Business Law Reform Bill

Xiexie. National will cooperate and has demonstrated throughout the process of this Business Law Reform Bill even tiny, minute steps that would improve and simplify compliance costs for the business sector. National will cooperate but will not compromise the select committee process by being a pushover or by being bullied into supporting any major changes that should have gone through a proper select committee process. No one should undermine the select committee process by using it as just a tool to push through legislation.

Recently the Minister of Commerce has made a lot of political capital about National not giving leave for her to introduce a Takeovers Panel’s recommendation through emergency lobbying to get the company amalgamation and scheme of arrangement combined under the Takeovers Panel’s jurisdiction. I would like to clarify our position. I also have concern about quite a few high-profile cases that seem to go through the company scheme arrangement rather than going through the Takeovers Panel. Because there does not seem to be any progress in addressing the issue, I decided to test the water and propose an amendment, knowing that it will be defeated, but none the less it will give me some guidance to see where the Minister is heading in addressing this issue during the debate on securities legislation.

I was duly delivered a lecture by the Minister, and it will be interesting to share that with the public and everyone. She assured me that when the Takeovers Panel had decided to go out to consult on that problem, its hearings were heard over only a 10-day period. The Minister said, even with her Small Business Advisory Group representation role, it is not long enough to actually qualify as the level of stakeholder input required to make the changes that need to be made.

She also suggested that during the Takeovers Panel’s hearings, the commercial sector’s opinion differed. There was no unanimous support: some felt it was too much to leave entirely within the jurisdiction of the Takeovers Panel, and some felt the Takeovers Panel’s recommendations should be heard by the High Court in the consideration of the scheme of arrangement, and that would solve the problem. The Minister assured us at that stage that the Government believed there was a wee way to go before the issue was resolved one way or the other. But she emphasised the importance of major changes like that going through a proper process.

In fact the very responsible and diligent chair of the Commerce Committee, my colleague Katherine Rich, made all allowances and heard the submission from the Takeovers Panel. She was prepared to cooperate if those amendments were introduced and we were allowed to invite submissions, because it is quite a defined sector that deals with takeover issues. National would have heard that rigorous debate, but we are not satisfied with the fact that on the one hand the Minister emphasised the importance of a proper process, and on the other hand we cannot hear those robust debates from the sector that have to deal with these takeovers.

I also say that the Minister might have lost a fan during this particular process because the ACT former member of Parliament, Stephen Franks, wrote an article praising the bravery of the Minister of Commerce, the Hon Lianne Dalziel, saying she had “yet to succumb to the Takeovers Panel’s emergency lobbying to get company amalgamation and the scheme of arrangement subordinated to the jurisdiction. The Minister still appears to be insisting that the proposal undergo normal legislative scrutiny”, so I think during this particular process Mr Franks might want to write another article to correct the impression.

I think it is worthwhile to clarify the point that the member Pansy Wong has raised, because it would not be appropriate to leave it on the record that the amendment I was proposing by way of Supplementary Order Paper 72 was in any way, shape, or form the same as the amendment that the member moved during the course of the debate on the Securities Legislation Bill. My recollection of the member’s amendment at the time was that it was based on the Takeovers Panel’s recommendation that the panel itself become the predetermining body in terms of whether an issue should be identified as being covered by the code, and whether an amalgamation or a scheme of arrangement should proceed. So the provision that the member moved during the debate on the Securities Legislation Bill is one that I would still oppose, because it has not been through an appropriate process.

We explained the Supplementary Order Paper to the Opposition spokesperson—the chair of the Commerce Committee—and she agreed to the actual provision that we were putting up.

💬 Katherine Rich: I did not. You’re telling fibs.

If the member is making statements that are unparliamentary in this House, then obviously she will have a conversation on that with one of my staff members, because that is whom she had the conversation with. I received the advice that all parties in this House were questioned over whether a Supplementary Order Paper would be agreeable to them. The reason we consulted other parties is that the Supplementary Order Paper as proposed is outside the scope of the bill.

If the National Party had just said no, and that it was not interested in proceeding with this measure, we would not have taken it to the Business Committee. We were surprised when we were told at the Business Committee that the National Party was not going to allow it to proceed, but that is fine. That is in the nature of the way that things happen in this Chamber, and I just have to accept that, because the measure is outside the scope of the bill. So nobody is saying that this measure could have proceeded in the same shape as was proposed, or even in the shape that the member had submitted it on the Securities Legislation Bill. It could not have proceeded under that proposal either, because to do that, too, would have been outside the scope of that bill.

All the Government had proposed to do was to develop a regulation-making power that would enable more information to be provided to shareholders when confronted with a situation such as an amalgamation or a scheme of arrangement, and it would have enabled a set of criteria to be established. In consultation, through a proper process of regulatory impact analysis, with the key stakeholders, it could have established the criteria the court would have to take into account in determining whether such an arrangement would proceed.

