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CRF Presidents Speech at Conference Opening


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CRF Presidents Speech at Conference Opening

  1. 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 ZealandWelcome 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 inAuckland.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 GlobalFinancial Crisis had yet to cast a shadow on our horizons. Our daily lives were low tech - Ihad 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 wewere 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 resultinglegislation this was reflected:1
  2. 2. The Companies Act 1993 was described as an act to reform the law relating to companiesand 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 companyregistration 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 willknow well, needed.In 1992, before the Act was even passed, an electronic database for companies had beencreated.In 1996 the first online companies registration system in the world came into existence, inNew 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 designedfrom 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 ourbanking 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 filesand pieces of paper. We stood in a circle looking at mysterious lines of stripes. This seemedodd – bringing the supermarket into the office. But Neville could see the potential.When company incorporations were first evidenced by an electronically generated certificatesome of our staff found it hard to shed old habits. They continued to manually sign thecertificate – not trusting something that wasn’t an “original”. An electronically generateddocument didn’t seem right. Now, of course, they are everywhere.We got bolder. The introduction of the Personal Property Securities Register in 2002 wasNew Zealand’s first wholly electronic register and underpinned one of the most significantcommercial law changes of that decade2
  3. 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 inour 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 manydelegates from the Pacific here, that since 2005 the New Zealand Companies Office hasbeen privileged to have been asked to work with other nations in the Pacific, providingtechnical 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 isoften called upon to speak about innovation to support businesses, and he has firm viewsabout how the government can help with that. I know that he will not be afraid to set uschallenges and I know that you will be interested in what he has to say. He will leave us withhigh aspirations.We have to put our aspirations in context. And the sessions after lunch today examining theglobal economic outlook and then the particular challenges facing emerging economies willhelp us do so. Our government, and I’m sure we are not alone, has set a goal of deliveringbetter public services within tight financial constraints. Whether we are funded by the3
  4. 4. taxpayer or the business community or a mixture of both everyone is looking for value formoney.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 andTrustee Service. We looked with alarm at the darkening economic clouds and startedplanning for greater demand for our services in administering bankruptcies. Forecasting isnot an exact science admittedly but we felt confident that more people would have financialdifficulties. It hasn’t turned out that way – our number of bankrupts is reducing. This may bea temporary state and the numbers may change – but the lesson for me is that anythinginvolving human behaviour is hard to predict.Later this afternoon we will hear about how we compare with each other. Comparisons andbenchmarking 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 todefend New Zealand’s implementation of the law to criminalise the bribery of foreign publicofficials to the OECD which was measuring our progress. The OECD was concerned that wedid not have a record of prosecutions for this offence. We thought this showed that this sortof corruption was not taking place. The OECD thought this showed that we weren’t enforcingthe law. Who was right?Integrity is a major concern for registrars. Yes, the registration process needs to be easy andefficient. It also needs to optimise the integrity of the register. I look forward to hearing theWorld Bank later this afternoon and how the Doing Business report measurements addressthis aspect.We will end the day with the aptly named Registry score card. And here integrity is an issuethat many jurisdictions have focussed on.Tomorrow morning we focus in more depth on integrity. New Zealand’s corporateregistration system is, by international standards, low-cost and simple to use. Over the pastdecade or so we have taken pride in our consistently high World Bank ratings for ease ofstarting a business and ease of doing business. For a small and distant nation, this remainsan important aspect of attracting foreign investment.Recently, however, there has been growing evidence that there has been abuse of the NewZealand corporate structure, leveraging off the good reputation that the New Zealand4
  5. 5. corporate regulatory regime enjoys internationally. In particular, there has been evidence ofan increasing use of shell companies by offshore interests to conceal the true ownership ofproperty, mask the source of funds used to purchase property, and to maintain control ofcriminal proceeds. In addition, there are concerns that a number of New Zealand registeredcompanies are used as shell companies to carry on banking activities, avoiding theregulatory controls they would otherwise be subject to. There are also concerns regardingthe use of the Limited Partnership structure for similar purposes. It takes only a smallnumber of such cases to damage New Zealand’s international reputation.In order to address these issues, the Companies and Limited Partnerships Bill has beenintroduced into Parliament, and is now awaiting its second reading. The Bill adjusts some ofthe 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 aresident of New Zealand, or a resident director in a prescribed enforcement country. Initially,the only prescribed enforcement country will be Australia. Many other jurisdictions alreadyhave a resident director requirement, so in this respect the Bill will align New Zealand’srequirements those of such other jurisdictions as Australia, Singapore and Canada.Transparency is a key theme of a number of international initiatives, such as the workcarried out by the Financial Action Task Force. The Anti-Money Laundering and CounteringFinancing of Terrorism Act is due to come into force on 30 June 2013. It will impose anumber of due diligence requirements on New Zealand based trust and company serviceproviders. The Bill complements these transparency measures by requiring disclosure of thedate and place of birth of directors, and in cases where it is applicable, the disclosure of acompany’s ultimate holding company.Finally, the Bill enhances the powers of the Registrar in cases where the bona fides ofcompanies or limited partnerships are in doubt. The Registrar will be able to seekinformation 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 Registrarwill 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 issubject to the usual statutory protections, such as notice and objection provisions.5
