Power seeks help on watching the watchers

Power seeks help on watching the watchers

by Paul McBeth

Oct. 19 (BusinessDesk) – Commerce Minister Simon Power is calling for submissions on how he should regulate corporate trustees after their failure to contain the finance sector collapse of the past few years.

Power wants to hear views on a Ministry of Economic Development discussion document entitled ‘Securities Trustees and Statutory Supervisors Regulations’ in his bid to tighten up laws around the supervision of corporate issuers.

The document calls for beefing up the strength of trust deeds, which held back the quality of supervision in the past, and supports placing a regulatory duty on an issuer to help trustees perform their duties.

“We suggest that there is a need for some additional prescription in trust deeds for debt issuers to ensure that trustees are able to carry out their role to the expected standard,” the MED said.

Trustees were included in an overhaul of the securities regime, which will see the formation of a super-regulator taking on supervision duties, after Companies Office Registrar Neville Harris was damning in his criticism of the trustee diligence and accountability over the finance sector’s failure.

The bill proposes to strengthen powers for the Financial Markets Authority to direct trustees and how they respond to breaches of trust deeds, and introduce a licensing regime for trustees.

The Treasury panned the proposed extra powers for the regulator in the bill’s regulatory impact statement, saying it would blur the role of trustee and the FMA.

The government’s economic policy adviser was also unhappy with the $600,000 annual price-tag, saying the costs would ultimately be borne by firms seeking to raise funds.

Parliament’s Commerce Committee reported back on the bill today, and supported the added powers. It recommended the bill be passed, though some of its members would prefer Parliament wait until a review of the Securities Act is completed.

“Flaws in the trustee companies regime were identified during the collapse of several finance companies from 2006 onwards and while this legislation will improve the regulatory framework, some of believe that it does not go far enough,” the committee report said.

(BusinessDesk) 17:50:32

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