1 00:00:00,160 --> 00:00:02,880 Speaker 1: More reform of business is coming away. The company's actor 2 00:00:02,920 --> 00:00:04,520 Speaker 1: is set to get its first proper update in some 3 00:00:04,559 --> 00:00:07,160 Speaker 1: thirty years, and phoenixing is going to be addressed. That's 4 00:00:07,160 --> 00:00:10,080 Speaker 1: when one company is liquidated and another one begins without 5 00:00:10,119 --> 00:00:12,120 Speaker 1: all the debt being paid off. Commerce and Consumer Fairs 6 00:00:12,119 --> 00:00:14,280 Speaker 1: Minister Andrew Bailey is with us on this Andrew morning 7 00:00:14,320 --> 00:00:14,600 Speaker 1: to you. 8 00:00:15,280 --> 00:00:16,239 Speaker 2: Oh, good morning mate. 9 00:00:16,320 --> 00:00:18,360 Speaker 1: The companies act as far as these things without being 10 00:00:18,360 --> 00:00:20,079 Speaker 1: too dry about this, as far as these things go, 11 00:00:20,200 --> 00:00:22,720 Speaker 1: how complex is it and how bigger upheaval is this? 12 00:00:24,320 --> 00:00:27,840 Speaker 2: Well, look, there's elements that are simply out of date. 13 00:00:28,040 --> 00:00:30,240 Speaker 2: It's about three pages of amendments we're going to make. 14 00:00:30,280 --> 00:00:33,800 Speaker 2: But essentially what we're doing is modernizing elements of it 15 00:00:33,840 --> 00:00:36,560 Speaker 2: to make it easier for companies to operate. We're simplifying 16 00:00:36,600 --> 00:00:39,680 Speaker 2: it and we're digitizing it. So for instance, why do 17 00:00:39,720 --> 00:00:42,320 Speaker 2: you have to send out your end report by post? 18 00:00:42,640 --> 00:00:44,560 Speaker 2: Why can't you just put on a website and tell 19 00:00:44,560 --> 00:00:47,440 Speaker 2: people where that that is. So that's the first big 20 00:00:47,520 --> 00:00:51,640 Speaker 2: chunk of the reforms. The second bit is about this 21 00:00:52,080 --> 00:00:55,480 Speaker 2: phoenixing which you've been talking about. But that what we 22 00:00:55,560 --> 00:00:58,680 Speaker 2: want to do is make sure that directors can protect 23 00:00:58,720 --> 00:01:01,440 Speaker 2: themselves if they think they've got security issues, so they 24 00:01:01,440 --> 00:01:04,040 Speaker 2: don't have to record their private address, but they do 25 00:01:04,120 --> 00:01:06,600 Speaker 2: have to have an address where they can be served 26 00:01:06,600 --> 00:01:09,160 Speaker 2: to notice or you can find them. But related to that, 27 00:01:09,200 --> 00:01:12,600 Speaker 2: we're going to give every director an ID a number, 28 00:01:13,480 --> 00:01:16,800 Speaker 2: because it's often very difficult to track what directors are 29 00:01:16,840 --> 00:01:21,000 Speaker 2: doing and what companies are associated with, and so by 30 00:01:21,040 --> 00:01:23,400 Speaker 2: giving that, we're giving them a number, we can do that. 31 00:01:23,920 --> 00:01:26,160 Speaker 2: You look, for instance, if you look at John Smith 32 00:01:26,200 --> 00:01:28,760 Speaker 2: and the company's office, there's twenty seven pages of John 33 00:01:28,800 --> 00:01:32,440 Speaker 2: Smith as directors. And then the third element of the 34 00:01:32,600 --> 00:01:35,920 Speaker 2: package is that we're going to do a fundamental review 35 00:01:36,160 --> 00:01:39,280 Speaker 2: of the duty and liabilities of directors and doing that 36 00:01:39,319 --> 00:01:42,399 Speaker 2: with Paul Goldsmith as a Minister of Justice. But we're 37 00:01:42,440 --> 00:01:45,720 Speaker 2: going to start that next year because unfortunately the last 38 00:01:46,319 --> 00:01:53,720 Speaker 2: many years, increasingly directors duties and liabilities have been ill 39 00:01:53,760 --> 00:01:56,640 Speaker 2: defined or less clear than they ought to and that's 40 00:01:56,680 --> 00:01:57,200 Speaker 2: what we can do. 41 00:01:57,720 --> 00:01:59,120 Speaker 1: Let me come back to that in mind, because that's 42 00:01:59,160 --> 00:02:02,240 Speaker 1: the most interesting part. The phoenixing thing with the number. 