The publicity-shy Todd Corporation was among businesses yesterday cheering a Government backdown from proposals that would have forced them to file financial reports for public scrutiny.
Commerce Minister Pete Hodgson yesterday said the Government had decided the loss of commercial confidentiality and shareholder privacy outweighed the public interest in full
disclosure.
It follows a review of the 1993 Financial Reporting Act by the Ministry of Economic Development, which proposed that companies with revenues greater than $20 million, and more than 50 fulltime equivalent staff, be required to file audited company accounts for public inspection. It aimed to create more transparency for creditors and employees.
Neil McKay of Todd Corporation - a business interest of the Todd family - said the company was pleased with the decision. "We see it as consistent with fundamental principles of New Zealand business, being privacy and commercial confidentiality."
Institute of Chartered Accountants chief executive Garry Muriwai said: "It's a very healthy decision for the Government to make."
He said the institute had made a sizeable submission opposing the proposal. Yesterday's decision "supports the findings that we put through that really show that the benefits of enforced disclosure are far outweighed by the additional compliance and regulatory costs".
Independent Fisheries director Mike Dormer said the decision amounted to a victory for "commercial common sense". He said the ministry's original proposals were "nonsensical" and "socialist".
"When you're a small or medium-sized company and you're competing with two or three others ... then you've got to retain any advantage you might have."
He believed large accounting firms had backed the proposal to generate "additional fees for themselves".
But Deloitte chief executive Nick Main said the firm's submission was balanced. "It said you have to look at the cost-benefit analysis, and there hasn't been enough work done to do that."
Yesterday's decision related only to companies that did not issue securities. Other aspects of the review are expected to be revealed later in the year.
- additional reporting, NZPA
