Nash StuartSTUART NASH (Labour—Napier): We have seen a lot of legislation pass through this House since the global financial crisis that is designed to prevent money laundering or nefarious behaviour in financial dealings. We have all supported this and we have all applauded it but when I look at a couple of clauses here I wonder whether in fact this is not a backward step.Let me give you one example: Part 1 clause 4(2A) regarding the annual return. What this used to say was that the old requirement of signing off an annual return—this is an amendment to the Building Societies Act 1965. In the past what used to have to happen was the annual return had to be signed off by two directors and the manager or secretary of the society. So there were three people: two of them in governance positions and one in an operation role—it makes sense. What we are doing now with this piece of legislation is deleting the need to have two in a governance position and one in an operational position and changing it by saying it must be signed off by the manager or secretary—that makes sense because it is still in the operational role—and a second person who is a director a qualified accountant or a lawyer.The concern I have about this is that first of all we are removing one layer or one extra barrier against nefarious activity—or fraud for want of a better term I suppose. The second thing is: OK you could actually have the manager married to a director of a society. I would say that would not be unusual and certainly would not be impossible. So the thing we have got to do when we are looking at these sorts of pieces of legislation that are designed to make the job of the Ministry of Business Employment and Innovation easier and more efficient is to ensure that we do not take away fundamental safeguards that protect the investment of the person involved with this. To say this can be signed by a qualified statutory accountant or a lawyer means that this could in fact be signed by the person in charge of the cheque book—the manager or the secretary—and someone who has no direct association with the building society itself as long as they are a qualified lawyer or an accountant. I think that that actually removes one of the safeguards that protected members of a building society.The thing I would say is that the previous condition was not onerous—to ensure that at least two directors signed off on the annual report. I have no idea why that condition was removed when I think it provided a really important safeguard and after all what both parties have been attempting to do since 2008—in fact all of Parliament has worked very closely together to ensure that safeguards are put in place to protect investors and asset holders. So that concerns me a little bit; there is no doubt about that.The other clause I would like to talk about is clause 16 and this is about annual meetings of shareholders. This is an amendment to the Companies Act. I am going to quote clause 16(5). It is an insertion that says: … it is not necessary for the board of a company to call or for a company to hold an annual meeting of shareholders under this section if—(a) there is nothing required to be done at that meeting; and (b) the board has resolved that it is in the interests of the company to rely on this subsection [when there are issues] …". That is the board can determine that there is "nothing to see here" that it is time to move on and that they do not need an annual general meeting. Again I think that that removes a certain safeguard. It is not difficult to hold an annual general meeting if all it means is that people gather around a board table for an hour and say "Hey look. This is the statement of accounts. This is what we are doing. There is nothing out of the ordinary here. There's nothing to see. Move on—we've done that." Of course it has to say in the constitution that the company does not require a meeting to be called or held but again what I think this potentially does is it moves power from shareholders onto a board that has an interest in protecting their own rights over those of shareholders.You could argue quite successfully probably that a shareholder would not have invested in a company if in fact the constitution said there will not be an annual general meeting. That was a sticking point but I just have concerns—[Bell rung]The CHAIRPERSON (Lindsay Tisch): Stuart Nash.STUART NASH: Thank you Mr Chairman and I will not take the 5 minutes. What I was saying was that what we cannot do is take the power away from those who have no governance say but simply a financial interest and put it all in the hands of those who actually do have a self-interest in a company or a body corporate or a building society because that removes I think an important safeguard. As mentioned it does say here that if a constitution does not require an annual general meeting then you do not have to have one and a shareholder can make a decision based on whether he or she believes that that is an adequate safeguard or not. But also in this you could have a situation where a shareholder has invested in this without this clause and the board makes a decision to change that. You do not have to do that at the meeting you do not have to hold a special meeting to change the constitution and before you know it another important safeguard has gone.I am not saying this does not streamline the process because I suspect it does streamline the process and I am not saying that what I talked about in clause 4 does not streamline the process because I am certain that removing one layer of accountability of course does streamline the process. I suppose my point overall is that we have got to be really careful in that balance of streamlining the process and holding to account those who have positions of responsibility. We really strengthened this and what I really would be loath to see is that because we say "Well that was a long time ago. We are out of that. We can trust people now." we actually weaken the accountability of those who have responsibility. We just have to be really careful that we are not doing that. Thank you."