43 00:02:02,640 --> 00:02:05,200 Speaker 1: The number seems the most obvious thing in the world. 44 00:02:05,280 --> 00:02:07,080 Speaker 1: Why hasn't somebody done it before? 45 00:02:08,000 --> 00:02:13,000 Speaker 2: Oh? Look, I can't understand it. I don't know. I 46 00:02:13,000 --> 00:02:14,000 Speaker 2: can't explain. 47 00:02:13,760 --> 00:02:17,920 Speaker 1: Because it's also numerous problems, don't you, Yeah, yeah. 48 00:02:17,760 --> 00:02:22,560 Speaker 2: It does. It's a smart way. And also we're going 49 00:02:22,600 --> 00:02:26,280 Speaker 2: to actually pick up some insolvency law changes that would 50 00:02:26,280 --> 00:02:30,760 Speaker 2: recommend back in twenty fourteen the previous government National government did, 51 00:02:30,880 --> 00:02:32,720 Speaker 2: so we're also going to do put that in there. 52 00:02:33,080 --> 00:02:36,920 Speaker 2: And the issue with it is it's I still about 53 00:02:36,919 --> 00:02:40,440 Speaker 2: the John Smith's example before. It's very easy for directors 54 00:02:40,440 --> 00:02:43,000 Speaker 2: say I'm John Smith, and then next a time they 55 00:02:43,040 --> 00:02:46,240 Speaker 2: put their record their details, it might be John R. Smith, 56 00:02:46,360 --> 00:02:48,040 Speaker 2: or it might be John Robert Smith, or it might 57 00:02:48,040 --> 00:02:51,240 Speaker 2: be Jonathan Smith. And therefore that's the easiest way of 58 00:02:51,280 --> 00:02:54,639 Speaker 2: stopping this. And you know what's the bit I'm really 59 00:02:54,639 --> 00:02:58,080 Speaker 2: worried about the Phoenix thing of the of companies is 60 00:02:58,120 --> 00:03:02,240 Speaker 2: that the the whole issue is when you have small debts. 61 00:03:02,320 --> 00:03:05,560 Speaker 2: Let's say you're doing a bathroom extension. I don't I'm 62 00:03:05,560 --> 00:03:07,880 Speaker 2: not getting at a building industry particularly, but let's so 63 00:03:08,040 --> 00:03:10,360 Speaker 2: you are doing a bathroom extension. You give a builders 64 00:03:10,480 --> 00:03:13,960 Speaker 2: money and then they don't complete the job and they 65 00:03:14,000 --> 00:03:16,240 Speaker 2: move on set up a new company the next day 66 00:03:16,280 --> 00:03:18,679 Speaker 2: and just put twenty twenty four on it, many of 67 00:03:18,720 --> 00:03:21,320 Speaker 2: those claims and never picked up. No one ever knows 68 00:03:21,360 --> 00:03:24,000 Speaker 2: about them because people don't have the money to chase them. 69 00:03:24,080 --> 00:03:27,400 Speaker 2: So this is part of the package. It's not just 70 00:03:27,480 --> 00:03:30,720 Speaker 2: the number, but I've also been talking to insultancy practitioners 71 00:03:30,800 --> 00:03:33,040 Speaker 2: to make sure that they've got the ability to record 72 00:03:33,080 --> 00:03:35,600 Speaker 2: those types of activities and then we can track them 73 00:03:35,640 --> 00:03:38,600 Speaker 2: over time, because ultimately we want to get rid of 74 00:03:38,600 --> 00:03:42,600 Speaker 2: those poor performing, you know, directors and managers who don't 75 00:03:42,600 --> 00:03:44,320 Speaker 2: do a good job and do it quite deliberately. 76 00:03:44,560 --> 00:03:46,920 Speaker 1: No exactly. I know you weren't picking on the building industry, 77 00:03:46,920 --> 00:03:48,800 Speaker 1: but it does actually happen quite a bit in the 78 00:03:48,800 --> 00:03:51,080 Speaker 1: building industry, and there are plenty of stories of it. 79 00:03:51,120 --> 00:03:54,480 Speaker 1: As far as the duties and of directors are concerned, 80 00:03:54,560 --> 00:03:57,360 Speaker 1: what are you looking to do? Because how many directors 81 00:03:57,360 --> 00:03:59,400 Speaker 1: in this country sit on boards or take a board 82 00:03:59,480 --> 00:04:02,240 Speaker 1: job and then get pinged for something they didn't have 83 00:04:02,320 --> 00:04:04,520 Speaker 1: any idea they were potentially going to get pinged for. 84 00:04:06,400 --> 00:04:11,240 Speaker 2: Yeah, well, there's multiple dimensions to this. The biggest issue, 85 00:04:11,720 --> 