Companies and Limited Partnerships Amendment Bill — In CommitteeText is incorporated into the Bound VolumeCompanies and Limited Partnerships Amendment Bill — In Committee[Sitting date: 18 June 2014. Volume:699;Page:18660. Text is incorporated into the Bound Volume.]Companies and Limited Partnerships Amendment BillIn CommitteeDebate resumed from 17 June.Part 1 Amendments to Companies Act 1993 (continued)Hon CRAIG FOSS (Minister of Commerce):I will pick up from where we left off last time. Mr Parker had raised a few questions and I will just quickly address those. Someone else raised a question about the size of Supplementary Order Paper 465 and I pointed out that Supplementary Order Paper 465 is not quite just a stand-alone Supplementary Order Paper; it is a revision-tracked version of the Companies and Limited Partnerships Amendment Bill including the Supplementary Order Paper. So essentially Supplementary Order Paper 465 is the new bill. I think one member was trying to measure it by weight or something somewhat naively. Mr Parker was asking about section 135 of the Companies Act. He was concerned about that last time. I pointed out that the criminalisation in section 135 has in fact been removed and that was the part he picked up on. But of course that was a stand-alone offence and it has now been included as a new offence under section 380 of the Companies Act. The serious misconduct that will be caught is the director dishonestly incurring debt for a company when their company is insolvent or the director knew the company would become insolvent.That kind of goes to the crux of the only issue really. The Commerce Committee in its own commentary was wrestling with how to deal with the level or the measurement of criminality of directors’ behaviour and how it should be described and captured. As you can see in that Supplementary Order Paper we have landed in I think a relatively good space. Regardless of whatever definitions came about of course there were questions such as: what if a company was facing difficulty and then some reckless trading issues started to arise because directors were making decisions on a company’s circumstances where on one interpretation they could have been behaving recklessly and therefore facing some criminal issues or in fact they were behaving as their shareholders would have expected and trying to make decisions to trade or build their way out of whatever the circumstances were? And of course there is a distinction on a balance or a measurement of the risk involved when a director directors or a board are making such decisions regardless of how the company got into the position that it may have found itself in. So there was a lot of discussion and as I say that is where Supplementary Order Paper 465 has landed. We really landed in a place where looking at dishonest actions with intent is the area that the criminality side of things here addresses.As another speaker spoke about last time an issue is the expression of potential effect on the entrepreneurship or the willingness of directors to be directors full stop. That was a fair comment. Again the committee I think did a really good job in grappling with that amongst the other issues it dealt with. All parties from whatever side of the spectrum could actually see the issues that the committee was trying to deal with. I am confident that we have come to a place of balance even though we have almost come full circle about good faith now into bad faith and what that means for a company’s circumstances under this new Companies and Limited Partnerships Amendment Bill. I am very comfortable and again I thank the Commerce Committee for the hard work it did dealing with some pretty complex issues.I do note that in previous readings this bill has passed unanimously I think across the House and that is fantastic. It is a credit to the select committee’s work. It is also a credit to the ongoing consultation and ownership that these commerce bills and now Acts have. I asked that officials engage with the various sectors so there was strong ownership of the bills once they landed and turned into Acts. It might take a bit longer to get that process through but when it lands across the House we tend to have pretty good support.KRIS FAAFOI (Labour—Mana):I will speak to Part 1 of the Companies and Limited Partnerships Amendment Bill. Can I first of all thank the Minister in the chair the Minister of Commerce for taking a call to respond to some of the issues that were raised by my colleagues—Hon Member: He responded quite well.KRIS FAAFOI: Yes he did respond quite well actually to be fair to my colleagues David Parker and Dr David Clark by first of all acknowledging that the rather large Supplementary Order Paper 465 that layers over Part 1 is not in fact the big document that was claimed earlier but is worked into the new revision-tracked version of the bill. We do acknowledge that Minister.Also there was the point that David Parker the deputy leader of the Labour Party raised around trying to get the balance right between companies and directors who look to take action in what you would call desperate times for some firms where they have to consider whether their actions may be considered either reckless or actions that are needed to take a company or a partnership that is in a precarious position back into a safe position. He also talked about where the line may be drawn in terms of the willingness of those directors to take some action that they may deem necessary but which they may think may not be the wisest move if that action may be seen as a criminal action under the law as it was first drafted. Thank you very much Minister for taking the opportunity to answer some of those questions.But as I mentioned first—Hon Simon Bridges: Don’t worry Kris. Remember what I said last night. You’ll be all right. You’ll be here after the election.KRIS FAAFOI: Thank you for that. But as I mentioned first there is a rather significant Supplementary Order Paper that layers over Part 1 of this bill. Although I was not on the Commerce Committee I think that because of the way that the bill was presented back to the House before Supplementary Order Paper 465 was added to this bill in its current form the select committee and the officials who were dealing with this bill did find themselves in a bit of a conundrum. They thought there were still issues about getting the balance right in terms of being specific about the criminality that may be acted and making sure that there was some in layman’s terms wriggle room there for directors to make sure that they could take action that they saw fit if they were in dire straits with that firm. I think that in the commentary on the bill the select committee did point that out.If I can take the opportunity just to quote from the commentary on the bill where the Commerce Committee says: “However we are aware that the bill could be perceived by directors and their advisers to criminalise legitimate business risk-taking behaviour. We have therefore sought an appropriate balance between encouraging positive entrepreneurial behaviour and imposing clear and effective sanctions on behaviour that crosses a criminal threshold.” But the commentary went on to say that the committee does not recommend any changes other than minor drafting and would support “further consideration of the drafting of these new offences to ensure that the provisions are expressed in a way that provides clear guidance to directors and does not have a chilling effect on legitimate business ...”