Commerce Committee reports back on the Business Law Reform Bill

The Business Law Reform Bill has been reported back to the House by the Commerce Committee. The Bill includes amendments to the Companies Act 1993 and the Financial Reporting Act 1993. It also consequentially amends the Corporations (Investigation and Management) Act 1989, the Reserve Bank of New Zealand Act, the Securities Markets Act 1988 and the Insurance Companies Deposits Act 1953.

The major changes include:

Companies Act

In relation to annual reports, the committee has proposed that:

• shareholders be sent annual reports or notice of their availability, in which case there will be time limits to comply with a request to receive them; and
  
  
• current directors that are subject to an overseas prohibition order will not be automatically disqualified from the directorship when the provision comes into force.

Financial Reporting Act

It is proposed that:

• to simplify the issuing of share purchase and option plans for New Zealand employees, the Securities Commission can exempt directors or classes of directors of issuers that are incorporated or constituted outside New Zealand from preparing, auditing and filing requirements, so long as there is no significant detriment to New Zealand subscribers;
  
  
• it be made explicit that a person is a recipient of money from a conduit issuer only if he or she received 10% or more of the money raised from the public, and that the aggregate amount provided to the person and related parties constituted 75% or more of the money raised from the public;
  
  
• the definition of "related person" in clause 27 be amended so that it is the same as the definition of"associated person" in section 2(2) of the Securities Markets Act; and
  
  
• amendments be made so that certain sections of the Bill apply to and from accounting periods that are in progress when the Act commences, allowing relevant entities to take advantage of the reduction in compliance costs one year earlier.
  

Insurance Companies Deposits Act

It is proposed that use of the word "insurance" in a company name be prohibited without the consent of the Chief Executive of the Ministry of Commerce.

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