14 Oct 2011

Bills target cartel behaviour and questionably run companies

9:00 am on 14 October 2011

Two bills introduced to Parliament aim to toughen up on hard-core cartel behaviour and questionably run companies.

Outgoing Commerce Minister Simon Power says the bills will ensure New Zealand's reputation as a trusted place to do business.

Last year, New Zealand incorporated firm SP Trading was involved in chartering a plane used for trafficking weapons in defiance of UN sanctions.

That sparked widespread debate about foreigners using New Zealand-registered shell companies to undertake criminal activity, and a subsequent Companies Office review removed 1800 firms.

Mr Power says such behaviour threatens New Zealand's reputation, and the Companies and Limited Partnerships Amendment Bill will help stamp it out.

The bill requires firms to have a locally based director or agent and beefs up the Registrar of Companies' investigation functions.

The other bill is designed to deter hard-core cartel behaviour and imposes criminal sanctions including a maximum penalty of seven years in prison.

It also clarifies what type of cartel behaviour is prohibited and introduces a clearance regime so firms can approach the Commerce Commission to test their competition concerns.

Mr Power says the new regime, which will be phased in over two years, will bring New Zealand in line with trading partners including the US, UK, Canada and Australia.