Accountants call for discussion

Press, 26 June 1989, Page 29

Accountants call for discussion

Wellington Changes to financial reporting procedures should be discussed in detail with the accounting profession, the president of the Society of Accountants, Mr Tony Frankham, says. The Minister of Justice, Mr Palmer, has the reports of the Law Commission and the Russell Committee which recommend considerable changes, and will soon have the Securities Commission report. It was essential the Minister left time for adequate consultation with those who had to work with these laws, Mr Frankham said.

After a preliminary review of the Law Commission’s Report No. 9 on Company Law Reform, issued in early June, Mr Frankham warned accountants they would have to adapt to a new regime.

The report recommended removal of the distinction between public and private companies, greatly streamlined registration procedures, with all companies being required to reregister within three years, removal of the par value of shares, permission for companies to purchase their own shares, removal of the two shareholders minimum, abolition of the compulsion to have a company secretary and a common seal and

streamlined insolvency rules. While welcoming the introduction of major new law reform, Mr Frankham warned that much of the detail would need careful review.

He supported the emphasis on director responsibility in the report but expressed concern that the essential difference between public companies and closely held companies had not been recognised. It was disappointing that the Commission had not taken the opportunity to suggest comprehensive reform of the insolvency laws, he said. The society was among the many organisations which made submissions on the earlier Law Commission Preliminary Paper No. 5. The society urged harmonisation with Australian law to facilitate closer economic relations, co-ordination of the work of the Law Commission with that of the Securities Commission, and a detailed consideration of whether the new regime should be enabling (as the Law Commission has suggested) or regulatory (as exists now in most jurisdictions, including Australia). Mr Frankham said the society was concerned that experience had shown that market forces may not be able to deal adequately with abuses arising within an enabling system.