Latest / Best of Business / Andrew Bayly: Commerce Minister on the incoming changes to the Companies Act

Transcript

Andrew Bayly: Commerce Minister on the incoming changes to the Companies Act · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks'd be follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: More reform of business is coming away. The company's actor
• 0:19
  Speaker 2: is set to get its first proper update in some
• 0:21
  Speaker 2: thirty years, and phoenixing is going to be addressed. That's
• 0:23
  Speaker 2: when one company is liquidated and another one begins without
• 0:26
  Speaker 2: all the debt being paid off. Commerce and Consumer Fairs
• 0:28
  Speaker 2: Minister Andrew Bailey is with us on this Andrew morning
• 0:31
  Speaker 2: to you.
• 0:31
  Speaker 3: Oh, good morning mate.
• 0:33
  Speaker 2: The companies act as far as these things without being
• 0:35
  Speaker 2: too dry about this, as far as these things go,
• 0:36
  Speaker 2: how complex is it and how bigger upheval is this?
• 0:41
  Speaker 3: Well, look, there's elements that are simply out of date.
• 0:44
  Speaker 3: There's about three pages of amendments we're going to make.
• 0:46
  Speaker 3: But essentially what we're doing is modernizing elements of it
• 0:50
  Speaker 3: to make it easier for companies to operate. We're simplifying
• 0:53
  Speaker 3: it and we're digitizing it. So for instance, why do
• 0:56
  Speaker 3: you have to send out your end report by post?
• 0:59
  Speaker 3: Why can't you just put on a website and tell
• 1:01
  Speaker 3: people where that is. So that's the first big chunk
• 1:04
  Speaker 3: of the reforms. The second bit is about the phoenixing
• 1:09
  Speaker 3: which you've been talking about. But what we want to
• 1:12
  Speaker 3: do is make sure that directors can protect themselves if
• 1:16
  Speaker 3: they think they've got security issues. So they don't have
• 1:18
  Speaker 3: to record their private address, but they do have to
• 1:21
  Speaker 3: have an address where they can be served to notice
• 1:23
  Speaker 3: or you can find them. But relate to that, we're
• 1:26
  Speaker 3: going to give every director an ID a number because
• 1:30
  Speaker 3: it's often very difficult to track what directors are doing
• 1:34
  Speaker 3: and what companies are associated with, and so by giving that,
• 1:38
  Speaker 3: we're giving them a number, we can do that. You look,
• 1:41
  Speaker 3: for instance, if you look at John Smith and the
• 1:43
  Speaker 3: company's office, there's twenty seven pages of John Smith as directors.
• 1:47
  Speaker 3: And then the third element of the package is that
• 1:50
  Speaker 3: we're going to do a fundamental review of the duty
• 1:54
  Speaker 3: and liabilities of directors and doing that with Paul Goldsmith
• 1:57
  Speaker 3: as a Minister of Justice. But we're going to start
• 1:59
  Speaker 3: that next year because unfortunately the last many years, increasingly
• 2:06
  Speaker 3: directors duties and liability have been ill defined or less
• 2:11
  Speaker 3: clear than that ought to and that's what we can do.
• 2:14
  Speaker 2: Let me come back to that in mind, because that's
• 2:15
  Speaker 2: the most interesting part the phoenixing thing. With the number,
• 2:19
  Speaker 2: the number seems the most obvious thing in the world.
• 2:21
  Speaker 2: Why hasn't somebody done it before?
• 2:24
  Speaker 3: Oh? Look, I can't understand it. I don't know. I
• 2:29
  Speaker 3: can't explain.
• 2:30
  Speaker 2: Because it's also numerous problems, don't you.
• 2:33
  Speaker 3: Yeah, yeah, it does. It's a smart way. And also
• 2:38
  Speaker 3: we're going to actually pick up some consolvency law changes
• 2:42
  Speaker 3: that would recommend back in twenty fourteen the previous government
• 2:46
  Speaker 3: National government did, so we're also going to do put
• 2:48
  Speaker 3: that in there. And the issue with it is it's
• 2:52
  Speaker 3: I still about the John Smith's example before. It's very
• 2:56
  Speaker 3: easy for directors say I'm John Smith, and then next
• 2:59
  Speaker 3: a time they put their record their details, it might
• 3:02
  Speaker 3: be John R. Smith, or it might be John Robert Smith,
• 3:04
  Speaker 3: or it might be Jonathan Smith. And therefore that's the
• 3:07
  Speaker 3: easiest way of stopping this. And you know, what's the
• 3:10
  Speaker 3: bit I'm really worried about the Phoenix thing of the
• 3:13
  Speaker 3: of companies is that the whole issue is when you
• 3:17
  Speaker 3: have small debts. Let's say you're doing a bathroom extension.