.So I think what you have got here is a strange position where the Commerce Committee identified that there was a problem which was that it thought the legislation had to be much more specific in terms of what the criminal actions might have been but it could not offer up a remedy for that conundrum that it found itself in which I guess meant that Supplementary Order Paper 465 had to come into play. We have looked at Supplementary Order Paper 465. I understand that we believe that it does strike the right balance to make sure we are very specific about the criminal behaviour that can be outlined as the Minister said around intent where there could be actions taken by directors and where there could be criminal behaviour and the other side of the equation where drastic action needs to be taken by directors to ensure that a company can stay afloat.This bill does have the support of the Labour Party. We know that New Zealand has a very good reputation in terms of the ability of people to come here and do business but we also know that lately there have been instances that have gained not just local media attention but also global media attention where people have taken it upon themselves to exploit the good reputation that New Zealand has by using shell companies to take advantage of the legislation that we have and taking advantage of our good name. So we do believe that this piece of legislation is necessary to make sure that that reputation stays intact.But we do know that this legislation has been on the Order Paper for some time. I believe it was introduced in about 2012—halfway through that year—so 2 years later we have got a piece of legislation that has had the support of this House to quite a strong degree being put forward. It does beef up the rules around the Companies Act and gives more powers to the registrar which has had the full support of this side of the House for some time. So we question why it has taken so long to get to the stage where it is now where it progresses to the final stages of becoming legislation.It may be the fact that we are very unlikely to see any controversial legislation come through this House now because we have seen one member of the House former ACT leader John Banks have to resign. What we may get is a lot of what you may call rather mundane legislation that the Government may have to start putting through this House because it simply does not have the numbers to get anything controversial through any more. So what you might be seeing is a Government petering out over the next 2½ months here in the House and simply not being able to implement its far-right agenda because Mr Banks is no longer here. That is upsetting I guess for the Government members but good for us on this side of the House because we have seen the kind of legislation that has been passed with the support of Mr Banks which has concerned the sale of quite a number of our State-owned assets and also a controversial move to introduce what the Government members over on that side call partnership schools but that are quite well-known as charter schools on this side of the Chamber.One other part of the legislation that we do support is the increase of penalties for any directors who undertake criminal behaviour which is specifically laid out in Part 1. Those increases see a maximum imprisonment sentence of 5 years I believe and also a maximum fine of $200000 for each offence that occurs. I think that does send a pretty strong message to anyone who is either here in New Zealand or overseas that if they are caught contravening this legislation a pretty harsh penalty will be imposed upon them.Just going back to be specific about Part 1 I think it is clause 4 that introduces a rather large new section 138A into the Companies Act which gives quite new powers to the Registrar of Companies to investigate and deal with non-compliance with the Companies Act. This includes I understand the power to flag companies on the register that are under investigation. That is a new power and it is a good power given to the registrar because of some of the concerns that I have mentioned before around overseas interests that are coming here to use New Zealand companies as shell companies to basically act illegally under that shell company.It will also allow the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act. I guess that we hope that the Registrar of Companies is given the resources to be able to monitor that quite closely. I think that if you have got well-resourced people—again probably from overseas—who are taking advantage of that loophole you want to make sure that you are able to monitor that quite closely. Also the registrar will be able to ban directors of those companies from taking part in the management of any company for up to 5 years. I think it goes without saying that anyone who gets themselves involved with that kind of behaviour is not the kind of person we want to be a company director here in New Zealand.We do support this bill. It does contain some good measures to ensure that when doing business in New Zealand the reputation of New Zealand is upheld. We do have some concerns as I have said around the timing of the bill—the fact that it has taken so long and also the fact that it is here now so late in the piece and why it is here. It is quite clearly because John Banks is no longer here.CLARE CURRAN (Labour—Dunedin South):Why has it taken so long for the Companies and Limited Partnerships Amendment Bill to come back to the Committee? It is not an unreasonable question. Why has it taken so long? I have just gone today and looked back at the last time it was that I spoke on this bill which was in July last year—July last year—in the second reading. Before that it took 18 months to actually get to the House and then another year to get through the Commerce Committee. So why has it taken so long for this piece of legislation to come back to the House for the Committee stage? The next question is: how long is it going to take for it to get to the third reading and for it to actually get through? Is that going to happen or is that going to take another year? This is a really important question and I think that everybody who is watching or listening on the radio to this debate tonight should actually be asking themselves this question.I do not know how many times I have stood in this Chamber and said basically these same things. Why is it taking so long for legislation that is around managing and ensuring accountability for the corporate raiders in this country—for the white-collar criminals to be actually held accountable? Why is it that it is taking so long for the legislation that holds them accountable to get through this Parliament under that Government over on that side of the Chamber? Why? I would like to know whether it is a deliberate strategy because we are seeing an awful lot of other legislation that is going through the House that is actually impacting on working people and people who are the most vulnerable in our society and making their lives harder under this Government. But when it comes to those who are responsible for white-collar crime it takes for ever—for ever—to get legislation passed through the House.That is a really important difference between the National Government and the other side which is the Labour Party which actually cares about the lives of ordinary working people who might invest their life-savings into a company where they think that they will take some shares in a company and what happens is that they get ripped off by the corporate raiders who are supported by the National Government. They get ripped off and it takes for ever—for ever—for any legislation to get passed and for them to have their rights protected or feel as if this Government