Non-issuer companies escape disclosure demand

Commerce Minister Simon Power. Photo / Mark Mitchell

The Government has decided that large, non-issuer companies will not be required to file their financial statements with the Registrar of Companies.

The question of whether non-issuers should file financial statements was raised in a Ministry of Economic Development discussion document last year. Submissions on the document closed on January 29.

Commerce Minister Simon Power yesterday said arguments against introducing the requirement - such as respect for privacy and commercially sensitive information - were underpinned by the "core values" of the Government.

"It is my view that the arguments against filing outweigh the arguments for filing, and the status quo should remain.

"I have decided to make an early announcement on this issue to put business concern to rest," he said.

A spokesman for the Ministry of Commerce said several hundred New Zealand companies might have been affected had the requirement been implemented.

Council of Trade Unions economist Bill Rosenberg said the Government's decision was a "backward step".

He said it was very difficult to get hold of information about non-issuers, and employees and local communities that depended on large companies would benefit from having financial information available.

"Occasionally, if they are a transnational, you'll get some information from the reports, but frequently that's not in a form that allows you to know anything about their New Zealand operations," Rosenberg said.

New Zealand companies in which the majority shareholder is foreign are required to file financial statements.

Business NZ chief executive Phil O'Reilly welcomed the decision.

While there were valid arguments for and against private companies filing financial statements, yesterday's decision was "entirely appropriate".

O'Reilly said the public's need for information would not be significant enough to compromise privacy and commercially sensitive information.

"Companies that are held privately ... they might carry out their affairs in a particular way and they might have had to change those significantly if they were going to have to file publicly," he said.

Business commentator Arthur Lim said the Government had missed out on an opportunity to bring some transparency into the private business realm.

He thought that, after recent finance company collapses, the Government would have welcomed more disclosure in business.

Non-issuers did not obtain funding through debt or equity, but Lim said "small players" did provide them with credit, and would benefit from knowledge of how the business was doing.

THE RULES

A company is a non-issuer if:
* It does not seek to obtain funding through debt or equity instruments that are offered to the public.
* It does not take deposits from the public and hold assets for broad groups of outsiders.

A company is defined as "large" if it exceeds two or more of the following thresholds:
* Annual revenue of $20 million.
* Total assets of $10 million.
* 50 full-time equivalent employees.