think again that this is an overreach. The SOP seeks to improve the fit and proper person test to be more manageable and pragmatic. As currently drafted the fit and proper person definition may impose a significant barrier to entry into the New Zealand market. The regulator has a good character reach back that is not time limited and is broader than in other similar New Zealand legislation. There appears to be no similar requirement in Australia the EU or the USA and given the relatively small size of New Zealand's therapeutic products market the assessment process will create a sufficiently significant regulatory burden so that some companies may choose to bypass the New Zealand market.Compliance may also be problematic with fit and proper person tests potentially affecting those who may "exercise significant influence" but may be quite removed in time in the role function and geography from the regulator. For example for a New Zealand sponsor and a large global company group the fit and proper person assessment applies to an extensive list of senior managers in the group despite many of them having no direct role in the management or administration of the New Zealand sponsor. Directors of the sponsor's overseas holding companies however—including the ultimate overseas parent company—may be classified as senior manager in the corporate structure of the group which would technically place those directors in a position that allows them to exercise significant influence over the management or administration of the sponsor despite them being offshore and having no direct role in the business operation of the sponsor in practice.It would be very difficult for a corporate applicant to obtain the relevant information required under the fit and proper person test from former senior managers who are no longer employed by or hold any role within the organisation the sponsor or a relevant member of the sponsor's company group over the proposed seven-year reach back.This SOP proposes an alternative. It places a 10-year time limit on assessment of fit and proper persons. It deletes broad grounds for "believing" that a person may contravene the Act. It removes the reach into senior managers over a previous seven year period and reaffirms the fit and proper person test only applies to direct management for bodies corporate incorporated in New Zealand specifically the New Zealand sponsor licensee or permit holder.We can see how this might be problematic. We may disagree that it's too unbounded. We may disagree that there are parts of this that are reasonable but I think it is challenging to contemplate a global corporate where managers might be deemed to have significant influence over the sponsor and to be able to reach back into them when they have no direct geographical association or past history with New Zealand—that would be a challenge. That would seem unfair particularly if the reach back is seven years and they're no longer employed by the sponsor. And yet their influence could still be over the sponsor in New Zealand and their fit and proper persons character test would still need to be taken into account. That would seem to be a burden that creates far too much on the applicant and is probably unmanageable and we see it in no other similar legislation either domestically or internationally.So in our SOP we look to change that. We look to expound the time frame for fit and proper persons we look to limit the seven-year reach and we look to make direct associations of fit and proper persons to the sponsor or the licensee so that we can directly say we're assessing correctly the correct person—and by the correct means—who has a direct influence on the authorisation and sponsor process that we're talking about.So we would commend the Minister of Health and her team to consider some of the points we've taken into account which have been collaborated with industry who are also deeply concerned. So this is no epiphany for us here tonight; this is of some period of time collaborating with the concerns that they brought to us which we've digested and we agree with. So it would be interesting to have a response to that and we place this SOP on the Table. Thank you."