is actually on their side. This Government is not on their side. This Government is on the side of the corporates. This Government is on the side of monopolies. This Government does not support the ordinary working person and does not support the ordinary battling person whether they are a small-business person or a person who is really just trying to make their way—even a person who has got good ideas and is trying to get a good company up.Hon Simon Bridges: Oh Mega.CLARE CURRAN: Excuse me? That is what I would like to hear from the Minister sitting in the chair Craig Foss because I do not know how many times I have stood in this Chamber as a member of the Commerce Committee who has sat and heard submissions on this bill. We have heard through the financial reforms that have come through in the last few years people before the select committee who were crying who have lost their life-savings and who have been extremely badly affected. Inch by inch by inch we have seen legislation eventually coming before the House taking years—simply years. If there was urgency why would a bill like this not be considered to be an important bill? Why would this bill not be considered a bill that could merit being passed through the House really quickly? Well because it is not a priority. That was my first point: why has it taken so long? I would be really interested to hear the Minister of Commerce’s explanation for that because there is no explanation. If there is it would be really good to hear what it was.The second point that I want to make tonight around this piece of legislation is the work—[Interruption] I know that the members on the other side of the Chamber are feeling a bit embarrassed about that because actually there is nothing they can say really to dispute the fact. The fact stands that it took 18 months to even get the legislation before the Commerce Committee then it took at least another year once it had got out of the select committee to get before the House. No doubt it will take a long time to actually pass it into law.The introduction of criminal sanctions for the very serious breaches of existing duties of directors—that is my second point. I do want to comment on the important work that the select committee did on this because it was important work. There was an important balance as the Minister said when he got up. I do appreciate the fact that the Minister did get up. This Minister despite the fact that he does take a long time to get legislation through the House does not resile from standing up and taking a call. I do want to give him credit for that because he does not resile from doing that. Unlike other Ministers in this Chamber who just sit there like dummies and do not say a word this Minister actually does have the guts to get up take a call and try to provide explanations on issues.Sue Moroney: That’s you Simon.CLARE CURRAN: Yes there is at least one of those Ministers sitting in the Chamber tonight. With regard to the work that was done on the criminal sanctions and the importance of creating that balance so that it was not seen to be punishing risk-taking innovative behaviour members on this side of the Chamber are right behind the engine room of our country in terms of economic development which is small business. That is where your innovation comes from that is where we are going to see the greatest ideas and what are we doing? We are actually backing small business. That Government over there actually backs crony monopolists and the big companies that are its mates. In terms of small business which is where innovation comes from in this country that Government is not behind it. It is really important that we do not put barriers in its way in terms of innovation.It is also very important that there is accountability. When it comes to the impact of corporate behaviour on investors—particularly on the small investors who get really badly done over—it is really important that we have criminal sanctions. White-collar crime should be treated with much more seriousness in our country than it is. So on this side of politics on this side of the Parliament of New Zealand we believe that it is all about intent—dishonesty with intent. If it is dishonesty with intent then it should absolutely be penalised. That is a basic principle. It is a basic principle of law it is a basic principle on which this country is founded and it is a basic principle of Labour values and that is extremely important. After the work that was done in the select committee—I want to thank my fellow members of the select committee and the officials who participated—on this part of the law we have found that balance and we should be proud of ourselves for that.My conundrum is: why has it taken so long? Why? Please Minister get up and tell us what it was that was so important that it had to be passed under urgency that might actually impact on the lowest-paid people and the more vulnerable people in our country. Why is it that we are not saying that white-collar crime is not OK? It is absolutely not OK in this country and we are going to not only put laws through this Parliament but say that they are important urgent laws. We are going to do it quickly and we are going to ensure that they are sorted.JAMI-LEE ROSS (Junior Whip—National):I move That the question be now put.Dr DAVID CLARK (Labour—Dunedin North):I rise to speak on Part 1. It is a delight to actually stand to speak in favour of the Companies and Limited Partnerships Amendment Bill. It is a positive contribution to make in this House and we from this side of the Chamber do not always get to commend the Government for making a good step forward. It happens rarely but it is great that here we are debating a piece of legislation that takes the country forward through criminalising breaches of directors’ duties. None of this detracts from what Clare Curran said. Why has it taken so long? The fundamental point she made in her speech is worth repeating. But here we are passing a bill that will help to level the playing field. It is the dishonest practice—Sue Moroney: I raise a point of order Mr Chairperson. I am reluctant to actually stop my colleague while he is in the middle of his contribution on this bill but I know it is after the dinner break and I am not sure—The CHAIRPERSON (Eric Roy): Order! If the member is making a point of order she should make the point of order and not comment on dinner or any other reason. Points of order should be made tersely.Sue Moroney: Well my very terse point of order is that I can barely hear my colleague speak and there are members opposite who have moved their seats in order to try to barrack at speakers on this bill. I do not know what they took in during the dinner break—The CHAIRPERSON (Eric Roy): Order! Now I have cautioned the member and the member has deliberately—so I am going to require an apology to the Chair before I do anything else.Sue Moroney: I apologise to the Chair.The CHAIRPERSON (Eric Roy): Thank you—Hon Todd McClay: Speaking to the point of order—The CHAIRPERSON (Eric Roy): No I am not taking any more and the barracking was too much so the point of order is upheld.Dr DAVID CLARK: Thank you Mr Chair. As I was saying I was congratulating the Government on its good behaviour and unfortunately those members have let themselves down as your point of order has rightly ruled.But here is the Government dealing with the criminalisation of breaches of certain directors’ duties and actually making a law that helps to level the playing field a little bit step by precious step. It is true that this bill has taken many years to get to this point in Parliament but here it is describing what