Business September 2009 Newsletter

General

Trans-Tasman regulatory integration to deepen
Prime Ministers Kevin Rudd and John Key met in Canberra on 20 August 2009 during Prime Minister Key’s official visit to Australia.

At the meeting, the Prime Ministers agreed to a joint statement of intent to give new intensity and a renewed focus to delivering the practical benefits and outcomes from the Single Economic Market (SEM). They noted that this work will be guided by key principles designed to deliver more quickly and effectively the benefits of a seamless trans-Tasman economy to consumers and businesses in both countries. A key element within the framework is a deliberate move from consideration purely of national benefits in policy development, to consideration of the net trans-Tasman benefit.

The Prime Ministers announced that they had already identified a range of shared outcomes in the areas of insolvency law, financial reporting policy, financial services policy, competition policy, business reporting, corporations law, personal property securities law, intellectual property law, and consumer policy.

The outcomes the Prime Ministers identified complement and build on the extensive work already underway under the SEM. They will accelerate and deepen trans-Tasman regulatory integration.

The joint statement and full list of proposed outcomes can be found on the MED website.

Improving the operation of financial markets
On 26 August, as part of the range of measures government is putting in place to improve the operation of financial markets, Commerce Minister Simon Power announced three key areas where new regulations are being put in place.

New securities regulations have been approved that will improve the quality of disclosure to investors, improve flexibility for issuers, and reduce compliance costs. The regulations also provided for the details of the new simplified disclosure prospectus for listed issuers that were established by the recently enacted Securities (Disclosure) Amendment Act 2009. This will provide a significant reduction in compliance costs for listed issuers by removing the requirement to disclose information that is already available to the market.

The Government hopes to introduce regulations that will simplify and clarify disclosure obligations for finance company moratoria. Moratoria proposals are an alternative to receivership for companies that issue debt and are in financial difficulty and unable to pay their investors.

The Minister also announced the introduction of a new regime for corporate trustees and statutory supervisors who supervise debt issuers and some collective investment schemes. The regime will involve the licensing of trustees by the Securities Commission, and a range of measures to strengthen the quality of supervision provided by trustees. Legislation is expected to be ready for introduction to Parliament by the end of the year.

Adjustment to the Employee Preferential Claim Figure under the Companies Act 1993 and the Insolvency Act 2006
Insolvency law provides all creditors with some measure of equality in order to avoid destructive fights between creditors and wasteful races to courts to recuperate their debts.

Employees are one of the categories of creditors that have statutory preference so that wages and salary are paid before payments are made to unsecured creditors of an insolvent company.

The maximum amount employees can claim in an insolvency proceeding under the Companies Act 1993 and the Insolvency Act 2006 is currently set at $16,420. There is a statutory requirement to adjust this amount every three years based on a prescribed formula. The prescribed formula provides for the revised figure to reflect any overall percentage increase, over the relevant adjustment period, in average weekly earnings (total, private sector), calculated by reference to the last Quarterly Employment Survey published by Statistics New Zealand.

The new employee preferential claim figure has been adjusted to $18,700. This reflects the overall increase in average weekly earnings in the private sector of 13.9% over the three-year period ending 30 June 2009.

The adjusted employee preferential threshold amount will come into effect on 25 September 2009.

Please see the Companies Office website for related information.