Unlike many other countries (e.g. Australia), there has historically been no requirement for a New Zealand company to have a New Zealand resident director.
This has made it fairly easy for non-residents to set a company up in New Zealand and not have to engage a person in New Zealand to act as director for the company.
Some time ago proposals were raised that would significantly change the director requirements in New Zealand. These proposals resulted in the Companies Amendment Act (No 4) 2014 being enacted on 24 June 2014. This legislation has increased the information requirements and strengthened the registration process of New Zealand resident companies.
Effective from 1 May 2015, all New Zealand incorporated companies will be required to have at least one director who:
- Is resident in New Zealand, or
- Lives in an enforcement country and is a director of a company registered in that enforcement country.
As noted above, this criteria is an “or” therefore having a New Zealand resident director is not critical provided a director satisfies the alternative criteria. At present only Australia qualifies as an enforcement country.
There may be an option for companies to appoint an ‘alternate director’ who is resident in New Zealand to help satisfy the new requirements.
If a company is found to be in breach of the new resident company requirements, this could result in the company being removed from the register.
In addition to providing the residential address details of each director, companies will also be required to provide the Companies Office with details of the director’s date and place of birth at the time of registration. These details will not be made publically available. Existing companies will be required to provide this information in relation to any changes to directorships or alternate directorships from 1 May 2015.
The board of directors will also be required to advise the Registrar of the name of any ultimate holding company, the country of its registration, the registration number or code (as applicable) and its registered office. This information will need to be provided on registration or within 20 working days of any change. These details will be made publically available. Existing companies will need to provide the Registrar with this information in the next annual return that is filed after 1 May 2015.
A further amendment to the Companies Act provides the Registrar with enhanced powers to de-register companies. The Registrar may de-register a company, if there are reasonable grounds to believe that:
- the company is not carrying on business;
- there is no proper reason for the company to continue in existence;
- the company has failed to respond to a request from the Registrar for certain information;
- one or more of the directors or shareholders has intentionally provided the Registrar with inaccurate information; or
- the company, or one or more of the directors, or shareholders has failed, in a persistent or serious way, to comply with the duties relating to the company under the Act or the Financial Reporting Act 1993 (“FRA”).
If you have any queries regarding changes to director requirements, please contact your Hayes Knight Advisor.