penalties should apply for bad faith where directors knowingly act in a way that results in serious loss to a company through the incurring of debt through fraudulent dishonest behaviour and so on.We know that this kind of legislation is incredibly important in our democracy. If we wish to have a functioning democracy where businesses can flourish and where people who work hard and have talent can get ahead then we do need a level playing field. We need a set of useful regulation because it is certainly true that where there is good regulation our markets can prosper and make good decisions and where there is poor regulation or a lack of oversight very poor outcomes can come into play.We are lucky that we continue to enjoy a reputation broadly in New Zealand as a country that has a transparent and robust democracy. We have a long and proud history of democracy. Of course those things are under threat all the time and we must be wary and it is very good that the court has found the honourable member—or formerly honourable member—John Banks guilty because we have seen an important judicial process take place and we have a robust judicial system that can actually say when something is wrong.There are other things that do not get across that line. There are decisions made in this House that we might find ethically repugnant that end up making life more difficult for many people and we can all think of our own examples of those. But here we are debating a positive piece of legislation—a piece of legislation that will actually improve the lot overall of New Zealand and improve the health and the atmosphere in which our institutions our businesses can flourish.There are of course many other things that do not find their way into Part 1 of the bill or into the bill at all—other things that would help to make our environment flourish. I mention in passing pro-growth tax reform the kind of research and development tax credits that Labour would like to see introduced and a capital gains tax that would see money move away from the speculative housing sector into the productive sector and would actually increase exports.We would like to see a growing economy. This Government seems reluctant to grow the economy where that will put at risk the interests of the wealthiest few. We know that the interests of the 1 percent that are at the very top are growing all the time that we have the largest gap between rich and poor that we have ever had that the majority of New Zealand citizens are going backwards that median wages have dropped in real terms under this Government’s watch and that there is no doubt that this is the Government with the worst economic record in 50 years. So it is therefore a pleasure to get up and support at least one piece of legislation that makes a small step in the right direction which has taken a long time to get here but we certainly welcome it on this side of the Chamber.We do want a more positive New Zealand—one where New Zealand families can hope to own a company one day to build up from perhaps owing a small business starting themselves out saving working hard registering a company and all of these things. Clause 7A in Part 1 of the bill covers the nature of an application for registration of a company.MARK MITCHELL (National—Rodney):I move That the question be now put.Motion agreed to.The question was put that the amendments set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to Part 1 be agreed to.Amendments agreed to.Part 1 as amended agreed to.Part 2 Amendments to Limited Partnerships Act 2008Dr DAVID CLARK (Labour—Dunedin North):These amendments to the Limited Partnerships Act are being made so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead. So Part 2 of the Companies and Limited Partnerships Amendment Bill if we put it really simply is to avoid an unintended consequence by tightening up one area of the legislation that dishonest or mischievous directors might pursue by structuring their companies in order to do the kinds of ill practices that we are trying to stamp out here the kinds of things that we discussed earlier: taking debt dishonestly behaving fraudulently and behaving not in the best interests of the company they are representing. So if those same people who wanted to practise those things look for a different structure to misuse New Zealand companies they are not going to find it in the amended Limited Partnerships Act or at least we hope as the bill is drafted and has been carefully considered that that will be case.In this part of the bill we have also got reference to the Financial Markets Authority which was established in 2011 I think—if memory serves me right—and that has authority for oversight. It has got a responsibility here for overseeing the behaviour in the sector. In clause 46 in Part 2 we have the requirements for a limited partnership. They are all laid out and stipulated. The law is changed so that the nature of those people who can take up that particular nature of organisation is quite clear as is what behaviour might be deemed acceptable and unacceptable.The better alignment of these bits of law is of course a no-brainer in a sense. I mean who would oppose it? And that is why it is really good to be able to support this legislation. It is taking sensible steps forward and as others before us have asked we must wonder why these changes have taken so long. Those who do commit a serious breach of their duties to act in good faith will face consequences and that will not be significantly different under this part of the bill. I would invite the Minister of Commerce if he is willing to speak about any changes that there might be between the Companies Act and the Limited Partnerships Act in terms of the kinds of penalties that will apply but my reading of it is that the penalties apply under the two structures in the same way. Minister I am looking to you for a nod of affirmation or perhaps I will—I cannot see any response from the Minister there but perhaps he will get back to us on that in due course. It would be interesting to know whether there were any differences because what we try to do as I said at the outset is ensure that the law is aligned across the different structures to avoid those unintended consequences. So I would invite the Minister’s considered view on that. Certainly I cannot find how it would be applied differently.These new powers will give ultimately a power to investigate and deal with non-compliance. That is what we are asking for; that is what we have got. That will help to build that reputation New Zealand has for transparency and for being a good place to do business where people can deal fairly and we know we need that. We know that currently the environment is lagging. For example we heard today from Mr Brownlee in the select committee that there had been 11000 new small businesses formed since the Canterbury earthquakes. That is higher than usual turnover. That would tend to suggest that small business is not doing well in that area. Businesses are starting and folding in Christchurch. That tends to suggest that all is not well and we know that over the past 4 years more small businesses in New Zealand have been destroyed than created. The number of small businesses being created has dropped substantially and the number of small businesses that are not surviving has risen.So the environment is not healthy for small business. I am sure members in this Chamber who engage with small business as I do in my spokesperson roles for the Labour Party will have spoken to people who are struggling to get by. Often small-business owners in retail are earning less than the people whom they are