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Business Law Reform Bill (Consistent) (Sections 14, 19(1)) [2006] NZBORARp 33 (12 June 2006)
Last Updated: 11 January 2019
Business Law Reform Bill
12 June 2006 Attorney-General
LEGAL ADVICE
CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990: BUSINESS LAW REFORM
BILL
- We
have considered whether the Business Law Reform Bill (PCO 6852/12) (the "Bill")
is consistent with the New Zealand Bill of Rights
Act 1990 (the "Bill of Rights
Act"). We understand that the Bill is likely to be considered by the Cabinet
Legislation Committee
at its meeting on 15 June 2006.
- Our
view is that the Bill appears to be consistent with the rights and freedoms
affirmed in the Bill of Rights Act. In reaching this
conclusion, we considered
potential issues of inconsistency with sections 14 and 19(1) of that Act.
PURPOSE
1. The Bill amends five business law statutes in
order to clarify and update certain provisions to give effect to the intended
purpose
of the provisions; remove unnecessary compliance costs; and remove
conflicts within and between legislation. The five statutes amended
are the:
- Companies Act
1993;
- Dumping and
Countervailing Duties Act 1988;
- Financial
Reporting Act 1993;
- Friendly
Societies and Credit Unions Act 1982; and
- Insurance
Companies’ Deposits Act 1953.
- We
discuss three provisions of the Bill (amending the Companies Act and the
Friendly Societies and Credit Unions Act) in greater detail
below.
SUMMARY OF THE BILL OF RIGHTS ACT ISSUES
- The
Bill, amongst other matters, requires companies to inform shareholders about
alternative methods for receiving a copy of the annual
report and to supply a
copy of that report upon request. If a company fails to satisfy this
requirement, every director is liable
to a fine. This clause gives rise to an
issue under section 14 of the Bill of Rights Act (freedom of expression). In our
view, however,
this provision appears to be justified in terms of section 5 of
the Bill of Rights Act.
- The
Bill retains the obligation for "large companies" with 25% or more overseas
ownership to file audited financial statements with
the Registrar of Companies.
This obligation does not
exist for "large companies" which are New
Zealand owned. We have therefore considered whether this clause gives rise to an
issue under
section 19(1) of the Bill of Rights Act with the right to be free
from discrimination on the ground of national origin. Although
it creates a
disadvantageous distinction between overseas owned companies and New Zealand
owned companies, we consider that this
is a justified limitation on the right to
be free from discrimination.
- Two
clauses of the Bill propose to amend sections in the Friendly Societies and
Credit Unions Act 1982 that refer to being an ‘adult’.
‘Adult’ is defined in that Act to mean a person who is at least 20
years old. Although the clauses impact the membership
of credit unions by
persons who are younger than 20 years, we consider that the provision does not
limit the right to be free from
discrimination. The possibility of disadvantage
to young people is remote and they may still join and participate in credit
unions.
In any case we do not consider the provisions are without
justification.
SECTION 14: FREEDOM OF EXPRESSION
- Section
14 of the Bill of Rights Act provides:
"Everyone has the right to freedom of expression, including the freedom to seek,
receive, and impart information and opinions of
any kind and in any form".
- The
right to freedom of expression in section 14 extends to all forms of
communication that attempt to express an idea or meaning.[1] The right has been interpreted as
including the right not to be compelled to say certain things or to provide
certain information.[2]
- Clause
8 of the Bill repeals and replaces section 209 of the Companies Act 1993
(sending annual reports to shareholders). New section
209 retains the
requirement that companies send an annual report to shareholders. However, the
company may instead send a notice
to shareholders stating that they have a right
to receive a copy of the annual report, free of charge and by electronic means,
and
whether the company has prepared a concise (summary) annual report. New
section 209A requires annual reports to be sent to shareholders
on request and
new section 209B requires annual reports to be made available by electronic
means. If a company fails to comply with
any of these new sections, every
director commits an offence and is liable on conviction to a fine not exceeding
$10,000.
- Clause
8 raises an issue under section 14 of the Bill of Rights Act because it requires
companies to make certain statements. In this
case, the threat of a penalty
introduces a clear element of compulsion.
- Where
a potential inconsistency exists, a provision may nevertheless be consistent
with the Bill of Rights Act if it is considered
to be a reasonable limit that is
justifiable in terms of section 5 of that Act.[3]
- On
balance, we consider the limitation contained in clause 8 to be a justifiable
limitation on section 14 of the Bill of Rights Act.
In reaching this conclusion
we have taken particular account of the right to receive information, which is
included within the right
to freedom of expression. The limitation on the right
of the company needs to be balanced against the right of shareholders to be
fully informed about the state of the company in which they hold shares. We also
note that the information that must be provided
to shareholders is
limited
to factual information about the company. It does not compel
individuals to state an opinion or say something that they do not believe
to be
true.
- It
might also be worth noting that clause 8 does not alter the existing obligation
of companies to provide annual reports to shareholders.
The purpose of this
provision is to provide companies with alternative methods of meeting that
obligation because the current requirement
to provide hard copies can impose
unnecessary compliance costs. Overall, the requirements imposed by the new
sections are less onerous
than those currently in the Act. The penalty level is
identical to the existing penalty for failing to provide copies of the annual
report.
SECTION 19(1): RIGHT TO BE FREE FROM DISCRIMINATION
- Section
19(1) of the Bill of Rights Act provides the right to freedom from
discrimination on the grounds set out in section 21 of
the Human Rights Act
1993. The prohibited grounds for discrimination include:
- ethnic and
national origin (which includes nationality or citizenship); and
- age (which means
any age of 16 years old and over).
- In
our view, taking into account the various domestic and overseas judicial
pronouncements as to the meaning of discrimination, the
key questions in
assessing whether discrimination under section 19(1) exists are:
i Does the legislation draw a distinction based on one of the prohibited grounds
of discrimination?
