By Paul McBeth
Dec. 11 (BusinessDesk) - New Zealand politicians are wary of racking up more criminal penalties on directors who breach their duties to companies and creditors, and have asked the government to take another look at pending legislation.
Parliament's commerce select committee supports Commerce Minister Craig Foss in taking another look at the drafting of legislation that would criminalise directors for breaching their fiduciary duties, according to the report-back on the Companies and Limited Partnerships Amendment Bill. Foss said those issues would be considered as part of a supplementary order paper.
The committee didn't go beyond minor drafting amendments, but "support further consideration of the drafting of these new offences to ensure that the provisions are expressed in a way that provides clear guidance to directors and does not have a chilling effect on legitimate business risk-taking."
The legislation was introduced last year as part of a crackdown on company registration after a New Zealand shell company was linked to illegal arms deals with North Korea.
The parliamentary committee, chaired by National MP Jonathan Coleman, recommended introducing a requirement for a company director to live in New Zealand or a country that has reciprocal arrangements for enforcing low-level criminal fines.
The recommendation replaced an earlier idea that would have required foreign companies to have a New Zealand agent, which was ultimately deemed to "provide only limited deterrence from the misuse of companies and limited partnerships."
Politicians recommended requiring companies to disclose the ultimate holding company, and for directors to give their place and date of birth when registering a company.
The commerce select committee also recommended granting the Companies Registrar greater powers to require information from companies and limited partnerships.
"This bill, together with the changes recommended by the select committee, will strengthen our company registration regime and enable stronger enforcement action against those that misuse it, while maintaining our reputation as one of the easiest places in the world to do business," Foss said.
"I'm advised that there will be minimal additional cost, because most New Zealand companies already satisfy these requirements," he said.
The new registration provisions will come into effect six months after the bill passes into law.