Regulatory Impact Statement – Offences for the New Zealand
Business Number Bill
Agency Disclosure Statement
This Regulatory Impact Statement (RIS) has been prepared by the Ministry of Business,
Innovation and Employment (MBIE). It analyses options for offences to be included in the
New Zealand Business Number Bill.
The major policy issues associated with the NZBN Bill were decided by the Government in
February and May 2014. The only material issue that remains to be considered relates to
offences and penalties. This means that the options are largely shaped by the earlier policy
decisions.
There are only limited constraints on the analysis contained in this RIS even though the New
Zealand Business Number is not in operation, for two main reasons. First, chapter 12 of the
Legislation Advisory Committee guidelines provides a suitable framework to evaluate the
need for and the appropriate form of offence and penalty provisions. Second, other Acts (e.g.
the Companies Act 1993 and Passports Act 1992) include offence and penalty provisions in
relation to the same or similar forms of undesirable conduct that are of concern under the
NZBN Bill.
We have not used any quantitative data as a basis for our conclusions. The main purpose of
including offence provisions is to promote general deterrence. However, we cannot obtain
reliable information about that matter by considering the readily available quantitative data
(notably, the number of complaints received or prosecutions taken under the Companies Act
in relation to the same and similar offence provisions). Those data relate to the undesirable
conduct that wasn’t deterred by the offence provisions, not the volume that was deterred. In
addition, if society regards a certain form of conduct as blameworthy, then it is of relatively
little importance whether that conduct would occur frequently or infrequently, absent an
offence provision.
Iain Southall
Manager, Corporate Law
Commercial and Consumer Environment
9 February 2015
Executive summary
1. The New Zealand Business Number (NZBN) system will provide a unique 13 digit identifier for
businesses. The main objective of the system is to reduce the cost for businesses interacting
with the government and other businesses. This, in turn means that the NZBN will need to
facilitate efficient and accurate interactions.
2. Several forms of conduct can seriously undermine this goal, so it is important to ensure that
there are well-targeted offence provisions, along with penalty provisions that will promote
general deterrence. Most forms of potentially undesirable conduct associated with the NZBN
are already unlawful under the Crimes Act 1961, Fair Trading Act 1993 and Privacy Act 1993.
Only two additional offence provisions are required to supplement the prohibitions in those
Acts:

knowingly using an incorrect number, without reasonable excuse, as if it were genuine

knowingly making a materially false or misleading statement to the Registrar of NZBNs.
3. We conclude that both forms of conduct should be criminal offences because they could cause
serious harm to other individuals and the wider collective interests of society. Criminalisation
should also promote general deterrence.
Background
The NZBN will reduce business costs
4. The NZBN is an element of the Government’s Result Area 9, which is to provide a one-stop
online shop for all government advice and support New Zealand businesses need to run and
grow their business. The purpose of the NZBN is to reduce costs for businesses when
interacting with government agencies and other businesses. It will achieve this over time by
providing a central register of about 25 categories of information that are routinely requested
from businesses by different government agencies. Under the NZBN, businesses will only need
to provide or update this information once rather than advising each agency. This includes
such information as an entity’s name, addresses and contact information.
The NZBN must be trusted
5. Government agencies and the business sector have stressed the importance of the NZBN
register being a trusted source of data. If it is not, then users will question its reliability. This
situation could arise as a result of a small number of serious cases of misuse, multiple
instances of less serious misuse, or both. This, in turn, is likely to discourage businesses from
voluntarily adopting the NZBN. In addition, the misuse of the NZBN system or data in it could
harm the reputation of individual entities and their owners or members.
6. While NZBN systems and processes will be designed to deliver a high level of integrity and
therefore support trust, by its nature the system will involve interactions with hundreds of
thousands of businesses, many of whom will be providing information either to the NZBN
Registrar or to the wider public which cannot easily be independently verified.
Status quo and problem definition
Status quo: an NZBN Bill without offence provisions
7. The Government has decided to introduce the NZBN as a unique identifier for business
entities. Although Cabinet made a number of decisions about the policy of the Bill, it did not
make any decisions on offence provisions. However, it did agree to include placeholder
provisions in an exposure draft of the NZBN Bill, 1 which was released for public comment over
August and September 2014.
1
http://www.mbie.govt.nz/about-us/consultation/nzbn-bill-exposure-draft/Exposure-draft.pdf
8. For the purposes of this RIS, the status quo is therefore considered to be the exposure draft of
the NZBN Bill, but without the inclusion of any offence provisions.
Status quo: existing offences
9. Three Acts include provisions that are aimed at dealing with many of the circumstances where
conduct may conflict with the objectives of the NZBN Bill as outlined in paragraphs 4-6. These
Acts and the relevant provisions are outlined below.
Crimes Act 1961
10. The Crimes Act includes three offences involving computers:

