University of Auckland academics say scrapping some plans in reform 'backward step'
Experts are criticising proposed reforms to New Zealand's Companies Act for focusing too much on straightforward fixes and falling short of addressing broader challenges in corporate governance.
Lynn Buckley and Peter Underwood of the University of Auckland said the reforms miss the opportunity to tackle pressing matters, such as environmental and social considerations in organisations.
"The removal of the express reference to the ability of company directors to consider environmental, social and governance factors in their decision-making is a backward step," Underwood said in a university article.
"The government seems focused on tidying up some archaic bits of the Companies Act but has missed the bigger picture: responsible capitalism."
Buckley also singled out the decision to scrap a proposed beneficial ownership register that would have mandated businesses to disclose shareholders with significant influence.
"This was a golden opportunity to shine a light on the often-opaque structures of corporate control," Buckley said.
According to Buckley, the register would have helped increase transparency and accountability in businesses.
"It seems strange that while we're pushing for unique identifiers and upping the use of business numbers, we're not addressing who influences corporations. Dropping this proposal also feels like a step back," she added.
The critics aired their criticism ahead of a conference that they organised to discuss the proposed reforms.
"This conference is about asking the hard questions and ensuring that these reforms reflect modern business realities while holding corporations accountable to society," Buckley said.
Reforms to the Companies Act 1993 seek to improve insolvency law and company phoenixing, which refers to the practice of shuttering bankrupt companies only to reappear as a new entity under a different name.
It also seeks to eliminate the requirement for company directors to publicly disclose their home addresses.
"These reforms bring the law into the 21st century and enable companies to focus on growing their core business, rather than retrofitting their practices to appease out-of-date legislation," Commerce and Consumer Affairs Minister Andrew Bayly previously said.
