Being a necessary step in starting any business, the process of registering a company in New Zealand was designed to be both low cost and easy to complete. However, recent examples have highlighted that the system of registration is open to abuse and has been abused. Consequently, in order to ensure that New Zealand remains a trusted place to do business, the Companies and Limited Partnerships Amendment Bill (the “Bill”) was recently introduced to Parliament to deal with these concerns.

In regards to the incorporation of a company, the Bill, as drafted, will:

1.      Require that every company incorporated in New Zealand must have either a director who resides in New Zealand or a resident agent. A resident agent will be responsible for ensuring that a company provides accurate information to the Registrar of Companies, and he/she will be liable if directors, the board or the company breaches their reporting and record-keeping obligations under the Companies Act 1993.

2.      Enhance the investigatory powers of the Registrar of Companies and extend the circumstances in which a company may be de-registered.

3.      Introduce criminal offences for directors who commit a serious breach of their duties to act in good faith and in the best interests of the company, and to not carry on business in a way that risks serious loss to the company’s creditors. Directors who commit these offences are liable for imprisonment of up 5 years or fines of up to $200,000.

If you have any queries regarding the material contained in this article please contact Brett Conn at Langley Twigg Lawyers on (06) 835 8939. The information in this article is of a general nature and should not be relied upon as a substitute for specific advice.