Further to the information regarding the Companies Amendment Act 2014, it has now been announced that the Commonwealth of Australia will be the only "enforcement country" for the purposes of the new resident director requirement. However, it is possible that this list will be expanded to include other countries at a later date.
Changes to the requirements for directors
On 11 August 2014 the Companies Amendment Act 2014 (Amendment Act) received Royal assent. This Amendment Act makes a number of significant changes to the Companies Act 1993 (Act), and it is therefore important for directors of companies to be aware of. One of the most significant of these changes is the introduction of a requirement for every New Zealand incorporated company to have:
a director who lives in New Zealand; or
a director who is also a director of a company incorporated in, and who also lives in, an "enforcement country".
The list of "enforcement countries" will be named in regulations at a later date. It is anticipated that an "enforcement country" will include Australia, the United Kingdom and the United States.
This new requirement for a company to include a residential director comes into force on 1 May 2015. However, there will be a 180 day transitional period for existing companies, who will be required to meet the new requirements before 28 October 2015.
The Amendment Act also introduces further changes to the Act. These include:
new criminal offences for directors for the following offences:
exercising a power or performing a duty in bad faith, knowing the conduct is not in the best interests of the company and knowing that the conduct will cause serious loss to the company; and
knowingly and dishonestly permitting the company to incur a debt and the company is, or becomes insolvent, at the time of, or as a result of, incurring that debt;
the penalty for breach of these new provisions is imprisonment for up to 5 years, or a fine of up to $200,000;
further registration and information requirements for registering a company;
enhanced powers for the Registrar of Companies; and
an alignment of the Act with the Takeovers Code regime.
Although the policies behind most of the changes are directed at a small percentage of companies, the resulting amendments to the Companies Act will impact on all companies.
If you have any questions or wish to discuss how the changes brought about by this Amendment Act will affect you, please contact Wynn Williams to discuss matters with someone in our corporate team.