So, National wants to re-assure us that, when they sell our assets against our will, they’ll keep 51% and control. But, um, minority shareholders have rights and private boards have to maximise profits ahead of the national interest. If they decide to sell off the dams later they can, and the Nats won’t stop them.
See the companies called Mighty River, Meridian, Genesis, and Solid Energy could still exist and be 51% government owned but everything they own of value could be hocked off if their boards decide that’s the best way to make a quick buck.
When Russel Norman asked Tony Ryall if the government would put anything in the legislation to stop the boards of part-privatised companies liquidating their assets, our power generation capacity, Ryall was …. less than convincing –
Dr Russel Norman: Will the legislation to establish these partially privatised energy companies include explicit provisions that prevent these companies from selling major New Zealand electricity-generating assets?
Hon TONY RYALL: The legislation will pretty much reflect the existing situation, where directors of State-owned enterprises not only operate under the requirements of the Companies Act but also are expected to act within the confines and requirements of listing requirements on the New Zealand stock exchange.
Dr Russel Norman: Will the legislation to establish these companies include explicit provisions that prevent those companies from selling major New Zealand electricity-generating assets?
Hon TONY RYALL: The proposed legislation does not need to include any additional features to address the concern that the member has, because the Companies Act already requires that any significant transactions would involve consultation with the shareholders. The Government is retaining 51 percent majority ownership. [so, before selling assets, the boards would have to consult with a government that’s obsessed with selling assets]
Dr Russel Norman: Is he saying that his Government will provide no legislative guarantee that major New Zealand electricity-generating assets will not fall into foreign ownership after partial privatisation?
Hon TONY RYALL: There are requirements in the Companies Act that significant transactions require the support of the majority shareholder, and there are similar requirements in respect of the listing requirements of companies. So the Government is retaining 51 percent majority control…
Dr Russel Norman: Is it his understanding that section 131 of the Companies Act requires directors to act in the best interests of the company, whereas if it is determined that it is not in the best interests of New Zealand to sell those assets, those directors will be required to act in the best interests of the company, not in the best interests of New Zealand?
Hon TONY RYALL: The directors’ acting within the best interests of the company also requires them to act within the other provisions of the Companies Act. The Companies Act, in respect of the question that the member asked in the first part of this exchange, does provide express provisions for majority shareholders to have a say in significant transactions, and the directors will be aware of that.
Hon David Parker: What percentage of the company’s assets have to be sold before it is a major transaction that requires shareholder approval?
Hon TONY RYALL: The Companies Act sets that out to be around 50 percent. [so, a board could sell, billions of dollars of hydro-dams and not even have to get the approval of the government…]
Looks like part-privatised companies would have a licence to asset strip under National.