1. Tēnā Koutou katoa. Tēnā Koutou ngā manuhiri. Nau mai. Haere mai ki Āotearoa.
Greetings to you all. Greeting to our visitors. Welcome. Welcome to New Zealand
Welcome to the 10th CRF conference.
Welcome to the executive committee and welcome to 179 delegates from 53 jurisdictions.
Our theme is: Tell, Inspire; Revolutionise.
So no pressure then.
I’ll start with the telling.
CRF was formed 10 years ago, in 2003, and New Zealand hosted the first meeting, here in
Auckland.
14 Countries attended. Some of you here today will remember that.
Let’s think back to that time. There was no Facebook. There was no Twitter and the Global
Financial Crisis had yet to cast a shadow on our horizons. Our daily lives were low tech - I
had only recently been allocated an office mobile phone.
But I want to go further back – to the early 1990s.
At that time I was working at the Law Commission on company law reform. The statute we
were reviewing was the 1955 Companies Act. In its report the Commission said:
In New Zealand, as in other economies based on private
ownership, the company form remains the major legal mechanism
for economic development. The reason for its significance
is the efficiency and flexibility of the company as a system for
organising aggregation and use of capital.
So the Commission emphasised the central importance of companies. In the resulting
legislation this was reflected:
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2. The Companies Act 1993 was described as an act to reform the law relating to companies
and in particular I want to draw your attention to two elements that the Act was to do:
 (a) to reaffirm the value of the company as a means of achieving economic
and social benefits through the aggregation of capital for productive
purposes, the spreading of economic risk, and the taking of business risks;
and
Of particular significance to us
 (b) to provide basic and adaptable requirements for the incorporation,
organisation, and operation of companies;
Basic and adaptable – in other words that new, modern ways of providing company
registration services would be supported by the legislation, not hindered by it.
That was all the encouragement that my predecessor, Neville Harris, whom some of you will
know well, needed.
In 1992, before the Act was even passed, an electronic database for companies had been
created.
In 1996 the first online companies registration system in the world came into existence, in
New Zealand. People could search online for the company information that they needed.
And this was a completely different mind-set – the registration function was being designed
from the clients’ or users’ perspective, as well as the Registrar’s.
By 1999 people could incorporate online. This seems quite normal now as we do our
banking online, renew our car registration, buy movie tickets or arrange holidays.
Back then it was revolutionary. I can remember the early experiments with bar coding files
and pieces of paper. We stood in a circle looking at mysterious lines of stripes. This seemed
odd – bringing the supermarket into the office. But Neville could see the potential.
When company incorporations were first evidenced by an electronically generated certificate
some of our staff found it hard to shed old habits. They continued to manually sign the
certificate – not trusting something that wasn’t an “original”. An electronically generated
document didn’t seem right. Now, of course, they are everywhere.
We got bolder. The introduction of the Personal Property Securities Register in 2002 was
New Zealand’s first wholly electronic register and underpinned one of the most significant
commercial law changes of that decade
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3. Then in 2003 CRF held its first conference.
Here is how we describe ourselves:
The Corporate Registers Forum (CRF) is an international not
for profit organisation for administrators of corporate and
securities registers.
Our aim is to provide delegates with the opportunity to review the latest
developments in corporate business registers internationally and exchange
experiences and information on the present and future operation of corporate
business registration systems.
The benefit of working together is immeasurable. We are the only companies registrars in
our own jurisdictions – a sometimes lonely role. Here we are all colleagues.
And in the spirit of working with colleagues I want to mention, because I know we have many
delegates from the Pacific here, that since 2005 the New Zealand Companies Office has
been privileged to have been asked to work with other nations in the Pacific, providing
technical assistance to develop and implement online business registries systems.
Personally I find it inspiring that registries can work together in this way.
What else is inspiring?
I think the next 3 and a half days.
Our keynote speaker, Rod Drury, is an inspirational force in the business community. Rod is
often called upon to speak about innovation to support businesses, and he has firm views
about how the government can help with that. I know that he will not be afraid to set us
challenges and I know that you will be interested in what he has to say. He will leave us with
high aspirations.
We have to put our aspirations in context. And the sessions after lunch today examining the
global economic outlook and then the particular challenges facing emerging economies will
help us do so. Our government, and I’m sure we are not alone, has set a goal of delivering
better public services within tight financial constraints. Whether we are funded by the
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4. taxpayer or the business community or a mixture of both everyone is looking for value for
money.
Looking to the future, as these presentations will do, is necessary but also difficult.
Sometimes things don’t turn out as expected. I previously worked for the Insolvency and
Trustee Service. We looked with alarm at the darkening economic clouds and started
planning for greater demand for our services in administering bankruptcies. Forecasting is
not an exact science admittedly but we felt confident that more people would have financial
difficulties. It hasn’t turned out that way – our number of bankrupts is reducing. This may be
a temporary state and the numbers may change – but the lesson for me is that anything
involving human behaviour is hard to predict.