employing. That is a situation brought about by an economic environment where the rewards of any recovery are not shared fairly across the population. Everybody wants to know that there is a fair environment one in which anyone who puts their shoulder to the wheel and is willing to work hard and abide by the rules can hope to prosper. [Bell rung] So this sets up—Mr Chair?The CHAIRPERSON (Eric Roy): Are you seeking another call?Dr DAVID CLARK: Yes Mr Chair. So this piece of legislation sets up the rules in such a way—sorry Mr Chair I was in the moment. This legislation sets up a fair system a system where people can imagine that they can start a business where they can prosper where they can get ahead where they can make the most for their family and for those around them where they might hope to one day own a home. We know that of course homeownership is unfortunately at its lowest rate in 50 years in New Zealand and this is something that the Government has not addressed.Labour has a plan to build 100000 new homes across New Zealand in order to work with New Zealanders to reach that aspiration. Of course we will do that in partnership with industry but having that dream is part of owning a business. It is part of hoping for a fair business environment and hoping that you can get ahead to own that home to have a family that has the things that you would wish them to have as they grow up: a good education a good health-care system and to be able to live in a country where there is high trust not just in business but across the society and of course work. And we know many employers feel that part of what they are doing is providing a social service actually. I talk to employers every week who acknowledge that a great part of what they do in their workplace is supporting their employees. Actually a lot of small-business employers are very well minded about this and believe that part of their civic duty is to create a structure where they can support and encourage and grow people who might one day own their own business or who might work somewhere else but who for the meantime are in their employ.So I congratulate the Government on finally getting the bill to this stage. I hope that it moves quickly from here because it is a piece of legislation that is worth getting into law. It makes sure that those white-collar criminals are brought to justice and that the rules for doing that are transparent. We applaud that on this side of the Chamber. We wish that some other white-collar criminals who are known closer to this place were brought to justice more promptly too. We do not always get what we want but this is a good step in the right direction. Thank you.KRIS FAAFOI (Labour—Mana):I will speak to Part 2 of the Companies and Limited Partnerships Amendment Bill which talks to amendments to the Limited Partnerships Act. Can I just begin where my colleague Dr David Clark finished and that is that we do support this piece of legislation and we do agree with the party on the other side on making sure there are good business conditions for New Zealand firms and that those firms want some certainty. That certainty comes about from many things. It comes from the reputation that companies have. One of those factors is obviously the laws governing companies and limited partnerships here in New Zealand.We have seen of late some concern about the reputation of some of our companies and about some people who have come to our shores to make use of our good name and to take advantage of our laws to ply their illegal trade under the guise of a New Zealand company. This bill in Part 2 goes quite a long way in the specifics to combat some of the issues that have come about. Part 2 gives the Registrar of Companies the ability to remove a limited partnership company from the register if in certain circumstances the registrar believes that there are grounds that the company is not carrying out business and there is no proper reason for it to continue to trade.I guess that is pretty precisely what I was talking to at the beginning of my contribution in terms of those people who come to New Zealand to ply their trade under the flag of a New Zealand business but have no proper reason to do that and who are engaging in what we would call either scurrilous or illegal behaviour. So that is a good power that this bill has added to the registrar to make sure that that reputation and certainty is there for New Zealand firms. There are also grounds for the registrar to remove a limited partnership—[Interruption] I raise a point of order Mr Chairperson. We have already had one instance of some barracking from across the Chamber—The CHAIRPERSON (Eric Roy): Order! You cannot refer to a previous point of order. I have already cautioned a member on your side to be terse. Please raise the point of order or I will dismiss it.KRIS FAAFOI: I cannot really concentrate on my speech with the level of barracking across the Chamber.The CHAIRPERSON (Eric Roy): Let us just have a bit more decorum all round. There is a degree of agreement on the bill and there is no need for this interchange.KRIS FAAFOI: That is right. It is a relatively good day here in the Chamber. The bill also gives the ability for the registrar to respond to requests to confirm information under its enhanced investigatory powers. There are two good instances of where the Registrar of Companies has been given more power to I guess increase the reputation of New Zealand legislation around our companies to protect their reputation.I would like to refer specifically to clause 58 of the bill which inserts sections 103A to 103G in the Limited Partnerships Act. New section 103A talks about people who are prohibited from managing limited partnerships and subsection (2)(b) refers to a person who has been convicted of an offence under any of sections 377 to 380 of the Companies Act or a crime involving dishonesty as defined in section 2(1) of the Crimes Act. Maybe someone in Parliament with a legal background might be able to help me because I am not sure whether that is quite specific as to what Mr Banks was found guilty of in terms of his case which sees him no longer in this House. That certainly was a dishonest act because he declared a couple of donations as anonymous when he knew what their source was.My colleague Clare Curran made a very good point in the first part of this debate as to why it has taken so long for the changes in Part 1 and Part 2 to find their way to the Committee stage when this piece of legislation I believe was introduced to the House some 2 and a bit years ago. She made I think a very strong point that the party across the Chamber is very vocal and very quick to pass legislation when it claims it is getting tough on what you would call street-level crime but when it comes to crime of the white-collar nature it seems to drag its heels to the extreme. I think that is certainly the case here.This piece of legislation was I think first mooted by the Hon Simon Power and then introduced in the new term of this Government but we are finding ourselves on 18 June at only its Committee stage. If someone can remind me when the Commerce Committee reported this bill back to the House—I think it would have been some time ago. So maybe the Minister in the chair the Minister of Commerce could answer that question as to the Government’s attitude and its lack of urgency on this kind of criminal behaviour which again goes to the reputation of doing business here in New Zealand but it seems that when it wants to beat its chest around law and order on street-level crime even when it is not really effective it will move that through this House with great