So the mechanism of an amendment—a Supplementary Order Paper—to the bill that was before the House was a quick fix to something that everyone had agreed on. Let me just read from the Commerce Committee’s report: “Some submitters suggested various changes that are beyond the scope of this bill. For example, the Takeovers Panel recommended amending the Companies Act to remove a possible loophole regarding the application of the Takeovers Code. We would support additional measures being brought forward to address the Takeovers Panel’s concerns at least in part.” Well, that is what the Government did. I am sorry, but that was a unanimous report of the select committee, and I took it on its face value as meaning that members were prepared to proceed. All members had to do, which is ultimately what happened, was to say that they were not prepared to let it proceed, whether or not that was on procedural grounds or whatever other grounds.

We needed unanimity, essentially, in order to have something included in the bill that was outside its scope. We put our hands up; we say that we give up. We will refer the matter back to our officials and we will do some more work on it.

After hearing that speech I think we are all sitting here thinking that that is the level of truth we have come to expect from that Minister. She is telling porkies again, or in this case—

The CHAIRPERSON (H V Ross Robertson): The member cannot use that word in this House. It has been ruled out by Speaker Hunt in 2003.

I withdraw.

The CHAIRPERSON (H V Ross Robertson): Thank you.

Let us just go through some of the exaggerations, the first one being my agreement to the Supplementary Order Paper. That is quite wrong; I certainly gave no agreement. In fact, when discussing the Supplementary Order Paper, I pointed out that this was outside the scope of the Business Law Reform Bill and, based on what went on in the Commerce Committee, it was unlikely to receive our support because of that.

Let us also remember that the Minister was given the opportunity by me to take back the issue to the select committee process, so that some consultation could be done—so that the business community could have some say—not just some eleventh hour, back-door amendment as the Minister has attempted to introduce in the Committee stage here today, but a proper process whereby people could have a say about the change. Let us remember that not one single submission was received on the issues raised by the Takeovers Panel, because no one had any idea that it was to be suggested.

The Minister gave her word that the Business Law Reform Bill would be compact and would contain a certain number of issues, and I recall her official telling me that there would be no introduction of any other non-negotiated clauses within the law. The Minister has gone back on her word, and that is why she is playing politics with this. She has gone back on her word to make sure that the Business Law Reform Bill had some collegiality and some mutual agreement.

This was an omnibus bill, and I think that this side of the House approached the bill with some collegiality. We worked hard on it in the select committee process, given that many of the submitters were quite gobsmacked at some of the changes suggested. Members will remember that Lianne Dalziel told the House that this was a technical bill, and that there was nothing to see here and that people should move along quickly, but, of course, submitters who came along to the select committee had a totally different view and they raised some very important concerns. So the issue here is that the Minister has gone back on her word. She attempted to introduce something at the eleventh hour that was not part of the initial bill.

The officials actually reminded us that it was outside the bill’s scope and, although the Minister wanted to pretend that there was a tsunami of businesses wanting to take advantage of the loophole, she obviously had not read some of her own officials’ advice. They said that in the 5 years since the code was introduced it appeared that schemes of arrangement and amalgamation had been used only three times to avoid the provisions of the code, and I quote: “Officials do not consider that the floodgates will open if no action is taken at this time.” So from the perspective of this side of the Committee, we think that it is important to have due process. I say to the Minister that if she is to make such a dramatic change that affects the business community, she should take the time to consult and not be so arrogant as to suggest that she can just introduce something in the Committee stage, when nobody has had any chance to have a say on it, and pretend that Armageddon is just around the corner if she does not have the opportunity to do that.

So let us just introduce a few facts into the debate. It is a shame that the Minister has tried to play politics with this change, because there was a lot of collegiality when it came to this Business Law Reform Bill. The Minister has thrown that out of the window by playing politics and by stretching the truth so far that it is barely recognisable. In terms of this Committee’s view, yes, we were sympathetic towards some of the concerns raised by the Takeovers Panel, but we have to have a proper process. We have to give New Zealanders and New Zealand businesses the opportunity to have their say, and not introduce back-door legislation that has not been consulted on at all. But that is what we have come to expect from this Minister. She wants to do things the easy way, without doing the hard yards. The Takeovers Panel had not done enough of its own consultation. In fact, it received only about 10 submissions on its ideas, and four of them said that they did not want it to do it. So there was hardly consensus before it got to the select committee stage. The Minister told me that there would be no additional issues introduced in the bill, and she went back on her word.

Clause 1 agreed to.

The question was put that the amendments set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel 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 2), the Dumping and Countervailing Duties Amendment Bill, the Financial Reporting Amendment Bill, the Friendly Societies and Credit Unions Amendment Bill, and the Insurance Companies’ Deposits Amendment Bill, pursuant to Supplementary Order Paper 73.

Bill to be reported with amendment presently.

House resumed.

The Chairperson reported the Ngāti Mutunga Claims Settlement Bill without amendment; and the Business Law Reform Bill with amendment, and that the Committee had divided it into five bills.

Report adopted.