Rethinking Corporate Governance in New Zealand: the Need for an Integrated Framework in the New Securities Law Regime

Abstract

Corporate Governance refers to the manner in which organisations are directed and controlled and encompasses a ‘web of relationships’ between a company and its stakeholders. Vast strides have been taken by jurisdictions globally to entrench good governance practices in their markets – applicable mostly for listed entities with wide shareholder dispersion but equally relevant for other entities and the public sector. The importance of corporate governance in making businesses more transparent and accountable has led to the incorporation of some of corporate governance best practices into legislative frameworks in several jurisdictions or otherwise been formulated into codes and enforced within a robust regulatory framework. In contrast, the corporate governance framework in New Zealand, barring few rules for listed issuers, is relatively lax. The inquiries made into the finance company collapses have revealed that poor governance was one of the predominant factors contributing to the collapses resulting in wide scale losses to the New Zealand economy and to investors. This paper highlights the gaps in the current corporate governance framework in New Zealand and reviews the securities law reforms being implemented, focusing particularly on the governance practices introduced through these reforms. This paper submits that the efforts taken to remedy governance failures for all listed and unlisted issuers of securities, though commendable, are inadequate. Drawing from corporate governance frameworks in Australia and the United Kingdom and international best practices, this paper proposes multiple measures that can be taken to create a robust and integrated corporate governance framework to lend support to securities law reforms.