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Companies Act updates

By Melissa Higham - 17 Oct 2011

Following on from an earlier blog, the Government has now introduced the Companies and Limited Partnerships Amendment Bill 2011 to Parliament to tighten the rules and requirements around company directors and the company registration process.

The main changes in the Bill are:

  1. Each company registered in New Zealand will be required to have a resident agent if there is no director living in New Zealand or in an approved jurisdiction. Resident agents will be responsible for ensuring companies provide accurate information to the Registrar of Companies, and will be liable if companies breach their record-keeping and filing requirements under the Companies Act.
  2. The Registrar of Companies will be given new powers to investigate and deal with non-compliance with the Companies Act. This includes the power to 'flag' companies on the register that are under investigation.
  3. Companies that provide inaccurate information or persistently fail to comply with the Act will now be able to be removed from the register. The Registrar will also be able to ban directors of such companies from taking part in the management of any company for up to five years.
  4. Similar changes will be made to the Limited Partnerships Act, so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead.
  5. The Companies Act will be better aligned with the Takeovers Code to ensure shareholders understand the effect that changes in company control will have on the value of their shares.
  6. Criminal offences will be introduced 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.

The amendments are designed to increase the Companies Office ability to identify and protect against companies engaging in criminal activity in New Zealand from overseas, increase confidence in New Zealand's financial markets and in New Zealand's regulation of corporate forms, and to ensure New Zealand remains a trusted place to do business.

The current Government intends to enact these changes in the first half of 2012.


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