New Requirements for New Zealand Companies
Wednesday 8th August 2012
The Companies and Limited Partnerships Amendment Bill (introduced to Parliament on 13 October 2011) has passed its first reading and has now been referred to the Commerce Committee for consideration. Submissions are due by 6 September 2012. The Bill aims to increase confidence in New Zealand’s financial markets and company regulation, and ensure that New Zealand remains a trusted place to do business. To achieve these aims, the Companies Act 1993 (and the Limited Partnerships Act 2008) will be amended.
The proposed changes in the Bill are in response to growing concerns that New Zealand’s incorporation process is being misused by individuals and groups (particularly those offshore) in order to carry out criminal activities, thereby damaging New Zealand’s international reputation.
Among the key proposals in the Bill are new requirements for New Zealand companies. Most notably, once the Bill is enacted, each New Zealand registered company will need to have either:
- a director living in New Zealand; or
- a director living in an “enforcement country”, ie any country (which will be specified in the legislation) that can enforce New Zealand judgments imposing criminal fines under relevant legislation such as the Companies Act 1993); or
- a New Zealand resident agent who is legally responsible for the company’s administrative affairs.
The Bill contains a number of requirements relating to the appointment, removal, duties and offences of resident agents, as well as relating to the duty of directors and employees to provide information to resident agents.
In addition to the requirements applying to companies, new requirements are also proposed in relation to limited partnerships (with a broadly similar effect to those relating to companies). Finally, breaches of certain directors’ duties are criminalised.
The new company requirements will come into force on the date which is 12 months after the Bill is enacted (unless this is brought forward by an Order in Council). Companies which are incorporated before this date have a further 6 months in which to comply with the new requirements (and any failure to comply with them may result in the removal of the relevant company from the New Zealand Companies Register).
We will provide further updates as to the progress of the Bill but, in the meantime, please contact us if you would like to discuss how we can assist you to comply with the new requirements.