Johnston Lawrence

Business Briefs: November 2008

2 November 2008. by NZ Law Releases , tagged with Business Law | NZ LAW Releases

No discrimination allowed to KiwiSaver employees

The amendment last month to the Employment Relations Act 2000, by virtue of the Employment Relations (Breaks and Infant Feeding) Amendment Bill 2008, has been the source of much public debate. Employers can no longer pay employee A less than employee B just because employee A is a KiwiSaver member.

The amendment applies to employment agreements entered into after 2 September 2008 or any variation to an employment agreement made after that date (such as a pay increase or a change to a term or condition). Therefore employers who (following enabling legislation at the end of last year) implemented the ‘total remuneration approach’ to their staff remuneration arrangements, will be affected if they make any change to employment agreements. The total remuneration approach is where the employer factors in compulsory employer contributions for KiwiSaver members into an employee’s total remuneration package.

Any employer who has adopted the total remuneration approach should take care when amending employment agreements or entering into new ones to avoid being caught out by the amendment. Employees may now bring a personal grievance against their employer if they can prove they have been adversely affected by being paid less than other non-KiwiSaver members.

Employers may also be in for more KiwiSaver changes with the National Party’s announcement of its KiwiSaver policy if it becomes the government in November.

Financial Advisers Act 2008

The Financial Advisers Act 2008 was recently enacted and will come into effect on dates to be appointed by Order in Council. Under the Act, the extent of a financial adviser’s obligations (including conduct and disclosure obligations) will depend to a large degree on the complexity of products in relation to which the financial adviser provides advice on or makes investment transactions. Less complex products such as consumer credit contracts or some insurance products and bank term deposits are classified as ‘category 2 products’. More complex products such as securities (other than category 2 products) or futures contracts are classified as ‘category 1 products’.

Individuals who are both authorised by the Securities Commission under the Act and registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 may provide financial advice or make investment transactions in the course of business in relation to both category 1 and category 2 products. These people may also provide financial planning services. Individuals who are registered but not authorised may provide financial advice or make investment transactions in the course of business in relation to category 2 products.

Employees or agents (whether registered in their own name or not) of an entity to which the Securities Commission has granted ‘qualifying financial entity’ (QFE) status may, in the course of the QFE’s business, provide financial advice or make investment transactions in relation to category 2 products. Employees of a QFE may also give financial advice, or make investment transactions in relation to category 1 products of which the QFE is the issuer.

The Act also establishes the office of Commissioner for Financial Advisers who is required to be a member of the Securities Commission and will have primary responsibility for the oversight of financial advisers under the Act (a significant change from the ‘co-regulatory’ model set out in the original Financial Advisers Bill).

Companies (Minority Buy-out Rights) Amendment Act 2008

The Companies (Minority Buy-out Rights) Amendment Act 2008 received royal assent on 16 September 2008 and also came into force on that date. This Act amends the Companies Act 1993 and is intended to help clarify the minority buy-out provisions where dissenting minority shareholders have opposed certain fundamental changes to a company that have been passed by a special resolution. In particular, the Act clarifies how shares are to be valued in a minority buy-out situation, including the date at which the shares are to be valued. If the value of shares cannot be agreed by the company and a dissenting minority shareholder, the price is to be determined by arbitration. The clarification provided by this Act is welcomed.

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