s 249 criminalises dishonest or deceptive access to a computer system in order to obtain
any property, privilege, service pecuniary advantage, benefit or valuable consideration; or
cause a loss to another person.

s 250 criminalises the intentional or reckless destruction, damage, alteration, modification
or interference with a computer system, data or software.

s 251 criminalises making, selling, distributing or possessing software for the purposes of
committing a crime.
11. Ss 249 and 250 address the most serious forms of potential misconduct in connection with the
NZBN register. The maximum punishments for these offences range from five to ten years
imprisonment. No maximum fines are specified. However, courts can impose fines for
contraventions of these provisions under s 10A of the Sentencing Act 2002.
12. Depending on the circumstances, several other offence provisions in the Crimes Act could
apply, including crimes against personal privacy and crimes involving deceit, forgery, and
making false statements or declarations.
Fair Trading Act 1986
13. S 13(f) of the Fair Trading Act states that no person shall, in trade, in connection with the
supply or possible supply of goods or services or with the promotion by any means of the
supply or use of goods or services make a false or misleading representation that a person has
any sponsorship, approval, endorsement or affiliation. The maximum fines are $200,000 for an
individual and $600,000 for a body corporate.
14. A representation by a trader that an NZBN is an endorsement by the Government will fall afoul
of this prohibition.
Privacy Act 1993
15. The Privacy Act controls how agencies collect, use, disclose, store and give access to personal
information. 12 privacy principles are at the heart of the Act. They cover the collection of
personal information, storage and security of personal information, requests for access to and
correction of personal information, accuracy of personal information, retention of personal
information, use and disclosure of personal information and using unique identifiers. The Act
also includes four principles relating to personal information held on public registers.
16. There is no public enforcement of the Privacy Act. Rather, the principles are privately enforced
by individuals seeking remedies from the Human Rights Review Tribunal comprising
declarations, injunctive orders, compensation, other relief the Tribunal thinks fit, and costs.
Summary of offences in existing Acts
17. The offence and penalty provisions summarised in paragraphs 10-16 are sufficient to generally
deter most of the conduct that would undermine the objectives of the NZBN as outlined in
paragraphs 4-6. For example, the Crimes Act provisions address hacking of the NZBN register
and the private remedies provisions in the Privacy Act regime provide a sufficient level of
protection for individuals’ privacy. The Fair Trading Act goes some way towards dealing with
concerns about incorrect information in relation to the register.
Problem definition
18. The main problem is that the goals of the NZBN system may be undermined if it is not
supported by any offence provisions in addition to those appearing in the Crimes Act and Fair
Trading Act and the remedy provisions in the Privacy Act. Two forms of potentially
blameworthy conduct are not addressed by these Acts:
a. using an incorrect number
b. making false or misleading statements.
19. The potential consequences of such conduct include:
a. Misuse of numbers for identity fraud purposes
b. Reducing the reliability of information appearing on the Register, thereby reducing
public trust in and use of the register.
Objectives
20. The objectives are:
a. To promote the integrity of the NZBN through the enactment of an effective offence and
penalty system
b. To avoid, to the extent possible, creating offences that overlap with existing offences
under the general law
c. To only capture conduct that warrants the intervention of criminal law
d. To set penalties at levels which are consistent with the penalties for comparable
