July 2014


Double taxation agreement with Vietnam

The double taxation agreement signed in August 2013 by the Vietnamese and New Zealand governments has now been ratified and entered into force. 

The agreement is inclusive of lower withholding tax rates on interest, and royalty payments of 10%. It does not, however, provide for a 0% withholding tax rate on dividends. A rate of 5% is available if 50% of the voting power is held by the beneficial dividend owner, contrastingly, other double taxation agreements to which New Zealand is party require only a 10% share of voting power.

New Zealand’s double tax agreements are aimed at reducing tax impediments to trade and investment between countries by preventing businesses from being taxed twice and giving greater certainty over the way tax rules are applied between countries.

New Zealand’s trade with Vietnam has grown steadily over recent years, with trade in goods and services increasing steadily over the last decade.  Significant markets are education, dairy, timber, food and beverage, and growth areas are aviation, tourism, clean technologies, environmental management and agribusiness. The ratification of this agreement enforces New Zealand’s continuing efforts to provoke successful and profitable foreign trade in the Asian markets.


Changes to the Electronic Transactions Act

The Electronic Transactions Act 2002 (“Act”) did not specify when a contract was formed by email communication. 

The general rule of contract formation is that a contract is formed at the time that acceptance of an offer has been communicated to an offeror. There has been substantial legal debate as to the point in time at which acceptance has been communicated when using email. For example, some have argued that the “Postal Acceptance Rule” applies which provides that a contract is formed at the time the acceptance was posted. This has not yet been tested in the courts in New Zealand.

The Act has been amended to clarify the point in time at which a contract is formed electronically. In particular, it is now clear the general law of contract acceptance applies, and that an offer is deemed to be accepted by an electronic communication at the time of receipt of that communication.  The parties to a contract may, however, contract out of the provisions of the Act.


Currency swap facility with PBOC renewed

The Reserve Bank of New Zealand has announced that it has renewed a reciprocal currency arrangement with the People’s Bank of China.  The arrangement is a bilateral currency swap line, which was first agreed in 2011 and has been renewed for a further three year term.

The arrangement aims to promote bilateral trade and direct investment for economic development between New Zealand and China.


Company Registration Bill passed into law

The passing of the Companies and Limited Partnerships Amendment Bill has created the Companies Amendment Act (No 4) 2014 and the Limited Partnerships Amendment (no 2) Act 2014. Effectively the Acts on commencement will:

  • require all New Zealand registered companies and limited partnerships to have a director or general partner who resides in New Zealand or is a director in a prescribed enforcement country
  • provides new powers to the Registrar of Companies to better investigate companies limited partnerships
  • introduce offences for serious misconduct by directors that result in the company or its creditors loss
  • align the company reconstruction provisions in the Companies Act with the Takeovers Code

 The introduction aims to improve regulation and lift confidence in New Zealand’s capital markets, a critical part of the Government’s Business Growth Agenda. The passing of the Bill reinforces New Zealand’s international reputation as a trusted place to do business.


Financial Markets Conduct Act 2013 – key dates and effects

The Companies office will roll out from 1 December 2014 new securities registers. These will eventually replace the old registers by 1 December 2016. Two new registers covering offers of financial products and managed investment schemes will replace the Unit Trusts, Superannuation Schemes, Participatory Securities and Overseas Issuers registers.

The Act aims to facilitate capital market activity to fund growth and individuals reach financial goals. The Act will make offer documents and information about public offerings accessible for all interested parties alike.

If you have any questions on the matters discussed in this update please contact the New Zealand Mackrell Partner, Brian Joyce at Clendons North Shore by email to brian.joyce@clendons-ns.co.nz or phone +64 9 377 8419.


This publication is necessarily brief and general in nature.  You should seek further information before taking any action in relation to the matters dealt with in this publication.