haste.Maybe the Minister in the chair the Minister of Commerce could answer that question. He has made contributions in the Committee stage that were quite useful so maybe on that specific point Minister Foss might be able to point us in the right direction as to the different attitudes that this Government has to street-level crime and to white-collar crime.We will be supporting Part 2 as we did Part 1 because it does go some way to increasing the protection around the reputation of New Zealand businesses specifically to be more specific about who can and who cannot ply trade or manage limited partnerships. Part 2 does give the Registrar of Companies much more power to monitor those. Again I make the point I made when we debated Part 1. We need to make sure that the registrar has the resources to do that because this Government along with the likes of the Commerce Commission has talked about giving the registrar new powers but has not necessarily given him the ability or the backing to make sure he can effectively express those new powers. Certainly that has been the case in other pieces of legislation.So just to finish off we would ask the Minister in the chair to talk to the specific question as to why this Government has a different attitude to street-level crime and to white-collar crime. I do not really rate our chances of getting an answer.CLARE CURRAN (Labour—Dunedin South):In speaking to Part 2 of the Companies and Limited Partnerships Amendment Bill I would just like to I guess remind the Committee of the actual history of this bill. It is pretty important to keep that in the public’s mind. There were two Cabinet papers as I understand it that came before Cabinet in 2011 which was actually 3 years ago. The issue that was being considered was whether or not there was a case for criminalising directors’ statutory duties. That arose within the Ministry of Economic Development and it was part of I think a 2010 securities law review discussion paper. The history of this legislation goes back to 2010 and then it came to Cabinet in 2011. It ended up taking 18 months to get through the select committee process and its second reading was a year ago in 2013. I think nobody can dispute the history of this piece of legislation and again it would be quite good if the Minister of Commerce could get up and say why he thinks it took so long.I also want to remind everybody as to what one of the major issues was that really sparked I guess the impetus around this issue. This was in New Zealand in 2012—actually on 27 June. It is nearly 2 years ago minus 9 days that New Zealand got removed from something called the white list which is a European Union list that provides guidance for EU banks and financial institutions about countries with EU-equivalent money-laundering and anti - terrorist-financing laws. It has a white list of the countries that are basically the preferred countries—the countries that are transparent that have got good laws in place and that actually do the right thing around financing standards in terms of dealing to anti - money-laundering and counter-terrorism.We got removed from that list in 2012. New Zealanders listening out there tonight that happened in 2012. That is 2 years ago. This Government claims it is the Government for business and transparency and all that sort of thing. New Zealand got removed from that white list 2 years ago. We were basically being told we had to undertake additional measures to ensure that customers including companies from New Zealand are who they say they are. That essentially means that we have to be able to reassure people that businesses and business transactions that are happening in this country are actually transparent and that we are doing everything we can to ensure that dodgy behaviour is not happening and that people are not getting away with that. Well you would think that this Government which claims it is the Government for business would have thought that this was a priority. Why was it not a priority? We have been removed from a list—Hon Simon Bridges: You’ve already given this speech.CLARE CURRAN: Minister Bridges how about getting up taking a call and telling us what your views are on this. Why has it taken 2 years for a piece of legislation that was already before a select committee—why was it not a priority? Why was it not a priority? What is the answer?Hon Simon Bridges: This was your first speech.CLARE CURRAN: Yes but what is actually the answer? Why was it not a priority?Hon Simon Bridges: A busy Government.CLARE CURRAN: “A busy Government.” is the answer. It was a busy Government. So what was the Government actually busy with? What about our international reputation? What about our reputation and getting back on to that white list? Why is that not a priority?Hon Simon Bridges: Oh you want me to take a call?CLARE CURRAN: Yes it would be great if he takes a call because we might actually get an answer. [Bell rung] Mr Chair.The CHAIRPERSON (Eric Roy): Clare Curran.CLARE CURRAN: Thank you Mr Chair—a very good decision. We got dumped from that list and that was around growing publicity of New Zealand - registered companies being linked to crime overseas. There was a report by the Organized Crime and Corruption Reporting Project. There was a company called Tormex Systems Ltd a New Zealand - registered company that allegedly laundered US$680 million through a Latvian bank account. That was just one of many examples of entities that exploited New Zealand’s simple company registration regime. There were plenty of other examples. I know that the select committee considered many of those examples and took that issue really seriously. We were actually doing our job in this Parliament thinking “Right we’ve got to sort this. We’ve been removed from this white list. We’ve actually got to get the issue sorted.” yet it was 2 years down the track before the legislation came back to the House and it still has not been passed. It still has not gone through the House.What has happened to our reputation? Well members have all got their heads down over there on the other side of the Chamber so clearly they actually did not think that that was that important. There were obviously other more politically expedient pieces of legislation they could put through the House that would impact on people who were actually more vulnerable and for some reason those members just decided to take their time.The select committee actually did quite a lot of work on this and we recommended—and this goes to Part 2 around the requirement for directors to live in New Zealand. This is actually quite a good part of this legislation. There was a lot of work done on this. We recommended that the requirements for an agent living in New Zealand be omitted: “Better balance could be achieved by requiring a company to have a director who lives in New Zealand or who lives in and is a director of a company in a country with which New Zealand has reciprocal arrangements for the enforcement of low-level criminal fines.” This was pretty important. We strengthened the legislation before the select committee on this.We put a higher test into the legislation. I am just going to read out what it says in the commentary because it is quite important: “The purpose of requiring a director who lives in New Zealand is to ensure that there is an identifiable individual with a substantive connection with the company who can be questioned about the activities of the company and who can in certain circumstances be held to account.” That is so important. It cannot be just an address. It cannot be just a shop or a door behind which there is no actual person. We heard submissions