Companies (Minority Buy-out Rights) Amendment Bill
Friday 5 September 2008; 12.10pm
Te Ururoa Flavell, MP for Waiariki
Tena koe Mr Speaker, tena tatou te whare i tenei ahiahi.
It has always concerned me that politicians are rated the lowlife in a long list of respected professions.
And I have to bring the House up to date, that contrary to the speculation that was raised in the House this morning
that carpet sellers, real estate agents and car salesmen are scooping the barrel, it is actually rather sad that
politicians are still trailing way behind. (Maori Party Members are exempt).
I guess there has, however, been some progress.
In this year’s Readers’ Digest list of respected professions, we politicians scored second last, with only telemarketers behind us, but it is hardly a
vote of confidence in the trustworthiness of politicians.
And with issues like Paintergate, Corngate, Speedgate and Doodlegate and all sorts of things to contend with, is it any
wonder?
Or on the other side of the gate, when the Maori Television Service revealed recently that it was on Crosby-Textor’s
advice that National in 2003 decided on the strategy of attacking Maori with the infamous Orewa speech or the equally
sad iwi/kiwi billboards; it doesn’t do much for reputation.
So when we come to this Bill that is described as being driven by the express purpose of instituting a fairer and more clear process, we of course are inclined to be pretty supportive of such a move.
But things have become a little bit cloudy.
For when we look into the background to this Bill, we are referred to the case of Natural Gas Corporation Holdings Ltd v Infratil; the first High Court case, I am told, to consider the minority buy-out provisions of the Companies Act 1993.
In his decision on that case, Justice Doogue said, and I quote:
It is common ground that the minority buy-out rights sections are defective”.
He continues…
“Although they provide for the company to nominate a fair and reasonable price for the shares to be acquired, they do
not state at what date that price is to be ascertained.
Nor do the sections make any provision for the company, in nominating the fair and reasonable price, to give any
information to the minority shareholder of the basis of the valuation.
Mr Speaker, I have taken a little bit of time of returning to the High Court finding, because it is yet another instance
where the trust and confidence that the public have in the political system runs the risk of being undermined.
Undermined by flaws in legislation which Judge Doogue referred to a “statutory vacuum”.
Justice Doogue recommended that if the minority buy-out rights are to be beneficial and workable, they should be
urgently reconsidered.
In response to Justice Doogue’s finding, the Law Commission report highlighted problems with the existing legislation
and concluded it was defective in its failure to set out a workable method of valuation.
What they concluded, I see, was that the current test in sections 110-115 of the Act gives insufficient guidance or
certainty to companies.
And so here we are today, Mr Speaker, looking to amend the Companies Act; to ensure that the buy-out regime functions
efficiently, cost-effectively, and appropriately.
We were relieved to see the recommendation from the Select Committee that the concept of ‘Fair and reasonable’ method is retained.
However, the committee went further and suggested that a ‘fair and reasonable method’ requires an objective assessment
of value.
Not only are we valuing fairness and reasonableness but we are even putting the effort into measuring that it matters. That’s all great and good.
Mr Speaker, I understand that Chapman Tripp, in their submission to the select committee, endorsed this move – advising
that statutory guidance as to the fair and reasonable price to be paid was desirable and will provide more certainty.
Mr Speaker, fairness and reasonableness is actually a very simple concept.
The fairness and reasonableness, in this Bill, is in the context of a dissenting vote.
The Bill is essentially to improve the way in which a minority shareholding in a company is valued when minority
shareholders have elected to have their shares purchased by the company.
It seems such a simple concept, but as we know, ‘a dissenting vote’ in the experience of this House is anything but simple.
In fact, the dissenting vote of my colleague Tariana Turia on the Foreshore and Seabed Bill was rapidly followed by her
crossing the floor; and the birth of the Maori Party not much later.
We, in the Maori Party, operate from a different premise that a dissenting vote, in itself, is not a fatal offence.
Indeed, we welcome the opportunity to share diverse experiences and to agree to disagree, when consensus appears unable
to be reached.
I suppose the point is, that we must have a process in place, from which to respond to dissenting points of view.
We welcome, therefore, the initiative in this Companies, Minority Buy-out rights amendment bill, to establish clarity in relation to the process of minority buy-outs and an appropriate methodology for the valuation
of shares.
The Bill, as Chapman Tripp Barristers and Solicitors advised, is a step in the right direction, but it doesn’t go far
enough.
Finally, we cannot leave this debate without acknowledging our disappointment that there appears to have been no
apparent consultation with Maori companies; no apparent consultation with Maori company directors in the Law Commission
review; no specific submissions sought from Maori companies.
And at this point I’d like to hold up this article from yesterday’s Otago Daily Times, headed “Call for Maori involvement with Business NZ”.
I would recommend this article to any member of the House with an interest in the future of New Zealand. You see, in
that article, Ikaroa Rawhiti candidate for the Maori Party, Derek Fox, lays down a challenge for Business New Zealand to include more Maori in its organisation, and in the way its policies and strategies are formulated.
His argument was that Maori have a huge interest in the future of New Zealand, as collectively, tangata whenua are the
biggest producers of meat and wool, and the biggest shareholder in the dairy giant, Fonterra.
It is a challenge which this House, and this Government, could also respond to – and which we would have looked forward
to seeing in the roll out of the Companies Minority Buy-out Rights Amendment Bill.
Mr Speaker, we make these comments in the honest hope that the Minister and the Ministry, may take on board the
commitment of the Maori Party to do all that we can to invest in the growth of business in New Zealand.
We look forward to being involved in the future discussions, and to that end, we will support this Bill at this reading.
ENDS