Our Articles

Residency Requirement for Director of NZ Company

February 21, 2017

Whether a director “lives in” New Zealand

By virtue of section 10 of the Companies Act 1993, New Zealand companies are required to have at least one director who:

  • lives in New Zealand; or
  • lives in Australia and is also the director of an Australian company (excluding a branch).

The Companies Act gives no guidance on how to determine whether a director will pass the Residency Requirement in New Zealand. The Registrar of Companies had, in line with tax residency requirements, operated on the basis that a director would satisfy the residency requirement if the director had been physically present in New Zealand for at least 183 days in any particular year. Failing this, the company could try to establish other factors supporting an argument that the residency requirement is satisfied.

The High Court has for the first time directly addressed the issue in Re Carr [2016] NZHC 1536. In that case, the Judge specified four relevant considerations (emphasising their importance to enabling enforcement):

  • the amount of time the director spends in New Zealand;
  • the director’s connection to New Zealand;
  • the other ties the director has to New Zealand; and
  • how the director lives when in New Zealand.

In applying those considerations to the case, the Judge found that Mr Carr did “live in” New Zealand and satisfied the residency requirement. The key factors influencing the Judge’s decision were: Mr Carr spent, on average, a third of the year in New Zealand;

  • he had a partner who lived in New Zealand most of the year;
  • he had a home and other land in New Zealand;
  • he was a member of various clubs and organisations in New Zealand;
  • his primary doctor was a New Zealand GP;
  • he had strong business relationships in New Zealand and employed a significant number of people in New Zealand;
  • he had New Zealand bank accounts; and
  • he generally presented as a New Zealand business person would.

Summary

A director’s presence in New Zealand for at least 183 days in any year will conclusively satisfy the residency requirement. However, it also shows that large absences from New Zealand in any year won’t necessarily be fatal where there are other factors connecting a director to New Zealand, such that enforcement against the director should be able to be achieved.

This Blog isn't legal advice – if you need legal advice on any company law issue or on any business law or commercial law issue, please contact me steve@dukesons.co.nz. I'm a business lawyer in Auckland who provides advice on company law issues and on a wide range of business law or commercial law issues.



Loading Conversation