Later this afternoon we will hear about how we compare with each other. Comparisons and
benchmarking are common (and satisfy the competitiveness in some) but they are complex.
Some factors are harder to measure, such as integrity. In a previous job I held I had to
defend New Zealand’s implementation of the law to criminalise the bribery of foreign public
officials to the OECD which was measuring our progress. The OECD was concerned that we
did not have a record of prosecutions for this offence. We thought this showed that this sort
of corruption was not taking place. The OECD thought this showed that we weren’t enforcing
the law. Who was right?
Integrity is a major concern for registrars. Yes, the registration process needs to be easy and
efficient. It also needs to optimise the integrity of the register. I look forward to hearing the
World Bank later this afternoon and how the Doing Business report measurements address
this aspect.
We will end the day with the aptly named Registry score card. And here integrity is an issue
that many jurisdictions have focussed on.
Tomorrow morning we focus in more depth on integrity. New Zealand’s corporate
registration system is, by international standards, low-cost and simple to use. Over the past
decade or so we have taken pride in our consistently high World Bank ratings for ease of
starting a business and ease of doing business. For a small and distant nation, this remains
an important aspect of attracting foreign investment.
Recently, however, there has been growing evidence that there has been abuse of the New
Zealand corporate structure, leveraging off the good reputation that the New Zealand
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5. corporate regulatory regime enjoys internationally. In particular, there has been evidence of
an increasing use of shell companies by offshore interests to conceal the true ownership of
property, mask the source of funds used to purchase property, and to maintain control of
criminal proceeds. In addition, there are concerns that a number of New Zealand registered
companies are used as shell companies to carry on banking activities, avoiding the
regulatory controls they would otherwise be subject to. There are also concerns regarding
the use of the Limited Partnership structure for similar purposes. It takes only a small
number of such cases to damage New Zealand’s international reputation.
In order to address these issues, the Companies and Limited Partnerships Bill has been
introduced into Parliament, and is now awaiting its second reading. The Bill adjusts some of
the registration settings in the Companies Act in three main areas:
 Accountability
 Transparency
 Enforcement.
In terms of accountability, the Bill requires companies to have a director who is either a
resident of New Zealand, or a resident director in a prescribed enforcement country. Initially,
the only prescribed enforcement country will be Australia. Many other jurisdictions already
have a resident director requirement, so in this respect the Bill will align New Zealand’s
requirements those of such other jurisdictions as Australia, Singapore and Canada.
Transparency is a key theme of a number of international initiatives, such as the work
carried out by the Financial Action Task Force. The Anti-Money Laundering and Countering
Financing of Terrorism Act is due to come into force on 30 June 2013. It will impose a
number of due diligence requirements on New Zealand based trust and company service
providers. The Bill complements these transparency measures by requiring disclosure of the
date and place of birth of directors, and in cases where it is applicable, the disclosure of a
company’s ultimate holding company.
Finally, the Bill enhances the powers of the Registrar in cases where the bona fides of
companies or limited partnerships are in doubt. The Registrar will be able to seek
information on the ultimate ownership and control of a company or limited partnership.
Where the entity fails to provide the Registrar with the requested information, the Registrar
will also be given powers to insert a note on the register to alert third parties to this failure;
and ultimately, the power to remove the entity from the register. The removal power is
subject to the usual statutory protections, such as notice and objection provisions.
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6. It is hoped that the Bill will be enacted towards the end of this year, and that it will provide
the NZ corporate registries system with effective tools to maintain its integrity and deal with
those who seek to take unfair advantage of it.
I mentioned the OECD hosted Financial Action Task Force.
This inter-governmental body was established in 1989 by the Ministers of its Member
jurisdictions. The objectives of the FATF are to set standards and promote effective
implementation of legal, regulatory and operational measures for combating money
laundering, terrorist financing and other related threats to the integrity of the international
financial system. The FATF is therefore a “policy-making body” which works to generate the
necessary political will to bring about national legislative and regulatory reforms in these
areas.
The FATF has developed a series of Recommendations that are recognised as the
international standard for combating of money laundering and the financing of terrorism and
proliferation of weapons of mass destruction. They form the basis for a co-ordinated
response to these threats to the integrity of the financial system and help ensure a level
playing field. First issued in 1990, the FATF Recommendations were revised in 1996, 2001,
2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they
are intended to be of universal application.
The FATF monitors the progress of its members in implementing necessary measures,
reviews money laundering and terrorist financing techniques and counter-measures, and
promotes the adoption and implementation of appropriate measures globally. In
collaboration with other international stakeholders, the FATF works to identify national-level
vulnerabilities with the aim of protecting the international financial system from misuse.
