New director requirements under the Companies Act 1993

The Companies Act 1993 (“Act”) has been amended with effect from 2 July 2015 to introduce new requirements for directors of companies incorporated in New Zealand.  Existing incorporated companies will have an additional 180 days to comply with the requirements.

The amendments are intended to address the misuse of New Zealand Companies by overseas criminal organisations, assist in meeting New Zealand’s obligations as a member of the international Finance Action Task Force on Money Laundering and align the Act with the Takeovers Code.

What do the amendments mean for companies?

New Zealand incorporated companies must have at least one director who is either living in New Zealand, or who is living in an “enforcement country” and is a director of a company registered in that enforcement country.  At this point, Australia is the only named “enforcement country” but it is anticipated that more countries will be appointed although the timeframe is uncertain.

Upon the appointment of a director (of a proposed company, or an existing incorporated company that does not comply) who satisfies the new requirement, the director will have to provide to the Registrar of Companies:

  • his or her full name and date and place of birth; and
  • his or her residential address; and
  • if the residential address is in an enforcement country, whether the director is a director of a company that is registered (except as the equivalent of an overseas company) in that enforcement country and, if so, the prescribed information.

If the proposed company, or existing non-compliant incorporated company, forms part of a group of companies, information regarding the ultimate holding company must be provided to the Registrar of Companies, more particularly:

  • the name of the ultimate holding company; and
  • the ultimate holding company's country of registration; and
  • the ultimate holding company's registration number or code (if any); and
  • the registered office of the ultimate holding company; and
  • any other prescribed information.

In addition, if there are any changes in the company’s ultimate holding company information, the board of the company must ensure that notice, in the prescribed form, is delivered to the Registrar of Companies for registration.  The notice must specify the date of the change, include the new ultimate holding company information, and be delivered to the Registrar of Companies within the prescribed time frame.  Every director of the company commits an offence and is liable on conviction to a fine not exceeding $10,000.00 if it fails to comply with this ongoing requirement.

The Registrar of Companies has various powers of inspection, in particular, for the purposes of ascertaining whether the information provided is correct.  The Registrar of Companies may require a person to confirm that the information is correct or correct the information if it is found to be incorrect.  When exercising the powers, the Registrar of Companies may specify a particular form in which the confirmation or correction must be provided, a date by which the confirmation or correction must be provided, and whether the confirmation or correction must be verified by the production of original documents or certified copies of original documents or by statutory declaration.   

To qualify as certified copies the documents must contain an attestation indicating that the copy is a true copy of an original document.  There are specific requirements relating to certification depending on the jurisdiction, so it is vital that legal advice is sought on this aspect.

What should you do right now?

Proposed companies must ensure they will comply with the new requirements upon incorporation on or after 2 July 2015.

A company incorporated before 2 July 2015 that does not comply with the new requirements must, before the close of the 180th day after 2 July 2015, do the following in order to comply:

  • arrange for a director who complies with the new requirements; and
  • in the manner required by the Registrar of Companies, notify the Registrar of Companies of the following:
    • that a director complies with the requirements; and
    • the prescribed personal information of the director, or in the instance of a group of companies, the prescribed information.

If a company fails to comply with the new requirements, the Registrar of Companies has grounds to remove the company from the register.

A few practical steps you can take, prior to seeking legal advice, include:

  • review your register of directors;
  • consider whether one of your directors lives in New Zealand, or lives in Australia and is a director of a company registered in Australia.  If he or she does not, consider whether there would be an appropriate individual, who would accept appointment as a director of your company; and
  • engage a lawyer to provide you with advice and guidance on compliance with the new and rather technical requirements.

This article has been compiled by Krystle Gardner and Natasha Sutcliffe, Law Clerk.  If you would like further information on any issue raised in this update please contact:

Krystle Gardner, Associate

DDI: 09 965 2662

Email: krystle.gardner@clendons-ns.co.nz

 

Disclaimer

Further advice should be taken before relying on the contents of this summary.  Clendons North Shore accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material in this summary.