Companies (Address Information) Amendment Bill

Members, we come now to clause 3B, “Section 159 amended (Notice of change of directors)”. This is the debate on section 159. The question is that clause 3B stand part.

Thank you, Madam Chair. I was inspired by my burst of activity prior to the break to have a real good long hard look at clause 3B, which is, of course, the section that has to do with notice of change of directors. I have, I would say, probably about five real key topics or areas I’d like to examine this clause with the member on, and, within each of those topics, a number of probing questions around this particular clause 3B.

The first topic I’d like to speak to is around what I would describe as the clarity and purpose of this particular amendment, and I’d like the Minister to explain a few things, or at least try to attempt to explain a few things. The first one—

Hon Dr Deborah Russell: Oh, I will explain them—there’s no attempt about it.

Hon JAMES MEAGER: Oh, no, there will be no attempt about it. Well, I mean, I’ve outlined quite a lot of content coming down the barrel, and I want to give the member time to rigorously examine the questions and provide thorough responses.

But the first one, and this first topic, is the clarity and purpose of the amendment. I just want to see if the member can explain the purpose of inserting that phrase “or the alternative address” into section 159. What is the problem that the amendment seeks to address here? Is the member looking at this from primarily a privacy perspective, is it a safety issue, or is it just administrative convenience? That’s the first question within this topic.

The second one is an interesting one, actually. There are a number of sections within the principal Act which could have been amended, and I point to section 360C or section 360D. I guess the question is: why amend section 159 rather than some of the other address-related provisions in order to make this particular clause amendment?

The final question in this introductory topic of examination is around the inclusion of alternative address anyway. Is that a mandatory requirement, or is it optional for directors when they’re notifying a change of details? Are they required to give an alternative address, or can they use one of the other options listed there? That’s the first set of questions on that first topic.

Thank you very much—

Hon Dr Duncan Webb: We could go together.

TOM RUTHERFORD: What was that, Mr Webb?

Hon James Meager: Dr Webb—Professor Dr Webb.

TOM RUTHERFORD: I haven’t even got to my feet and I’m being heckled already. That’s when I know I live rent free in his head—that’s when I know. That’s when I know. It’s very good. There’s not much else taking up the brain space; I’ll tell you that.

CHAIRPERSON (Maureen Pugh): Clause 3B.

TOM RUTHERFORD: Madam Chair, clause 3B, “Section 159 amended (Notice of change of directors)”. Following on from my colleague James Meager, I’m keen to understand about, actually, the administrative burden for companies. So how will clause 3B, which amends section 159 to include alternative addresses in change notifications—how will clause 3B, amendment to section 159, affect the administrative burden on companies? Because with this change, companies will now be required to track and notify—so both track and notify—changes to both residential and alternative addresses.

They were previously just doing the one—they were just doing the residential address, which is the change that this bill is looking to make to provide that security to people. So you’re potentially not having people turning up at your property, who knows, throwing things through your windows, not putting pots and pans and banging things outside, disrupting the neighbourhood—who knows? Who knows? Hypothetically, that could happen. You wouldn’t know—you wouldn’t know—

Hon Member: Common decency.

TOM RUTHERFORD: —some common decency. You would think if you had such an issue with it, you would support legislation to change that sort of thing.

Companies will now need to track and notify changes to both residential and alternative addresses. What guidance is going to be provided on how companies should manage these dual address requirements? What guidance is going to be provided to the companies to say you’ve now got the required residential address of the director, but now you’ve also got what we have termed—and we just fleshed it out in the previous clause, what was now going to be called “their alternative address”. [Interruption] Potentially, Stuart Smith. How will you be able to differentiate between what will be their residential address and their alternative address and the burden that that may put on companies?

How will companies also know when a director’s alternative address has changed if the director deals directly, say, with the registrar, which is required under section 360D? So I’m keen to understand from the member, how would the company know when a director’s alternative address—let’s remember it’s not their residential address.

Hon Member: No, the alternative.

TOM RUTHERFORD: Their alternative address that they have nominated has changed—if that director just deals directly with the registrar and does not inform the company, how would the company know? Because under section 360D, all the requirement is is for the director to advise the registrar, and maybe the company might not find out. So how would I know if I was said member of the public and I go to the company and say, “Well, this was the alternative address that was provided, that was notified publicly.” I turned up there with my documents to serve them or whatever it might be and suddenly it’s now no longer accurate.

Dr Vanessa Weenink: They also go and change the actual director.

TOM RUTHERFORD: Oh, Vanessa Weenink is going to take a five-minute call after me to talk about what if there was the change of the director but the alternative address potentially stayed the same. What if it goes both ways?

So my question to the member in charge is: if the alternative address changes but the director tells the registrar, how does the company know? Where is the check and balance and stopgap in the middle there to say to the company that you need to change the alternative address as well? Because the director has only told the registrar and hasn’t actually told the company itself. They’ve actually just taken the initiative, told the registrar, and then someone turns up and they’re grumpy and they say, “Well, I went to the alternative address that you advertised and it was not accurate.”

