The Companies and Limited Partnership Bill (Bill) introduces major changes to company director and general partner requirements. The purpose of this update is to highlight some of the key changes that may affect you. The changes highlighted below apply to New Zealand companies registered under the Companies Act 1993 and General Partners of New Zealand Limited Partnerships registered under the Limited Partnership Act 2008. These proposed requirements apply equally to newly incorporated as well as existing Companies and Limited Partnerships.

COMPANIES

Director’s residence

The Bill proposes that every company must have at least one director who:

  • Lives in New Zealand, or
  • Lives in a country with which New Zealand has a reciprocal  arrangement for enforcement of New Zealand judgments and criminal fines

It should be noted that the requirement is that at least one director and not all directors must live in New Zealand. As a result a company can have a mixture of New Zealand and foreign resident directors. There is no requirement that the director be a New Zealand citizen, although the residency status will probably be relevant.

The purpose of this enactment is to ensure that there is an identifiable individual in New Zealand who can be held accountable for the actions of the company.

Existing companies will have to comply with this requirement within 6 months of the enactment of the Bill. Failure to do so can result in the removal of the company from the Company Registry.

Director’s additional information requirements

At present the information that is needed to be provided to the Registrar of Companies in New Zealand in respect of directors is fairly limited. The only information that was required to be provided is residential details. The Bill proposes that every director provide his/her date and place of birth.  This requirement will apply to newly incorporated as well as existing companies. Failure to comply with this requirement will result in penalties / fines. Whilst this additional information will be held by the Registrar of Companies it will not be available to public.

The Ultimate Holding Company

The Bill also proposes that details of company’s ultimate holding company be disclosed upon registration. The disclosure is in relation to the name of the ultimate holding company, country of registration, company registration number, and it’s registered address.  There will also be the requirement to disclose the name, address and date of birth of each of the directors of the ultimate holding company. Any changes to any of these particulars must be registered within 20 working days with the Registrar of Companies.

The purpose of this disclosure is to allow for greater transparency and allow those dealing with the New Zealand company to be able to determine where the control over the company ultimately lies.

LIMITED PARTNERSHIPS

General Partner’s residence

Similarly with company directors the Bill proposes that every Limited Partnership must have at least one General Partner who:

a)      is a natural person:

  • Lives in New Zealand, or
  • Lives in a country with which New Zealand has a reciprocal arrangement for enforcement of low level criminal fines, or

b)      Is a partner in a general partnership that complies with a) above, or

c)       Is a company registered under Companies Act 1993

In cases where the general partner is a New Zealand incorporated company, it will have to have at least one New Zealand resident director who will have to comply with residency and additional disclosure requirements.

In cases where the general partner is an individual, the persons full name, date and place of birth and residential address will need to be provided to the Registrar of Companies.

The Ultimate Holding Company

Because of the difference in structure between companies and limited partnerships, limited partnerships and its partners will not be required to provide details of their ultimate holding companies.

Whilst these changes are still in a Bill form, they may, if passed, increase your compliance obligations.

If you think that these rules may affect you please contact us, we are here to help and make sense of the various complexities.