  6. 6. It is hoped that the Bill will be enacted towards the end of this year, and that it will providethe NZ corporate registries system with effective tools to maintain its integrity and deal withthose 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 Memberjurisdictions. The objectives of the FATF are to set standards and promote effectiveimplementation of legal, regulatory and operational measures for combating moneylaundering, terrorist financing and other related threats to the integrity of the internationalfinancial system. The FATF is therefore a “policy-making body” which works to generate thenecessary political will to bring about national legislative and regulatory reforms in theseareas.The FATF has developed a series of Recommendations that are recognised as theinternational standard for combating of money laundering and the financing of terrorism andproliferation of weapons of mass destruction. They form the basis for a co-ordinatedresponse to these threats to the integrity of the financial system and help ensure a levelplaying 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 theyare 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, andpromotes the adoption and implementation of appropriate measures globally. Incollaboration with other international stakeholders, the FATF works to identify national-levelvulnerabilities with the aim of protecting the international financial system from misuse.When New Zealand was evaluated in 2009 by FATF the company registration system wasexamined. FATF recommended that New Zealand should broaden its requirements toensure that information on the beneficial ownership and control of legal persons is readilyavailable to the competent authorities in a timely manner. The Bill I have talked aboutaddresses this.My point, though, is that international comparison is extremely valuable, whether undertakenby an international body such as the OECD or by directly comparing amongst ourselves.6
  7. 7. Tomorrow we have the chance to compare legislative regimes when we will hear more aboutrecent 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 wehave 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 tobeing surprised along with everyone else!We then have, on Wednesday afternoon, two breakout sessions where you will have achoice of three different topics to explore.The sessions cover very important practical considerations about how we can make ourregistries work better. And this is against the background of fiscal pressure – which I’m sureaffects 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 topicmore relevant to a conference of law enforcement people, or a conference of bankers, but itis relevant to us.FATF says: Countries should take measures to prevent the misuse of legal persons formoney laundering or terrorist financing. Countries should ensure that there is adequate,accurate and timely information on the beneficial ownership and control of legal persons thatcan 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 arean important element in a very large causeThe United Nations Office on Drugs and Crime (UNODC) conducted a study to determinethe magnitude of illicit funds generated by drug trafficking and organised crimes and toinvestigate 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) beinglaundered.7
  8. 8. This falls within the widely quoted estimate by the International Monetary Fund, who statedin 1998 that the aggregate size of money laundering in the world could be somewherebetween 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 billionand USD 1.5 trillion. At the time, the lower figure was roughly equivalent to the value of thetotal 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 betweenregistries globally and their interconnection. Talking about information sharing,benchmarking and mutual assistance – that sounds very much like the Corporate RegistersForum home territory!In the afternoon the CRF holds its annual general meeting. During that time delegates areinvited to hear about some exciting new technical developments – for example mobileapplications and hear about how we have targeting our assistance to small to mediumenterprises. And there is a visit to the Companies Office.On Friday morning we hear from our sibling organisations the International Association ofCommercial Administrators and the European Commerce Registers Forum – againfocussing on all important bench marking.So, turning to the third part of this conference’s theme, what is revolutionary and where dowe go next?We have some very specific challenges in New Zealand. One of the government’s 3priorities is rebuilding Christchurch after the tragic earthquake in 2011 that killed 185 peopleand 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 allgovernment advice and support they need to run and grow their business.The goal is to, by 2017,8
  9. 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 willinteract with government.For us this is revolutionary. It needs intense co-operation between departments. It requiresmeasurable commitment to business. And it requires shifting our minds 180 degrees to seeour services from the customers’ point of view.Where can we take the law, the technology and the business processes to achieve thisgoal?And – most importantly for me, how do we ensure that the Registrar’s statutory role, theintegrity, 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 withoutthe 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 FosterMoore the Registry people and the Asian Development Bank. Both have been very generousto and supportive of this conference.I look forward to the conference and thank you for being part of it.9