David MacLeod: What was that clause again?

TOM RUTHERFORD: It was quite clear—well, under section 360D, which says the director just has to advise the registrar of the alternative address, they don’t actually have to tell the company specifically themselves. How do you actually mitigate that from happening? Otherwise you’re going to have grumpy people out there who are saying, “I went to the alternative address and there was nobody there. I couldn’t drop things off. It’s out of date.” How do you ensure that information stays completely up to date so that people can actually get to the alternative addresses that they need to get to?

Madam Chair, thank you. I will just go through the questions that have been asked. The Hon James Meager has asked whether this alternative address is a matter of safety or administrative convenience. The safety is the whole point of this bill. The point of the bill is to ensure that directors who are concerned that their home address is readily available through the Companies Register can actually use an alternative address. It provides a level of safety so that the Companies Register, which is easily available online, cannot be used to stalk. So that’s the point of this bill.

The second question said, “Well, why did we not look at amending other parts of the Act?” I just want to draw Mr Meager’s attention to section 159. Clause 3B is looking at amending section 159, and that’s the “Notice of change of directors”. The obligation under section 159 of the Companies Act is that the board of a company must ensure that notice is given, in the “prescribed form”, to the registrar of any changes in director or in the name or residential address of a director. This amendment will add in “or the alternative address” of a director of a company.

Now, directors actually have obligations to the company to keep the company itself up to date with where they live and what their names are. The member—and I note that his colleagues seem to think the same thing—sort of assumes that directors are very at arm’s length from a company; they are not. They are tied up quite closely in the governance of a company. Companies actually have an interest in knowing who their directors are and where to contact them and so on, so companies do this anyway. In particular, if the member goes to section 159(3) of the Companies Act, the board of a company has an obligation to comply with the section. Boards already have the obligation to keep the names and addresses of companies up to date with the Registrar of Companies.

So that goes to the third question that the Hon James Meager asked, which is—oh, no, sorry, something that Mr Rutherford asked. I’ll go back to the third one that Mr Meager asked: is it mandatory to have an alternative address? No. It’s not mandatory. This is an option that someone may want to adopt. When we get on to discussing clause 5, you will see the steps that a person needs to go through in order to adopt that option.

Then Mr Rutherford talked about the administrative burden for companies. There is no extra administrative burden for companies. They already have to keep track of the addresses of directors. A director who wishes to use an alternative address has to go through a procedure for that, then she or he will need to keep that up with the company. The company reports either the address or the alternative address of a director to the Registrar of Companies. So there is no extra administrative burden there. It’s not a dual address requirement; it’s an alternative address. So the company only needs to keep one or other of those addresses up—and, yeah, alternative address only if the director has opted for it.

The other thing is that there was a question about “Well, what if there is a change of director?” Again, this is just standard in the Companies Act. It has to be notified to the Registrar of Companies. There is already a set of procedures in place; there is no extra burden there. It is just the ongoing compliance cost of running a company, anyway.

Before I take the next call, can I just remind members that clauses 3A, 3B, and 3C are quite consequential to the substantive changes which are found in clause 5. So if members wish to canvass issues that will be in clause 5, they could already be deemed to be repetitive by the time we get there. So just a caution there.

Thank you, Madam Chair, and thank you for the very satisfactory responses from the member in the chair, the Hon Dr Deborah Russell, to those questions. I was wondering, when she said “the young Mr Meager”, who she was referring to—

Hon Dr Deborah Russell: I meant the young Mr Rutherford.

Hon JAMES MEAGER: —but, obviously, she got me confused with Mr Rutherford, and that’s where the “young” part came in from, so I acknowledge that.

Look, I am going to move on to the second topic of this clause, and it sort of follows on from Mr Rutherford’s contribution. It is around the definition of “alternative address” and its administration, and I think it’s important to address this here because it doesn’t appear in clause 5. It’s a question around how it is defined. Is it defined identically as the “address for service”, or is it a different meaning under the Act? I really want to touch on how you tell whether an alternative address is suitably qualified.

Now, I think it’s quite straightforward that when you have a residential address, those tend to be, first and foremost, legitimate addresses. They tend to actually exist in an actual property, a place, and a physical location which someone can actually seek information from. How will the Companies Office ensure that an alternative is a real place so that when you turn up to undertake the activities that you might want to for those addresses, such as providing service, it is a physical location that you can drop something to? Who will be determining what qualifies and constitutes an alternative address?

I can imagine a situation where it could be quite simple, where there’s a basic search on the Google machine. But what kind of proof of address do you have to provide that this is an actual physical location? And I’m not just going to sort of turn up to 242 Beach Road and find some rock or a set of sticks or a stone circle that someone has put into the system?