00:04:13,920 Speaker 2: I think the fundamental issue is would you like to 86 00:04:13,960 --> 00:04:17,240 Speaker 2: be a director now? And to be honest, a director 87 00:04:17,240 --> 00:04:20,440 Speaker 2: and I probably would not do right unless they paid 88 00:04:20,440 --> 00:04:23,000 Speaker 2: me a lot of money and that's wrong. What we 89 00:04:23,040 --> 00:04:25,960 Speaker 2: want is people to be able to think that they 90 00:04:26,000 --> 00:04:28,520 Speaker 2: are quite happy to be a director. Obviously, we don't 91 00:04:28,560 --> 00:04:31,720 Speaker 2: want to cut away from the obligation that you can't 92 00:04:31,760 --> 00:04:34,560 Speaker 2: act recklessly or net didn't all that sort of stuff right, 93 00:04:34,560 --> 00:04:37,320 Speaker 2: That we're not cutting away that. But the issue now 94 00:04:37,440 --> 00:04:41,279 Speaker 2: we've got is that some court cases have come down 95 00:04:41,320 --> 00:04:45,680 Speaker 2: with mainsil was one, but the other big area government 96 00:04:45,760 --> 00:04:49,960 Speaker 2: has been very good at piercing the corporate veil using 97 00:04:49,960 --> 00:04:53,839 Speaker 2: a technical term where directors are now personally liable for things. 98 00:04:53,839 --> 00:04:57,080 Speaker 2: So I'll give you an example climate related disclosures. We've 99 00:04:57,120 --> 00:04:59,240 Speaker 2: got a brand new regime in New zenand no one 100 00:04:59,240 --> 00:05:02,680 Speaker 2: knows only it's world famous in New Zealand. But directors 101 00:05:02,680 --> 00:05:06,320 Speaker 2: are personally liable for the reports. Even though it's just 102 00:05:06,360 --> 00:05:08,920 Speaker 2: coming into play now for a lot of lists of 103 00:05:09,000 --> 00:05:12,560 Speaker 2: company people, that's kind of an obligation, so a personal 104 00:05:12,600 --> 00:05:15,599 Speaker 2: liability if they get the report wrong. We've got other 105 00:05:15,680 --> 00:05:17,800 Speaker 2: liabilities that have been put through into a piece of 106 00:05:17,880 --> 00:05:23,359 Speaker 2: legislation that now make directors personally liable. Now. Ultimately, the 107 00:05:23,440 --> 00:05:26,320 Speaker 2: whole thing about company's law, which set up in sixteen 108 00:05:26,360 --> 00:05:30,120 Speaker 2: seventeenth century was about allowing people to take reasonable risks, 109 00:05:31,000 --> 00:05:34,200 Speaker 2: but not extreme risks, and what we've done now has 110 00:05:34,320 --> 00:05:38,040 Speaker 2: made it very blurred. And ultimately, you know, experienced directors 111 00:05:38,040 --> 00:05:40,360 Speaker 2: should and we should be encouraging them to be helping 112 00:05:40,400 --> 00:05:43,920 Speaker 2: startups taking risks at that point. Many people wouldn't want 113 00:05:43,960 --> 00:05:46,000 Speaker 2: to do it now because of this. And that's the 114 00:05:46,000 --> 00:05:48,960 Speaker 2: way we want to grow the economy and have the 115 00:05:49,000 --> 00:05:51,680 Speaker 2: money to build schools and hospitals and all that sort 116 00:05:51,680 --> 00:05:54,479 Speaker 2: of stuff. We need successful economy and we need to 117 00:05:54,520 --> 00:05:57,280 Speaker 2: support our business and our companies to be able to 118 00:05:57,360 --> 00:05:59,520 Speaker 2: do that, and right now it's a bit of a barrier. 119 00:06:00,040 --> 00:06:01,600 Speaker 1: Very well said, Andrew, have a good week in appreciate 120 00:06:01,600 --> 00:06:04,360 Speaker 1: your times always, Andrew Bailey, Commerce and Consumer Affairs Minister. 121 00:06:04,440 --> 00:06:06,960 Speaker 1: I think I'm not being unfair and suggesting that might 122 00:06:06,960 --> 00:06:08,680 Speaker 1: be another bloke who's across as Brief as well. 123 00:06:09,160 --> 00:06:12,039 Speaker 2: For more from the Mic Asking Breakfast, listen live to 124 00:06:12,160 --> 00:06:12,719 Speaker 2: news talks. 125 00:06:12,720 --> 00:06:15,919 Speaker 1: It'd be from six am weekdays, or follow the podcast 126 00:06:15,960 --> 00:06:16,839 Speaker 1: on iHeartRadio.