Institute of Directors welcomes law review by Hamish Rutherford. Dom Post. Business section C1. Sept. 16, 2010. C1
The Institute of Directors says it is not fazed by new powers being proposed for the new financial super regulator and welcomes a comprehensive review of financial market laws.
Commerce Minister Simon Power tabled legislation in Parliament on Tuesday which would give the Financial Markets Authority, set to come into being next year, wide-ranging powers never available to the Securities Commission.
These include the ability to take action against directors they believe to have acted illegally in the name of public interest, as well as the power to seek search warrants to raid offices and seize documents.
William Whittaker, the IOD’s research and policy manager, said the organisation recognised that there appeared to be gaps in the regulatory framework which needed to be clarified and closed.
On the FMA’s proposed powers, Mr Whittaker said the organisation needed to have the teeth to do the job properly. It had not been surprised by the proposals, although it was important that the FMA did not stifle legitimate company risk-taking or put people off becoming directors.
“Hopefully it won’t be so draconian that it results in boards and directors taking a more risk-averse approach.”
Originally proposed as part of the review of the Securities Act, the ability of the FMA to take civil action against directors as a deterrent to others was fast-tracked at the request of the regulator’s establishment board.
Shareholders’ Association chairman John Hawkins said the organisation fully supported the new powers, having lobbied for the FMA to have the power to take action against directors for the public good.