When New Zealand was evaluated in 2009 by FATF the company registration system was
examined. FATF recommended that New Zealand should broaden its requirements to
ensure that information on the beneficial ownership and control of legal persons is readily
available to the competent authorities in a timely manner. The Bill I have talked about
addresses this.
My point, though, is that international comparison is extremely valuable, whether undertaken
by an international body such as the OECD or by directly comparing amongst ourselves.
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7. Tomorrow we have the chance to compare legislative regimes when we will hear more about
recent law reforms in Hong Kong, Singapore and New Zealand.
The law is only part of the story however. What happens in practice? After morning tea we
have case studies – bringing to life the challenges that maintaining registry integrity brings –
from New Zealand, Hong Kong and Mauritius.
After lunch we have Corporate Register Beat. I know not what this is and look forward to
being surprised along with everyone else!
We then have, on Wednesday afternoon, two breakout sessions where you will have a
choice of three different topics to explore.
The sessions cover very important practical considerations about how we can make our
registries work better. And this is against the background of fiscal pressure – which I’m sure
affects us all. We must continue to find efficiencies – and technology is fundamental to that.
Technology case studies will form the last session on Wednesday afternoon.
On Thursday morning we will hear about anti-money laundering. This may seem like a topic
more relevant to a conference of law enforcement people, or a conference of bankers, but it
is relevant to us.
FATF says: Countries should take measures to prevent the misuse of legal persons for
money laundering or terrorist financing. Countries should ensure that there is adequate,
accurate and timely information on the beneficial ownership and control of legal persons that
can be obtained or accessed in a timely fashion by competent authorities.
Of course, as you all know, information about legal persons is held on our registers. We are
an important element in a very large cause
The United Nations Office on Drugs and Crime (UNODC) conducted a study to determine
the magnitude of illicit funds generated by drug trafficking and organised crimes and to
investigate to what extent these funds are laundered. The report estimates that in 2009,
criminal proceeds amounted to 3.6% of global GDP, with 2.7% (or USD 1.6 trillion) being
laundered.
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8. This falls within the widely quoted estimate by the International Monetary Fund, who stated
in 1998 that the aggregate size of money laundering in the world could be somewhere
between two and five per cent of the world’s gross domestic product. Using 1998 statistics,
these percentages would indicate that money laundering ranged between USD 590 billion
and USD 1.5 trillion. At the time, the lower figure was roughly equivalent to the value of the
total output of an economy the size of Spain.
Obviously we need to play our part.
Later on Thursday morning we hear about the EU approach to data exchange between
registries globally and their interconnection. Talking about information sharing,
benchmarking and mutual assistance – that sounds very much like the Corporate Registers
Forum home territory!
In the afternoon the CRF holds its annual general meeting. During that time delegates are
invited to hear about some exciting new technical developments – for example mobile
applications and hear about how we have targeting our assistance to small to medium
enterprises. And there is a visit to the Companies Office.
On Friday morning we hear from our sibling organisations the International Association of
Commercial Administrators and the European Commerce Registers Forum – again
focussing on all important bench marking.
So, turning to the third part of this conference’s theme, what is revolutionary and where do
we go next?
We have some very specific challenges in New Zealand. One of the government’s 3
priorities is rebuilding Christchurch after the tragic earthquake in 2011 that killed 185 people
and destroyed the central business district.
Another goal is to build a more competitive and productive economy.
To achieve that goal the government has identified a goal that I think is revolutionary.
Called Result 9, it is that New Zealand businesses have a one-stop online shop for all
government advice and support they need to run and grow their business.
The goal is to, by 2017,
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9. a) to have a 25% reduction in the cost of dealing with government by reducing the effort
required to work with agencies and
b) key performance ratings for government services to business are to match leading
private sector firms.
Result area 9 is about fundamentally changing the way that New Zealand businesses will
interact with government.
For us this is revolutionary. It needs intense co-operation between departments. It requires
measurable commitment to business. And it requires shifting our minds 180 degrees to see
our services from the customers’ point of view.
Where can we take the law, the technology and the business processes to achieve this
goal?
And – most importantly for me, how do we ensure that the Registrar’s statutory role, the
integrity, the protection, remains?
I’m confident we can do this. As I said at the beginning, we were revolutionary in the 1990s.
We will be again. The question is what will our revolution look like?
I look forward to discussing these issues with you over the next few days.
We have a formal programme of presentations, but a conference is not a conference without
the delegates. It is your discussions before, during, in and around, bilateral and multilateral,
which will make this worthwhile.
For helping us with our telling, inspiring and revolutionising I thank our sponsors Foster
Moore the Registry people and the Asian Development Bank. Both have been very generous
to and supportive of this conference.
I look forward to the conference and thank you for being part of it.
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