conduct under existing offence provisions.
21. The criterion we have used in relation to maximum penalties is comparability with the maxima
under other enactments for the same or similar conduct.
Options
22. The options need to be considered in two stages. The first step is to consider the nature of the
offence. The second is to determine the maximum penalty for a contravention of the offence
provision.
The nature of the offence
23. Chapter 12 of the Legislation Advisory Committee’s guidelines identify the following options for
offence provisions:
A. Criminal offences that contain a mental element (which means that a guilty mind must
be proven)
B. Strict liability offences (i.e. criminal offences that do not contain a mental element)
C. Infringement offences.
24. The criteria for assessing the options in the LAC guidelines are:
i.
whether the conduct is blameworthy and sufficiently serious to warrant punishment
ii.
whether criminalisation will promote general deterrence
iii.
whether there is no need to prove a mental element, but there is a defence if the
defendant proves total absence of fault
iv.
whether there are offences of strict liability which are committed in large numbers,
involve misconduct of relatively minor concern, and involve acts or omissions that
involve straightforward issues of fact.
25. If criteria (i) and (ii) apply, then Option A will be appropriate. If criterion (iii) applies, then Option
B is appropriate. If criterion (iv) applies, then Option C is appropriate.
26. An offence relating to the use of an incorrect number needs to focus on conduct that is serious
enough to warrant the intervention of the criminal law. We have identified two options:
a. All uses of a number that are either a false number or the NZBN of another business
b. Uses of a false number or another business’s NZBN which involve identity fraud.
27. The options in relation to making false or misleading statements are defined by existing offence
provisions in several other Acts that provide for business registers. There are minor
differences in the wordings but they are much the same in substance: to prohibit knowingly
making a materially false or misleading statement with respect to a document required for the
purposes of the Act. We consider that this is the only option.
Maximum penalties
28. The second step is to determine maximum penalties that are proportionate to offence
provisions in other enactments, particularly those that relate to similar forms of conduct in
association with a public business register.
Breaches of privacy
29. We also considered the possibility of offence provisions for NZBN-related privacy breaches.
However, we concluded that this is not a viable option because this approach would be
fundamentally inconsistent with the scheme of the Privacy Act. Enforcement under the Privacy
Act is premised on private parties seeking civil remedies from the Human Rights Review
Tribunal. There would need to be compelling reasons to depart from that scheme in relation to
the NZBN system, but there are none.
Regulatory impact analysis
Using an incorrect number
The nature of the offence
30. As discussed in paragraph 26, the choice is between a wider of a narrower offence provision in
relation to using a number that is another business’s NZBN and using a number that is not an
NZBN. We have concluded that the narrower option of linking the use to identity fraud is
appropriate for the following reasons:
a. The Crimes Act already deals with such conduct where the person intended to use the
number to obtain a gain, or impose a loss on another person
b. We have not been able to identify a form of use outside identity fraud that is sufficient to
justify including an offence.
31. Applying the criteria in paragraph 24, it is clear that strict liability and infringement offences are
unsuitable. Bearing in mind that NZBNs will have 13 digits, it will be relatively easy to
inadvertently use an incorrect number, most commonly by transposing digits.
32. Furthermore, inadvertent uses cannot have any of the undesirable consequences that we are