on this issue. We knew that it was really important to actually ensure through legislation that there could be actual people.Hon Simon Bridges: Now Phil Goff is counting the numbers.CLARE CURRAN: This is the committee working together.The big problem Mr Bridges is that we have not actually got to the point of passing the legislation. It is important that the people of New Zealand know tonight that that Government over there is actually not that concerned about white-collar criminals. This Government drags its heels on putting this sort of legislation through. It does not consider it urgent. It does not consider it that important. This legislation has obviously been put down the pecking order because that is such a busy Government doing other things that are actually going to impact on ordinary struggling New Zealanders who are just trying to keep their heads above water and pay their bills every week. Instead we are letting the white-collar criminals in this country off the hook.This piece of legislation does need to get passed. It needs to get passed soon. We have got to address these issues. Thank you very much to the officials for the work that was done by them in the select committee. The work done generally by the select committee around this is important. I have no idea why this bill as with so many bills that seem to come before the House on these sorts of issues is taking so long to actually get through the House. I would really like to hear the Minister get up and tell us why that is. Why is it that his legislation seems to get put down at the bottom of the list—at the bottom of the list?Hon Phil Goff: Because he’s a junior Minister.CLARE CURRAN: Is it because he is a junior Minister? What is it? Is it that the Minister sitting there Simon Bridges seems to have a louder voice and therefore his stuff gets put up—Dr CAM CALDER (National):I move That the question be now put.The question was put that the amendments set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to Part 2 be agreed to.Amendments agreed to.Part 2 as amended agreed to.Schedule 1 agreed to.Schedule 2The question was put that the amendments set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to schedule 2 be agreed to.Amendments agreed to.Schedule 2 as amended agreed to.New schedule 2AThe question was put that the amendment set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to insert new schedule 2A be agreed to.New schedule 2A agreed to.New schedule 2BThe question was put that the amendment set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to insert new schedule 2B be agreed to.New schedule 2B agreed to.Schedule 3 agreed to.Clauses 1 and 2KRIS FAAFOI (Labour—Mana):Thank you very much for giving me a call on the title and commencement date clauses of the Companies and Limited Partnerships Amendment Bill. This is usually the part of the debate where people have a bit of fun with the title of a bill. I will not do that and I will turn to clause 2 the “Commencement”.Generally as my colleague Clare Curran has pointed out the commencement of this bill is going to come far too late. This is a Government that claims it is business-friendly and works in the interest of both big and small—usually big—business. But this piece of legislation which is designed to protect the reputation of the legislation around our companies and limited partnerships has languished on the Order Paper under this Government. I think it was Minister Simon Bridges who said it was because this Government has been a busy Government. Well yes in one respect it has been a busy Government—selling our State-owned assets introducing rank changes to our education system—and all of a sudden this piece of legislation lands in the Committee. We have not seen it for some time and we have to ask the question around its commencement: why is it all of a sudden here?Why is this what we would call relatively mundane piece of legislation which has support from both sides of the House all of a sudden arriving here in Parliament? It is because—for the people at home who do not understand what is going on here—John Banks is not here any more and this Government cannot pass any of the legislation that it really wanted to pass. That is really the bigger game here. That is what is going on. Because John Banks is not here you will not see anything go through this House that the Government can just squeak through with its one vote majority and that is the likes of selling our assets changes to housing and changes to our education system. You will not see much of that any more because this Government no longer has the numbers to make sure that that kind of legislation gets through. For a long time now this Government has relied on the votes of John Banks and Peter Dunne to get all that kind of controversial legislation through. But no longer will we see that—The CHAIRPERSON (Eric Roy): Order! Clauses 1 and 2.KRIS FAAFOI: —because the vote of Mr Banks is no longer here.That goes back to the commencement date and why I say that this is coming in far too late. This is a piece of legislation that is very important and that has cross-party support. As you have seen there are a number of changes that the Minister has made in Supplementary Order Papers post the select committee process that members on this side of the Chamber are very very happy to support. So you would think that because of that relatively good working relationship on this side of the Chamber this piece of legislation would be shuffled through pretty quickly by this Government. We have had this legislation there for the benefit of protecting the reputation of the legislation that governs our companies. But no the commencement date will not be for some time because this piece of legislation has sat quite a way down on the Order Paper and its commencement date will be some time into the future. It could have been quite sadly passed much much sooner.We wanted it to be passed much much sooner again because of the protections it gives to our firms to protect the reputation that they have around the world. I have a number of small businesses in my electorate. They trade—I will not mention names because they will not enjoy that—and they go out there to the global market and because they are from New Zealand the people they work with are quite happy to work with them because of the reputation that New Zealand businesses have. As I said earlier there has been concern both domestically and internationally because like in a lot of other countries around the world there has been a fair degree of people using the reputations of firms in countries like New Zealand and taking advantage and using shell companies. So to protect the reputation of New Zealand firms—and I think quite rightly and with the support of this side of the House—the Hon Simon Power in 2010 began work for this legislation to be improved. That is right I did say 2010. So it was quite some time ago and National has had quite a high degree of support from this side of the House but it was not until 18 June 2014 that we have got to this stage where this can get through the Committee stage.I think that is a sad state of affairs where the Government does not think that this kind of legislation is very important more so for those smaller businesses that use our reputation for doing business to ensure that they can get business. Those kinds of firms are very strong around the world. They could have had a lot more confidence in going overseas and selling their products overseas with more protection from this piece of legislation months or years earlier had this Government given this piece of legislation priority. I think it is a sad