Bill introduced to tighten rules around companies

Source:    Simon Power

Date of Release.  13 OCTOBER, 2011

A bill that tightens rules around company directors and company registration was introduced to Parliament today by Commerce Minister Simon Power.

“New Zealand has an international reputation as one of the best and most trusted places in the world to do business,” Mr Power said.

“However, that is threatened by overseas interests using New Zealand-registered shell companies to undertake criminal activity.

“The Companies and Limited Partnerships Amendment Bill will aid in stamping out this kind of behaviour and help ensure New Zealand remains a trusted place to do business.”

The bill will:

  • Require each company registered in New Zealand 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.
  • Give new powers to the Registrar of Companies 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.
  • Allow the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the act. 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.
  • Make similar changes to the Limited Partnerships Act, so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead.
  • Better align the Companies Act with the Takeovers Code to ensure shareholders understand the effect that changes in company control will have on the value of their shares.
  • 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.