Government to Ease Personal Liability Rules for Company Directors to Boost NZX Listings

• The government aims to reduce personal liability for company directors to encourage stock listings.
• cplans to simplify compliance and ease investment for mid-sized businesses.
• The changes include removing financial forecast obligations and climate-related disclosure liability for directors.

The government is set to reduce personal liability for company directors to encourage more companies to list on the New Zealand Stock Exchange (NZX). Commerce Minister Andrew Bayly revealed plans to scrap certain regulatory requirements, including future earnings forecasts, to make it easier for businesses to attract investment and expand. Bayly highlighted that simplifying the rules for mid-sized companies would foster growth in the economy.

The Minister also hinted at removing directors' personal liability related to climate-related disclosures. These changes aim to create a more appealing environment for companies to go public, as many have been deterred by the high costs and risks associated with current regulations.

"Company directors are a crucial part of the puzzle when it comes to growing the economy and creating wealth for New Zealanders," Bayly said. He believes the "huge layering of personal liabilities" has discouraged people from taking directorship roles, affecting the overall economy. By shifting liability from individual directors to companies, the government hopes to strike a balance between transparency and attracting investment.

The plan to ease listing rules on the NZX includes removing prospective financial reporting requirements, which Bayly described as costly and risky. Compliance costs and regulations have made it less attractive for businesses to list on the stock market, with many opting for alternative sources of capital, such as private equity.

Simplicity KiwiSaver CEO, Sam Stubbs, acknowledged the current difficulty of listing on the NZX but cautioned against making the process too easy, as it could lead to less credible companies seeking public investment. Bayly assured that the changes would still maintain necessary safeguards while making NZX listings more viable.

Bayly also expressed interest in increasing KiwiSaver investments in New Zealand companies to grow the available pool of money for local businesses. However, no plans are in place to make these changes compulsory.