Just following that, do the registrars themselves have the power to reject an address that appears to be false or inadequate in that case, and, if that is the case, what is the process to go through in order to make sure that the address is actually a legitimate alternative address? I only raise this because it is quite straightforward for residential addresses. They are in the system, so when we’re now talking about alternative addresses, that might not be physical locations. I think they are legitimate questions to ask.

Madam Chair, as you suspected, the member was discussing material that is in clause 5; however, I will address it now so I don’t have to address it later.

I will draw the member’s attention to new section 360E, inserted by clause 5, where it talks about the requirements for an alternative address and it says what it must not be. It’s not the company’s registered office. It can’t be a post centre or a document exchange. It can be, say, at the offices of any firm of accountants, barristers, or solicitors, but you’ve got to state that the address is at the office of that firm and the particulars of the location in any building of those offices. If that doesn’t apply, but the alternative address is located in a building containing a number of premises, the alternative address must state the particulars of its location in the building, so a physical address is assumed, and it must be reasonably well specified.

The member asked as well, “Who verifies the address?” Well, that problem arises with existing company addresses or addresses for service anyway, so it’s no different a problem than already exists for the Registrar of Companies.

Can the registrar reject addresses? Well, I’m sure the registrar can. That would be in the powers of the registrar as already contained in the Companies Act. It’s not part of this bill, but the alternative address functions in exactly the same way as the ordinary, regular address, so all the same powers apply. So we’ve now discussed new section 360E.

Thank you, Madam Chair. Look, I understand the interpretation that the member’s taking on, dragging us up to clause 5, so I won’t dig into some of the consequences of amending section 159, which may well be covered under clause 5 and new section 360E in the subsections. But I will talk about the broader policy and the precedent being set here.

We’re going to be changing the Companies Act to provide for an alternative address for company directors. Now, I was involved in a number of club constitutions when the new Incorporated Societies Act came through, and I just want to raise a question around consistency with other Acts and other address requirements for potentially slightly more vulnerable people. You’ve got offices of incorporated societies and charities, who now have to provide their information, and they have to actually provide a physical address. How is this consistent with existing legislation, and is there any intention for the member to go further and look at the other requirements for address provisions in other similarly stated entities such as incorporated societies, charities, and other entities that may well have address publication requirements that, perhaps, members of those organisations are entitled to receive as well?

No, not in this bill. This bill is quite narrow. It confines itself only to companies. However, I invite the member the Hon James Meager, in his capacity as a Minister, to perhaps look at introducing a bill that would deal with that, or, indeed, any of his colleagues to put forward their own member’s bill dealing with those particular issues.

Thank you, Madam Chair, and I appreciate your words of wisdom about the narrowness of this clause.

CHAIRPERSON (Maureen Pugh): Good.

Dr HAMISH CAMPBELL: We are, of course, talking about clause 3B, “Section 159 amended (Notice of change of directors)”. My colleague has already brought up the burden for directors and businesses, and I just wondered whether there’s actually been any look into the burden on the registrar for this extra bit that we’re adding into the notice of change of directors.

Of course, in clause 3B we have subclauses (1) and (2). Subclause (1) says, “In section 159(1)(b), replace ‘name or the residential address’ with ‘name, the residential address, or the alternative address’ ”. I wasn’t part of the Economic Development, Science and Innovation Committee at the time that this bill went through, but if I was, I might have brought this up then, but luckily, I have been transferred on to that select committee now.

Dr Vanessa Weenink: We are very lucky to have you.

Dr HAMISH CAMPBELL: Yeah—very lucky. The thing is, I am just questioning about the wording, and whether it is actually clear. Instead of having the name or residential address and changing that to the name, the residential address, or the name and the alternative address, just to make it clear, because, otherwise, it might not necessarily—people might think that they could have a name or the alternative address.

So that was in subclause (1). In subclause (2), once again, we have “In section 159(2)(d)(ii), replace ‘name or the residential address’ with ‘name, the residential address, or the alternative address’ ”. The wording here just seems a little bit clunky, and it probably has a kind of different meaning, and so I was just wondering what was discussed in the select committee about that and whether we’re actually adding more burden on to the Companies Register with that.

I’ve covered this already. One needs to go to the actual original Act. This is an amendment to the original Act, so one needs to read the original Act. Clause 3B amends section 159(1)(b). At the moment, it says that the board of a company must ensure notice in the prescribed form of a change in the name or a residential address of a director of a company. We’re inserting the words “name, the residential address, or the alternative address”. I just invite the member to perhaps look at the original Act because, often, it provides its own explanation.

I was just going to remind the House that unless you are a garden gnome living on a mushroom at the bottom of the garden, I think we’ve canvassed this clause 3B, and so I’m going to suggest that the question is that clause 3B stand part.

Clause 3B agreed to.

Clause 3C Section 189 amended (Company records)