The Companies and Limited Partnership Amendment Bill (“Bill“) proposes key changes to company director requirements which may affect up to 4,200 companies. This article outlines some key changes which may apply to your company.
Director residency requirements
The proposed director residency changes require that every New Zealand incorporated company must have at least one director who:
- lives in New Zealand (NOTE: There is no requirement for the person to be a New Zealand citizen or to hold an appropriate visa before the person could be a director who lives in New Zealand, although the person’s residency status would likely be relevant); or
- lives in and is also a director of a company that is registered in a country with which New Zealand has reciprocal arrangements for the enforcement of low level criminal fines, such a country being termed an “enforcement country“.
The list of countries qualifying as an “enforcement country” is yet to be finalised, however it appears that initially only Australia will qualify on the basis that this change is not intended to impact Australian based New Zealand companies (which currently make up the majority of New Zealand companies without a New Zealand resident director).
Existing companies will have six months following the enactment of the Bill to comply with these changes. Failure to do so at the end of the six month period will be grounds for the Registrar of Companies to remove the company from the register.
We note that the New Zealand resident director provisions do not apply to an overseas company that is registered in New Zealand (i.e. companies can operate in New Zealand as an overseas company without the need to have an New Zealand resident director).
Director birth details
Directors are currently required to provide his or her residential address. Under the changes proposed by the Bill, every director of a proposed company will also be required to provide his or her date and place of birth. This information will be held by the Registrar of Companies but will not be publicly available. The directors of existing companies will also need to provide his or her date and place of birth information, however, the manner in which this will be done is yet to be determined. Penalty provisions will apply for failure by a company to comply with these information requirements.
Ultimate holding company
The Bill also proposes that upon the registration of a company and within 20 working days of a relevant change, every company must disclose that company’s ultimate holding company, if it has one. The ultimate holding company’s country of registration, registration number or code (if any) and the ultimate holding company’s address for service must also be disclosed. This information will be publicly available. Existing companies will also have to provide this information to the Registrar of Companies, however, the manner in which this is to be done is yet to be determined. Again, penalty provisions apply for failure by a company to comply with these information requirements.
In our recent dealings with the Companies Office, we note that requests for further information with respect to the registration of a company’s foreign directors and shareholders are becoming standard practice. Going forward, we expect that this will be the new normal.
We note that the Bill is yet to be finalised and that further amendments may be made. We will keep you up-to-date with any amendments to the changes outlined in this article.