- Does
the distinction involve disadvantage to one or more classes of individuals?
- If
these questions are answered in the affirmative, we consider that the
legislation gives rise to an issue under section 19(1) of
the Bill of Rights
Act. As noted above, where this is the case, the legislation falls to be
justified under section 5 of that Act.
Right to be free from discrimination on the basis of national origin
- Clause
31 repeals and replaces section 19 of the Financial Reporting Act 1993 which
requires companies with 25% or more overseas ownership
to file audited financial
statements with the Registrar of Companies. This requirement is no longer
considered necessary for all
companies and the Bill would retain the requirement
to "large companies" only. The Bill includes a definition of a "large company"
based on the total assets (including intangible assets), turn-over, and number
of employees of the company and its subsidiaries.
- This
clause appears to raise an issue under section 19(1) of the Bill of Rights Act
because it draws a distinction based on the overseas
origin of the owners of the
companies concerned. The distinction involves a more extensive reporting regime,
and therefore a disadvantage,
for these large overseas-owned companies.
Accordingly, the provision falls to be justified under section 5 of the Bill of
Rights
Act.
- The
different treatment of large companies is retained because these companies have
a significant effect on the New Zealand economy.
The provision is intended to
protect New Zealand interests which could be supplanted by the broader interests
of the company. This
can be considered a significant and important
objective.
- The
additional reporting requirements are intended protect New Zealand interests by
making larger companies more accountable under
New Zealand law. Accordingly, the
reporting requirements appear to be rationally connected to the objective.
- For
this reason, to the extent an issue is raised under section 19(1), we have
concluded that the Bill appears to be justifiable in
terms of section 5 of the
Bill of Rights Act.
Right to be free from discrimination on the basis of age
- Clause
44 of the Bill proposes to amend section 100(a) of the Friendly Societies and
Credit Unions Act 1982, which sets out the criteria
for registration as a credit
union. In order to register as a credit union, a society must have at least 21
members who are either
adults, charitable entities as defined by the Charities
Act 2005, or incorporated societies registered under the Incorporated Societies
Act 1908. Clause 46 of the Bill amends section 104(1)(b) of the Act, which
requires an application to register as credit union to
be signed by 21 members
who are adults, charitable entities or incorporated societies. The Bill retains
the definition of "adult"
used in section 2 of the Act, to mean a person who is
at least 20 years old.
- The
effect of clauses 44 and 46 is to prevent individuals who are less than 20 years
old from contributing to its qualifications to
form a credit union or from
signing an application to register as a credit union. This is clearly drawing a
distinction on the basis
of age; however, it is not clear that the distinction
creates a disadvantage for any particular class.
- Although
individuals under 20 years old are treated differently, the possibility of real
disadvantage is remote. In practice it is
unlikely that a credit union with more
than 21 members would be prevented from registration for a lack of qualifying
members. Individuals
under the age of 20 would still be able to be members as
long as there are 21 members who are 20 years or older (or are charitable
entities or incorporated societies). Members under 20 years old are still
entitled to take part in the decision-making on registration
as a credit union
and they can profit from it. Also, in the event that a credit union is prevented
from registering, the disadvantage
will affect all the members of the society,
not just those below the age of 20.
- Even
if persons under 20 were to suffer disadvantage (giving rise to a prima facie
issue of discrimination), we do not consider that these provisions are
unjustified in terms section 5 of the Bill of Rights Act. The
operation of a
credit union, which involves large sums of money also belonging to other people,
is such that a level of financial
maturity amongst its membership is very
important. Setting a threshold for registration based on a minimum age provides
a level of
financial stability. People under the age of 20 are able to
participate, provided there are a minimum number of adults involved to
ensure
the financial security of the operation.
- We
therefore consider that the proposed amendments in clauses 44 and 46 of the Bill
do not raise an issue of discrimination based
on the ground of age as affirmed
in section 19(1) of the Bill of Rights Act.
CONCLUSION
- Overall,
we have formed the view that the Business Law Reform Bill appears to be
consistent with the Bill of Rights Act.
Jeff Orr Chief Legal Counsel Office of Legal Counsel
|
Stuart Beresford
Principal Adviser
Bill of Rights/Human Rights Team
|
Footnotes
1 R v Keegstra
[1990] INSC 224; [1990] 3 SCR 697,729,826
- RJR
MacDonald v Attorney-General of Canada (1995) 127 DLR (4th)1
- In
applying section 5, the Ministry of Justice has regard to the guidelines set out
by the Court of Appeal in Ministry of Transport (MOT) v Noort [1993] 3
NZLR 260 Moonen v Film and Literature Board of Review [1999] NZCA 329; [2000] 2 NZLR 9;
and Moonen v Film and Literature Board of Review [2002] NZCA 69; [2002] 2 NZLR 754 and
Supreme Court of Canada’s decision in R v Oakes (1986) 26 DLR
(4th)
In addition to the general disclaimer for all documents on this website, please
note the following: This advice was prepared to assist
the Attorney-General to
determine whether a report should be made to Parliament under s 7 of the New
Zealand Bill of Rights Act 1990
in relation to the Business Law Reform Bill. It
should not be used or acted upon for any other purpose. The advice does no more
than
assess whether the Bill complies with the minimum guarantees contained in
the New Zealand Bill of Rights Act. The release of this
advice should not be
taken to indicate that the Attorney-General agrees with all aspects of it, nor
does its release constitute a
general waiver of legal professional privilege in
respect of this or any other matter. Whilst care has been taken to ensure that
this document is an accurate reproduction of the advice provided to the
Attorney-General, neither the Ministry of Justice nor the
Crown Law Office
accepts any liability for any errors or omissions.
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