Large private companies escape reporting requirements

Large, non-public companies will not have to file their financial reports like their listed counterparts, in a new Government decision.

Commerce Minister Pete Hodgson said it had been decided that the public interest in full disclosure was outweighed by the loss of commercial confidentiality and shareholder privacy.

The decision follows a review of the 1993 Financial Reporting Act by the Ministry of Economic Development.

The ministry put forward two options: requiring companies of a prescribed scale to disclose their accounts to the Registrar of Companies, and allowing shareholders to opt out of the recording requirement.

Mr Hodgson said the decision related only to companies that were not issuers of securities.

Other aspects of the review are expected to be revealed later in the year.

The decision not to make private companies open their books to the public for the first time has delighted some of the country's biggest businesses and richest families.

Individuals in the private business community condemned it as "nosy parker" legislation .

If successful, it would have meant limited liability companies with revenues greater than $20 million and more than 50 full-time equivalent staff would have to file audited company accounts.

The ministry said the reforms were aimed at increasing transparency for creditors and employees of large businesses, as well as bringing New Zealand into line with international accounting practices.

But Steve Anderson, chief executive of co- operative food giant Foodstuffs South Island, said he was "absolutely stoked" to hear the idea of full disclosure of accounts had been dropped.

"We put a lot of time and effort into constructively discussing the issues with the Labour Government and we are glad they have listened.

"We just hoped the saw the logic behind our arguments. It doesn't make sense to gift our competitors commercially sensitive information that they don't have to provide."

Foodstuffs' supermarkets, which include Pak n' Save and New World brands, compete with Australia's Woolworths.

Foodstuffs argued the requirements would have meant Woolworths would have access to individual store accounts, but would not have had to file the same information itself.

The discussion paper attracted 172 submissions with large scale opposition.

Christchurch chartered accountant Sue Sheldon said the timing of the announcement before the general election was "interesting".

Ms Sheldon had argued against the reforms on behalf of a number of wealthy families and large businesses.

She said filing public accounts had both privacy and security implications for wealthy families, would have no economic benefit and could harm the competitiveness of private businesses.

"I think Government ministers and officials have listened to the serious concerns if the business community and the accounting profession."

"It's a very good outcome."

National finance spokesman John Key said the reform had been a favour to the Government's "union mates" who wanted a look at company accounts to help with wage claims.

"It's amazing what an election does to focus the minds on poor policies. They've shown the colour of their money though -- it'll probably be back on the books later."

- nzpa