New Zealand Law Society - Select committee recommends Venture Capital Fund Bill

Select committee recommends Venture Capital Fund Bill

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The parliamentary Finance and Expenditure Committee has reported on the Venture Capital Fund Bill and recommends that it be passed with amendments.

The bill was introduced on 22 August 2019. It creates a Venture Capital Fund, which would be owned by the Crown and managed by the Guardians of New Zealand Superannuation (the Guardians). The purpose is to increase the venture capital available to New Zealand’s start-up companies and to develop New Zealand’s venture capital markets to function more effectively.

The committee considered 13 submissions and heard oral evidence from 8 submitters.

Part 1 of the bill amends the New Zealand Superannuation and Retirement Income Act 2001.

Part 2 of the bill establishes the Venture Capital Fund and provides for the Guardians to manage and administer it.

Proposed amendments

The committee considers that the bill should be more explicit about what is meant by “developing New Zealand’s venture capital markets”. Part of the Fund’s purpose is to encourage the developments of more self-sustaining private venture capital funds, so therefore clause 24 should be amended by inserting clause24(b)(iii) to include a reference to this in the purpose.

Some submitters were concerned that the limited scope of directions that the policy statement could contain (clause 35) could lead to investment in less diverse and less inclusive ventures. The committee recommends amending clause 35 so that the policy statement could include the Government’s commitment to an inclusive economy in the list of possible directions a policy statement could contain.

As introduced the bill would require the Guardians to prepare an annual report (clause 56 (1)), however the Minister would have no power of direction over the annual report. This was intended to preserve the Guardians’ independence when operating the Fund. The committee understands that there may be a need to ensure that annual reporting on the Fund provides relevant data to support capability development in the venture capital market. Because of this the committee recommends clause 56 should be amended to give the Minister the power to direct the Guardians to report on additional matters in the annual report.

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