state of affairs in terms of when this piece of legislation will commence. As I say it could have happened much sooner only this busy Government was doing much more controversial things and now it has got to the stage where because of the mathematical realities of the House non-controversial pieces of legislation will now be coming through the House.I just want to talk about some of the things that will commence under this bill. I want to talk about clause 4 where under section 131 of the Companies Act I understand it will be a criminal offence if a director breaches his or her duty where a director knows that a breach is seriously detrimental on the interests of the company or where under section 135 he or she breaches his or her duty knowing that a breach will result in serious loss to the company’s creditors. I am trying to think of a situation where that might be the case. It certainly might be the way that Ministers have carried out their dealings with the likes of say Solid Energy because we certainly know that the direction given to that company had a detrimental effect on that company and now it finds itself in a very tricky position of trying to work itself out of a serious amount of debt because of the pressure that this Government put it under. It will be interesting to see how this piece of legislation would lie over that kind of situation because in that situation the directors of that company were put under a fair amount of pressure to increase their gearing to make sure the Government could get a better return from what was a well-performing State-owned enterprise but is now one that is struggling to quite an extreme extent and has to force many lay-offs. That is the kind of management of our State-owned enterprises that we have had from this type of Government.In terms of the title and commencement on this side of the Chamber we say that it has happened far too late. We have made requests to the Minister as to why this piece of legislation which deals with criminality in a corporate sense was not given the same priority from the Government in terms of the other legislation that deals with criminality at a street level. Again we think there is a degree of dog whistling going on over there from a Government that said it was business-friendly but really in this sense it has not walked the talk and has not given those smaller companies the protection of the reputation of doing trade in New Zealand. I think our businesses may have suffered to a degree because of that. The Government has not given what it calls its natural supporters the protection of this legislation which could have happened much much earlier.I do again offer the Minister in the chair the Minister of Commerce in the dying stages of this Committee stage the opportunity to explain the Government’s position on that. Again I am not so hopeful of getting a response.CLARE CURRAN (Labour—Dunedin South):I do want to go back to the issue of New Zealand being removed from the white list just in this final stage of the Committee stage on the Companies and Limited Partnerships Amendment Bill around the title and the commencement. It is important to point out that that white list includes countries such as Australia Brazil Canada Hong Kong India Japan South Korea Mexico Singapore Switzerland South Africa and the United States. Not everybody in New Zealand would know what that white list was but being removed from it actually means that banks and other financial institutions in the European Union for instance can no longer accept and acknowledge the “know your customer” identification and analysis performed in New Zealand. It would seem to me that that is actually something that we should be a bit worried about and a bit ashamed of.I understand that back in 2012 when we got removed from that white list there was a flurry of activity by various Ministers including the Minister of Justice over there and the Minister of Foreign Affairs about trying to get us back on that white list. It would be quite interesting to know because I just did a wee Google search on it as to whether we are back on that white list. Can anybody confirm whether we are or not? No everybody has got their heads down so I am presuming that we are not.Hon Todd McClay: Oh don’t presume.CLARE CURRAN: Actually that is quite significant—Hon Judith Collins: Why don’t you just make it up?CLARE CURRAN: So are we or are we not? Are we back on the white list? Are we back on the white list Minister? Are we? If we are that is a good thing but let us actually hear from you as to whether we are or not. No answer? No. Clearly we are not.So it is 2 years—2 years—since we got removed from that white list. We got removed from that white list because we needed to change our laws. We needed to change our laws and put in place more restrictions on the way that businesses were operating in this country and white-collar crime was actually being conducted. Well we have dragged our feet. The Government has dragged its feet. It has not actually done the best it could for New Zealand businesses and as a result we have a black mark against us in the international environment around the way that New Zealand does its business. I think that that should be reinforced because this Government pretends it is there for businesses and for good business practice. In reality—Dr Paul Hutchison: Oh there’s no pretence about it.CLARE CURRAN: Well can you over there on the other side of the Chamber dispute the facts? We did get removed from that list. Have we actually got back on it? If we have then that is good but clearly we have not.This bill has taken far too long to get through the House. It is really important to have robust debates. We need the time in Parliament to have those robust debates but there has been too much time in between those robust debates so we are not seeing the legislation actually make it through the House in the way it should where it actually impacts on the white-collar criminals the behaviours that lie behind them and the behaviours that are condoned in a system that should be being fixed. The issues were identified at least 3 or 4 years ago. They have not been acted on fast enough. It is an indictment on this Government that it has not done that. It has not done it because it has been pushing through legislation that is impacting on other aspects of its agenda—which is a political agenda and an agenda about making the vulnerable more vulnerable and working people’s lives harder—and not holding to account the behaviours in business that are behaviours that we as a country should not be condoning.We support this legislation because it is important. We did a lot of work in the Commerce Committee to improve the legislation to make it more effective. Unfortunately it has taken far too long for it to get back before this House and it is going to take even longer for it to get passed and then for it to be commenced and actually put into law. I think that that is an indictment on this Government and the way that it has conducted itself over the last 6 years. This Government is actually not about holding to account the white-collar criminals in our country.JAMI-LEE ROSS (Junior Whip—National):I move That the question be now put.Motion agreed to.Clause 1 agreed to.The question was put that the amendments set out on Supplementary Order Paper 465 in the name of the Hon Craig Foss to clause 2 be agreed to.Amendments agreed to.Clause 2 as amended agreed to.The Committee divided the bill into the Companies Amendment Bill (No 4) and the Limited Partnerships Amendment Bill (No 2)pursuant to Supplementary Order Paper 466.Bill to be reported with amendment presently.