Nash StuartSTUART NASH (Labour—Napier): I am going to talk about a couple of clauses that are completely unrelated but I would say that my experience of the Young Enterprise Trust is that it is a fantastic scheme but it is not compulsory and it tends—it tends—to be in those schools of a high decile where the teachers and the parents are really engaged in this sort of thing. My personal view is actually probably the same as Mr Hipkins'. We need financial literacy to be an integral part of the curriculum if we are to have these young guys who know the difference between 10 percent per week and 10 percent per annum when they are trying to buy a car at the age of 16. The lack of financial literacy is absolutely terrible in this country and we have got to change it. You know it is a terrible thing to say thinking about the global financial crisis but when you have the DIY attitude that we have got and a lack of financial literacy you are going to get people who believe that Colin Meads knows all about investments because he was a great rugby player.The CHAIRPERSON (Lindsay Tisch): Focus back on the bill.STUART NASH: We have got to change it. What I would like to talk about is—Kris Faafoi: It's a good point though.STUART NASH: —thank you—clause 124 and these are amendments to the Companies Act. This is interesting because I am not too sure how this works. So what this is about—David Seymour: Familiar feeling.STUART NASH: Well thank you very much. I should know how this works should I not? But what this is about is the reimbursement of expenses that are incurred in connection with a takeover of a company. So what the rules in this Act say is despite anything in the target company—so you have got two companies. You have got one that wants to take over—company A wants to take over and company B is being taken over. What this says in new section 48 in clause 124 is that despite anything in the constitution of a company being taken over if this company is being taken over then the company being taken over must reimburse the director of that company any expenses he or she incurs in this whole process. As a number of us will be well aware when a company is being taken over then the directors are really required to step up and do a hell of a lot more work than they would in the normal course of events.The other point that is interesting is that any expenses incurred in this whole process by the company that is being taken over must be reimbursed by the company that is seeking to take over that company. This goes to a panel if there is any dispute about this but I suppose my question is: if the takeover is not successful are those costs still to be incurred? What can happen is that this can go to a special panel that will assess the amount that a target company has to pay to one of its directors but it will also assess a fair amount that the company seeking to take over has to pay to the target company. And if that is not agreed upon or if they cannot find common ground or if there is in fact dispute about this then in fact it can go to the High Court. The High Court has the sole jurisdiction as I understand it so what we are talking about here is that the panel is a panel of mediation. It is not arbitration but it does bring up some interesting dilemmas.You know what we can find in a number of these companies is that the directors are highly competent highly engaged and highly paid individuals and if they are going from for example their standard director's fees of let us say $100000 a year for let us say 10 hours' work or for 15 hours' work they could in fact incur significant costs—The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.Sitting suspended from 6 p.m. to 7.30 p.m.STUART NASH: At the point that I was stopped I was talking about amendments to the—Hon Ruth Dyson: Quite rudely interrupted actually.STUART NASH: —yeah rudely—Takeovers Act 1993. But before I go any further if people think there is a slight red hue on the lens of the TV there is not. The Parliamentary Rugby Team has been out training and I exerted myself a little bit too hard. So if I am looking a bit red that is the reason—genuine. I know the Chair was a valued member of the Parliamentary Rugby Team.I was talking about the changes to the Takeovers Act 1993. It needed to be amended but the points that I am making and I will make them again because it has been an hour and a half are talking about the reimbursing of directors. What this clause talks about is that if one company is taking over another company then the director of the company that is being taken over has to have his or her costs reimbursed by that company. So that has to happen. The other thing that has to happen by law in here is the company that is being taken over has to have its costs reimbursed by the company that is taking it over. It does not matter whether the takeover is successful or not; those costs still have to be reimbursed and they can be considerable at times.Let me give you an example. As we know a lot of companies have a professional board of directors staffed by men and women who are professional directors who pull down often $200000 or $300000. When a company is being taken over there is a significant amount of work for these directors to do to meet the terms of their contract. So what this is saying and I get it is that if a director is responsible for a significant increase in work due to his company her company or the company that they are on the board of then they must be reimbursed. The other thing that must happen is the costs incurred by the company being taken over must be reimbursed by the company taking it over.It does not matter what is in the constitution of the company being taken over; this is still a requirement under the Takeovers Act. As mentioned how this works is that if there is any dispute it goes to a panel. The panel will make a determination. That is only mediation—it is not arbitration—which means it is a non-binding agreement because from there if there is any dispute at this point then it can go to court for the court to determine. Just to give the Committee an idea of how much money we are talking about this new section 53 in the Takeovers Act says …court means—(a) the District Court"—so this has to go to the District Court—"if the amount to be reimbursed is no more than $350000;" and that has been increased from $200000 "or (b) the High Court if the amount to be reimbursed is more than $350000." If it is $350000 or less you can go to the District Court. You can go to the High Court if it is $350000 or more.But I suppose what I am outlining here is that the legislation has actually recognised the fact that $200000 in terms of reimbursement is just not realistic in this day and age—$350000 is much more in keeping with 2017 rates of pay for directors and costs incurred. But we are talking a significant amount $350000. It may sound a lot but again if your company is being taken over there is a substantial amount of work that might have to be done in this and that money must be paid by the company taking you over. So it can be a substantial amount of money of that there is no doubt. But you have also got to remember that when this goes to a court if it either goes to the District Court or the High Court there are significant costs involved in this as well. So it will go to only those jurisdictions the District Court or the High Court if there is a dispute around how much money must be paid by the company taking over the other company.On top of that the company doing the taking over could I would suggest end up incurring double those costs again if it is a litigious situation or it gets quite acrimonious. So we are talking about a substantial sum of money. If it is Spark or a big company this is just part and parcel of what they do.Clare Curran: Get with the picture there.STUART NASH: But if it is a smaller company then the costs can be quite considerable. I know Clare Curran says she gets the picture and I am pleased she is back so I can move on from this but I suppose what I am saying is we are talking about an omnibus bill here. There are many pieces of legislation that this bill actually updates and we just need to be aware of this as no doubt a whole lot of company lawyers are but also the professional directors on companies when they are making decisions around governance as well as operations. Thank you very much."