8 Sep 2011

Lawyer hopes proposed law won't hit legitimate firms

7:01 am on 8 September 2011

A commercial lawyer doubts New Zealand's gaining a reputation as an easy place to set up shell companies for fraudulent activity, and fears plans to make the incorporation process tougher will hit legitimate firms in the pocket.

In July last year the Government agreed to make changes to the law, to make it harder for New Zealand-registered companies to be used as shell companies for international fraud.

But so far that legislation hasn't been introduced to Parliament.

Minister of Commerce Simon Power says the practice of shell companies being formed for clients overseas continues, and he still plans to close loopholes in company incorporation laws.

But a public and commercial lawyer, Stephen Franks, doubts New Zealand is gaining itself a reputation as an easy place to conduct fraudulent company business.

He says during his 30 year career in commercial law he's never had a client express any view that New Zealand's company law is inferior to those in other countries.

Mr Franks says commercial reputations are built on the integrity with which rules are enforced, because sometimes even the worst jurisdictions have rules that look good.