Tougher corporate standards unveiled

Press, 31 March 1989, Page 14

Tougher corporate standards unveiled

By

PATTRICK SMELLIE

in Wellington

Mandatory accounting standards for public companies, a beefed-up Securities Commission, and tougher disclosure rules for company directors over conflicts of interest were outlined last evening by the Minister of Justice, Mr Palmer. He said the New Zealand sharemarket was too small to be self-regulating, and accused the market of disregarding the meaning of words such as “trust,” “confidence,” "integrity,” and “confidence.” The Russell Committee.of Inquiry into the Sharemarket would be reporting soon, Mr Palmer said.

“The Government will examine the recommendations of the Russell committee very carefully indeed.

“If confidence in the market is to be restored, or created, and if efficiency is to be effected, then change must occur,” he said. Mr Palmer was critical of

the sharemarket on four key points, which he said the market had to come to terms with. First, change had been happening before the sharemarket crashed. Afterwards the only thing to change had been the willingness to implement reform. Second, “the performance

of the sharemarket has been woefully inadequate in achieving core economic objectives for such a market,” Mr Palmer said. “The third truth is that it is unwise to rely on market forces alone to generate the required improvement of the over-all performance of the market.

"The fourth truth is that the nation’s welfare is not necessarily best served by unbridled competition with an absence of legal safeguards. "The New Zealand sharemarket is just too small to generate the sort of competition that might allow it to be effectively self-regulating.

“The Government will move to provide the environment within which a low-cost transfer of funds can take place,” he said. Directors’ obligations not to get into conflicts of interest would also be underlined "in an explicit manner in the future,” Mr Palmer said.