seeking to guard against, as outlined in paragraph 19. It would be wholly inappropriate to have
offence provisions that could capture behaviour that is both inadvertent and lacks seriousness.
33. We conclude that it is essential to include a mental element in the offence provision. The
offence should be limited to the circumstances where a person knowingly uses an incorrect
number.
34. Section 29A(1)(b) of the Passports Act 1992 includes an offence provision in relation to forged
or false New Zealand travel documents. The forgery element is not needed in relation to an
NZBN because there is nothing ‘concrete’ to be forged. However, the NZBN Bill provision
could be closely modelled on the Passports Act provision in relation to the use of a false
number for identity fraud purposes.
Maximum penalties
35. The maximum penalty under the Passports Act provision is ten years’ imprisonment, a fine of
$250,000 or both. We consider that this is excessive in an NZBN context, given the greater
risks associated with passport fraud (i.e., threats to national security and New Zealand’s
international reputation) and that there will be no forgery element. We instead consider two
lesser options being a maximum prison sentence of three years or a maximum fine only.
36. We favour three years’ imprisonment for the following reasons:
a. Identity fraud can have serious consequences, such as causing substantial harm to the
reputation of another a business. The courts should have the discretion to impose a
prison sentence in the worst cases.
b. If imprisonment is specified, then the options of home detention, community service and
fines or reparation are also available to the courts under the hierarchy of sentences and
orders in section 10A of the Sentencing Act 2002. However, only the reparation
alternative would be available if the offence is punishable by fine only.
c. Three years is the same as is proposed in the Organised Crime and Anti-Corruption
Legislation Bill for new offences that will target the sale of identity-related information.
We consider that use is no worse than sale.
d. Three years is proportionate to the five, seven and ten year maxima for computerrelated crimes under sections 249 and 250 of the Crimes Act, as summarised in
paragraph 10.
Making false or misleading statements
The nature of the offence
37. We expect that the great majority of businesses and their agents will wish to provide accurate
statements in connection with the NZBN register. They have this incentive because this is
usually the best way of ensuring that the cost of interacting with the government and other
businesses will be minimised. However, as noted in paragraph 19b, false and misleading
statements could be made to capitalise on the reputation of another business, harm the
reputation of another business or avoid liability.
38. Applying the criteria in paragraph 24, again it is clear that a criminal offence containing a
mental element is the best option. Statements are only likely to unjustifiably or inexcusably
impose or threaten substantial harm to an individual or the broader public interest if they are
false or misleading in a material particular.
39. This is consistent with the approach taken in other comparable enactments. There are general
prohibitions on false or misleading statements in other Acts, including the Companies Act 1993,
Financial Markets Conduct Act 2013, Financial Services Providers (Registration and Dispute
Resolution) Act 2008 and Insurance (Prudential Supervision) Act 2010. All of the relevant
provisions include a materiality test. For example, section 512 of the FMC Act states that a
“person commits an offence who, with respect to a document required by or for the purposes of
this Act, makes, or authorises the making of, a statement in it that is false or misleading in a
material particular knowing it to be false or misleading”. We see no reason to depart from this
general approach in relation to the NZBN Bill.
Maximum penalties
40. The maxima in the other Acts referred to above are:

section 377 of the Companies Act: 5 years imprisonment or a $200,000 fine

section 512 of the Financial Markets Conduct Act: 5 years imprisonment or a $200,000
fine or both

section 41 if the Financial Service Providers Act: 2 years imprisonment or $100,000 fine
or both (individual) or $300,000 (non-individual)

section 215 of the Insurance (Prudential Supervision) Act: $200,000 fine (individual) or
$500,000 fine (body corporate).
41. There are several inconsistencies between these provisions:

Three provide for imprisonment, while the other does not

Of the three that provide for imprisonment, one provides for imprisonment or fine, while
the other two provide for imprisonment, fine or both

Two provide for different maximum fines depending on whether the offender is or is not
an individual

The maximum fines are different.
42. It is beyond the scope of this RIS to consider the broader issues relating to these
inconsistencies. Instead we limit our assessment to consideration of which of these Acts is
most akin to the NZBN Bill. This is the Companies Act. The largest class of entity that will
appear on the NZBN register will be companies (about 550,000), so consistency is important.
In addition, false or misleading statements made by or in respect of a company could
potentially be offences under both Acts. The decision about which provision will be used by
MBIE (which is responsible for managing both registers) should not be influenced by
differences in the maximum penalties.
Consultation
43. In March 2014, the Government released a discussion document called Less Administration
More Business which outlined the NZBN proposal as a whole. The business community
expressed strong support in submissions. No submitter opposed it.
44. In August 2014, the Government released an exposure draft of the NZBN Bill for public
comment. It included placeholder offence provisions including provisions targeting the two
types of conduct discussed in this RIS. However, the exposure draft did not include any
penalty provisions. Submitters tended to focus on other clauses in the Bill. To the extent that
there were comments, they were supportive of the need for offence provisions in order to
protect the integrity of the Register.
45. Consultation on our specific recommendations has been limited. Our proposed offence
provisions are materially different from the placeholder provisions that were included in the
exposure draft. However, we have consulted on these specific proposals with the Office of
the Privacy Commissioner, Ministry of Justice and MBIE Business Registries.
Conclusions and Recommendations
46. We conclude that:

most potential forms of harmful conduct associated with the NZBN are prohibited by the
Crimes Act, Fair Trading Act and Privacy Act

offences under the NZBN Bill should be restricted to conduct where the nature and
seriousness of the wrongdoing demands the intervention of the criminal law

maximum penalties should be high enough to be a true deterrent.
47. Consistent with those conclusions, we recommend that:

knowingly using an incorrect number, without reasonable excuse, as if it were genuine
should be an offence. The maximum penalty should be three years imprisonment.

there should be a general offence for knowingly making a materially false or misleading
statement with respect to a document required by or for the purposes of the Bill. The
maximum penalty should be five years imprisonment or a fine of $200,000.
Implementation
48. These forms of conduct will be included in the New Zealand Business Number Bill if Cabinet
agrees. The Bill will be introduced into the House in March 2015, with a view to enactment by
the end of the year. They will be brought into force no later than the date that entities can start
providing information to be included on the register.
49. The Companies Office, through various statutory officers, is responsible for establishing and
maintaining various registers, for example under the Companies Act 1993, Financial Reporting
Act 1993, the Motor Vehicles Sales Act 2004, and for taking compliance and enforcement
action against those who fail to comply with or breach their statutory obligations in relation to
those registers.
50. The Companies Office compliance and enforcement strategy will also apply to the enforcement
of the NZBN Bill. That strategy is underpinned by the philosophy that:

the focus is on maintaining the integrity of the information contained on its registers;
and

as far as possible, the Companies Office aims to assist the public in complying with
registration requirements and to achieve compliance with their statutory obligations,
rather than seeking to penalise them for each and every breach.
51. The Companies Office recognises that the majority of customers and users wish to and do
comply with their obligations, and seeks to overcome any obvious barriers to compliance. In
accordance with this underlying principle, the Companies Office will use the most appropriate
and cost-effective compliance tools available to it. It will establish compliance pathways which
may include progressively more serious consequences for non-compliance. The Companies
Office will consider further enforcement measures where there is a public interest in
enforcement action being taken, for example because:

the non-compliance is serious, prolific or has caused serious financial loss, or

there are persistent failures to comply through the use of compliance tools such as
website information, a free phone telephone enquiry line, periodic seminars of matters
of general interest and reminder letters
52. These measures may include formal warnings, the issuing of infringement notices, the
suspension or cancellation of the registration of an entity or individual, or in the most serious
cases prosecution.
53. The usual practice in relation to new compliance functions is to publish compliance information
on Companies Office website and issue targeted communications to users advising them of
their obligations and the potential consequences of non-compliance. Information on compliance
requirements is also usually made available through the Companies Office free phone
telephone enquiry line. The Companies Office will assess the specific requirements for
publicity around the NZBN Bill offence provisions closer to the time that these provisions are
brought into force.
Monitoring, evaluation and review
54. We will not carry out separate monitoring, evaluation and review processes in relation to the
issue addressed in this RIS because it relates to just one small part of the overall New Zealand
Business Number system. Instead, the impact of the offence provisions will be assessed as a
part of the broader work described in the RIS attached to the paper considered by Cabinet in
May 2014 entitled Extending the Business Number. These provisions will have been successful
if the Registrar has had little if any need to use them because the main objective is to promote
general deterrence.