• 3:21
  Speaker 3: I don't I'm not getting at the building industry particularly,
• 3:23
  Speaker 3: but let's so you are doing a bathroom extension, you
• 3:26
  Speaker 3: give a builders money and then they don't complete the
• 3:30
  Speaker 3: job and they move on, set up a new company
• 3:32
  Speaker 3: the next day and just put twenty twenty four on it.
• 3:35
  Speaker 3: Many of those claims and never picked up. No one
• 3:37
  Speaker 3: ever knows about them because people don't have the money
• 3:40
  Speaker 3: to chase them. So this is part of the package.
• 3:43
  Speaker 3: It's not just the number. But I've also been talking
• 3:45
  Speaker 3: to insultancy practitioners to make sure that they've got the
• 3:48
  Speaker 3: ability to record those types of activities and then we
• 3:51
  Speaker 3: can track them over time, because ultimately we want to
• 3:54
  Speaker 3: get rid of those poor performing, you know, directors and
• 3:58
  Speaker 3: managers who don't do a good job and do it
• 4:00
  Speaker 3: quite deliberately.
• 4:01
  Speaker 2: No exactly. I know you weren't picking on the building industry,
• 4:03
  Speaker 2: but it does actually happen quite a bit in the
• 4:05
  Speaker 2: building industry, and there are plenty of stories of it.
• 4:07
  Speaker 2: As far as the duty us of directors are concerned,
• 4:11
  Speaker 2: what are you looking to do? Because how many directors
• 4:14
  Speaker 2: in this country sit on boards or take a board
• 4:16
  Speaker 2: job and then get pinged for something they didn't have
• 4:19
  Speaker 2: any idea they were potentially going to get pinged for.
• 4:23
  Speaker 3: Yeah, well, there's multiple dimensions to this. The biggest issue,
• 4:28
  Speaker 3: I think the fundamental issue is would you like to
• 4:30
  Speaker 3: be a director now? And to be honest, I'm a
• 4:33
  Speaker 3: director and I probably wouldn't not do right unless they
• 4:36
  Speaker 3: paid me a lot of money, and that's wrong. What
• 4:39
  Speaker 3: we want is people to be able to think that
• 4:42
  Speaker 3: they are quite happy to be a director. Obviously, we
• 4:44
  Speaker 3: don't want to cut away from the obligation that you
• 4:48
  Speaker 3: can't act recklessly or net didn't all that sort of
• 4:50
  Speaker 3: stuff right, That we're not cutting away that. But the
• 4:53
  Speaker 3: issue now we've got is that some court cases have
• 4:57
  Speaker 3: come down with Mainsiel was one, but the other big area.
• 5:01
  Speaker 3: Government has been very good at piercing the corporate veil
• 5:06
  Speaker 3: using a technical term where directors are now personally liable
• 5:10
  Speaker 3: for things. So I'll give you an example climate related disclosures.
• 5:13
  Speaker 3: We've got a brand new regime in New Zealand. No
• 5:15
  Speaker 3: one knows only it's world famous in New Zealand. But
• 5:18
  Speaker 3: directors are personally liable for the reports. Even though it's
• 5:22
  Speaker 3: just coming into play now. For a lot of lists
• 5:25
  Speaker 3: of company people, that's kind of an obligation, so a
• 5:28
  Speaker 3: personal liability if they get the report wrong. We've got
• 5:32
  Speaker 3: other liabilities that have been put through into a piece
• 5:34
  Speaker 3: of legislation that now make directors personally liable. Now, Ultimately,
• 5:39
  Speaker 3: the whole thing about company's law, which set up in
• 5:42
  Speaker 3: sixteen seventeenth century, was about allowing people to take reasonable
• 5:46
  Speaker 3: risks with but not extreme risks, and what we've done
• 5:50
  Speaker 3: now has made it very blurred. And ultimately, you know,
• 5:53
  Speaker 3: experienced directors should and we should be encouraging them to
• 5:56
  Speaker 3: be helping startups taking risks. At that point, many people
• 6:00
  Speaker 3: wouldn't want to do it because of this, and that's
• 6:02
  Speaker 3: the word. We want to grow the economy and have
• 6:05
  Speaker 3: the money to build schools and hospitals and all that
• 6:08
  Speaker 3: stuff in this successful economy, and we need to support
• 6:11
  Speaker 3: our business and our companies to be able to do that,
• 6:14
  Speaker 3: and right now it's a bit of a barrier.
• 6:16
  Speaker 2: Very well said, Andrew, have a good week. I appreciate
• 6:18
  Speaker 2: your times always, Andrew Bailey, Commerce and Consumer Affairs Minister.
• 6:21
  Speaker 2: I think I'm not being unfair and suggesting that might
• 6:23
  Speaker 2: be another bloke who's across as Brief as well.
• 6:25
  Speaker 1: For more from News Talks at b Listen live on
• 6:28
  Speaker 1: air or online, and keep our shows with you wherever
• 6:31
  Speaker 1: you go with our podcasts on iHeartRadio