Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ policymakers back criminal sanctions for reckless boards

NZ policymakers back criminal sanctions for reckless directors in securities law overhaul

By Paul McBeth

Sept. 10 (BusinessDesk) - New Zealand directors could face criminal sanctions if their reckless behaviour leads to offer documents containing false statements as an overhaul of the nation's decades-old Securities Act gets a step closer.

Parliament's Commerce Committee, chaired by National MP Jonathan Young, backed criminal liabilities for 'reckless' directors, shooting down opposition from a range of submitters on the Financial Markets Conduct Bill. The committee tweaked some of the bill's wording to spell out where liability falls under the regime, it said.

"We believe that the liability regime should not discourage capable and prudent people from becoming directors with overly punitive sanctions, and companies should be able to attract directors with diverse skills and background," the report said.

"Although directors should supervise capital raising and exercise due diligence regarding offer documents, they should be able to focus mainly on business strategy and supervising management, rather than on compliance and liability," it said.

The legislation beefs up the costs of corporate malfeasance though it backs away from criminalising negligence and major misjudgements. It also puts the onus on the Crown to prove an offender had a 'guilty mind'.

New Zealand's corporate community was seeking to water down the level of culpability, saying recklessness too easily blurred into negligence.

The politicians accepted Ministry of Business, Innovation and Employment advice that the criminal definition of recklessness was clear.

The MoBIE report to the committee said the bill won't criminalise reckless conduct or general risk-taking, rather it will only impose consequences when a person's recklessness attracts criminal liability.

"Departing from knowledge or recklessness could increase the incentive for unscrupulous people to flout the law, which would be contrary to the purpose of promoting confident and informed participation," the MoBIE report said.

The Commerce Committee recommended changes spelling out who could get captured as an accessory under the liability regime after New Zealand's biggest law firms suggested advisers such as lawyers and auditors may be unnecessarily captured.

The report reduced the exemption threshold for a large wholesale investor to an individual or business with net assets of $5 million or annual turnover of $5 million for the past two years, from $10 million in assets or turnover of $20 million.

"We believe that an individual or business meeting the lower threshold is likely to be sufficiently sophisticated to participate in wholesale offers of financial products," the committee said.

The legislation, which aims to consolidate New Zealand securities law into one act with a goal of improving financial market conduct and restoring investor confidence, will go back to the House for its second reading.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Energy: New Zealand Could Be World’s First Large-scale Producer Of Green Hydrogen

Contact Energy and Meridian Energy are seeking registrations of interest to develop the world’s largest green hydrogen plant. The plant has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas... More>>

MBIE: 36th America’s Cup Post-event Reports Released

Post-event reporting on the 36th America’s Cup (AC36) has been released today. The reports cover the delivery of the event by Crown, Council and America’s Cup Event Limited, economic impacts for Auckland and New Zealand, and delivery of critical infrastructure... More>>

Fonterra: Farmer Feedback Set To Shape Revised Capital Structure Proposal

With the first phase of Fonterra’s capital structure consultation now complete, the Co-op is drawing up a revised proposal that aims to reflect farmers’ views. A number of changes are being considered to the preferred option initially put forward in the Consultation Booklet in May... More>>

Statistics: Household Saving Falls In The March 2021 Quarter

Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today. Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020... More>>