Swain Paul: Companies (Minority Buy-out Rights) Amendment Bill — First Reading 
Swain Paul: Companies (Minority Buy-out Rights) Amendment Bill — First Reading 
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Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I would like to address a couple of points made by Judith Collins and also Simon Power who I thought made quite a useful contribution. But the first thing I would like to know is why the National Party is filibustering on this kind of legislation. I hear that it is supporting it and what I am interested to know— 
Gerry Brownlee 
: I accept the questions that Mr Swain is asking us and I seek the leave of the House to take 2 minutes to answer them. 
The ASSISTANT SPEAKER (Ann Hartley) 
: The member has sought leave for that purpose. Is there any objection? There is objection. 
Hon PAUL SWAIN 
: A very simple answer to the question would easily suffice here. It may be because those members had a bit of trouble at the post-media do last night. There was a bit of grumpiness and now they are trying to take a bit of utu; that is what it might be about. I wonder whether National Party members know the saying “Cutting off one’s nose to spite one’s face” and over there is a particularly large nose and not a very pretty face. 
Gerry Brownlee 
: That is what Doctor Cullen has done; silly man! He should have talked to us before he talked to Vernon. 
Hon PAUL SWAIN 
: Was this because of last night? That is the only thing I can think of. 
Gerry Brownlee 
: No it’s nothing to do with last night. 
Hon PAUL SWAIN 
: Well I take the member’s word that it is nothing to do with last night because he is an honourable member. I presume the National Party is going to be supporting this legislation because it is good legislation.  
I want to take up the first point that Judith Collins made. She said that the Government has not done much in this area until now. Of course that is completely not the case. When the Labour Government came in in 1999 I had the privilege and honour to be the Minister of Commerce and one of the things we looked at was the problem we had not only with company law but also with the rights of minority shareholders. We got to work putting into place the Takeovers Code that the National Party had agreed to in Government but had decided not to implement because of pressure from the Business Roundtable. We got it under way straight away to give minority shareholders rights at a time of takeovers.  
Then there was a whole lot to do with insider trading to make sure that the torch went on to insider trading and exposed it in order to protect minority shareholders. Now we are bringing forward the Companies (Minority Buy-out Rights) Amendment Bill. It is more really good progressive business legislation— 
Gerry Brownlee 
: It’s 8 years late! 
Hon PAUL SWAIN 
: Well this has been a very very busy Government. We have had lots of legislation to bring through not only in this area but also in transport health and education. There is so much to do in so little time which is why we need to be able to continue on for the next 3 years as the programmes and projects are not yet finished.  
Simon Power raised what I thought was quite a reasonable point. He essentially said that in the case of a company director or company directors trying to make a decision about where the company should go they not only need to take into account the health of the company but also need to take into account what is potentially the outcome for some minority shareholders who for example are opposed to a decision to amalgamate and then decide that they want the buy-out rights. That has to be factored into the decision. I think what this bill is trying to do is clarify the rights of minority shareholders who are in that position.  
It is not just on the question of amalgamation; it is also to do with times of special resolution because that is not specifically mentioned in the legislation. If there is a special resolution it clarifies for example what the rights are in the case of a company’s constitution being imposed or removing a restriction on a company’s activities. Someone might be opposed to that and want to buy out. It may be a major transaction that the minority shareholders might not be keen on or as I said before an amalgamation proposal. At the moment the old legislation says they do have rights but it does not really clarify what those rights are. I think the most important piece of clarification is to say that at the time of the opportunity for the minority shareholders to buy out there firstly needs to be clarity around the value of the shares to be purchased from a shareholder to ensure the value is an honest estimate. What is an honest estimate? That is a fair point.  
The second point is that the price of the shares at that moment in a minority buy-out will be calculated from the date the company gives the shareholder notice agreeing to buy back the shares. That is fair enough. But of course there could be some fluctuations around that time as always happens when this kind of activity goes on. The legislation says that the calculation of the value of the shares must not take into account those fluctuations. Of course thirdly if an arbitrator is in place then it clarifies and expands the powers of the arbitrator to determine the share price in a minority buy-out situation.  
So this is a good situation. I come back to Simon Power’s point which was that we need to have some certainty and some clarification so that for example directors do not get themselves into the position where they do not take a positive step in the interests of the company because they are concerned about the impact potentially of those who are opposed to it and then exercise their minority buy-out rights.  
I think where Simon Power got to in the end was that provided there was clarity in the legislation he would support it. I think it does provide that clarity. Of course the opportunity with this legislation is that it will go to a select committee—the Commerce Committee I presume chaired by Gerry Brownlee—[ 
Interruption 
] No I actually think he does not do a bad job to be perfectly frank. A good meeting is a quick meeting as I have always said. I hold to that particular principle. Of course it is an electronic committee so some members have struggled but it is a very good committee. Gerry Brownlee seems to have mastered the new technology— 
Hon Darren Hughes 
: He’s always logging off. 
Hon PAUL SWAIN 
: Yes logging off and on when the time suits. I think the important thing is that this bill will go to the Commerce Committee. I expect there will be quite a lot of submissions from the business community and rightly so. I think it will be really interesting to hear whether what is in the bill before us will meet the needs of shareholders. I am sure that people will come up and say “You’ve forgotten about this. You should do this. What about that?”. I am sure that under the leadership of Gerry Brownlee and with the hard-working and conscientious members of that select committee we will come back to the House with possibly a new and improved proposal.  
It is with great pleasure that I support this legislation. It is another arrow in the quiver of important business legislation that this very busy and business-friendly Government has introduced into the House. That is another reason why we need to be able to continue with our work after the next election because there is so much more to do. With that I commend this bill to the House.