Our Articles

Companies Amendment Act Changes

October 15, 2015

Compliance Checklist

If your business is a registered company, a law change means you must have a director who lives in New Zealand – or who lives in Australia and is a director of an Australian registered company – by 28 October. You’ll also need to provide some extra information about directors and any ultimate holding company with your next annual return.

Make sure you’re sorted by following this quick and easy checklist:

By 28 October 2015 make sure:

your company has at least one director who:

  • lives in New Zealand; or
  • lives in Australia and is a director of an Australian registered company. You’ll be asked for the Australian company’s name, address and Australian Company Number (ACN).

(Note: if your company has more than one director living in Australia and they are a director of an Australian registered company, each director will be required to provide the details of an Australian company that they are a director of).

  • you provide the following details of any ultimate holding company* (if applicable):
  • name of the ultimate holding company
  • its registration number or code (if any)
  • its country of registration
  • its registered office.

All Directors of New Zealand Companies are also required to provide the Date of Birth, Town/City of Birth and Country of Birth. This information will not be visible to anyone looking at the Company Office website

We will be contacting all of our clients affected by the law change, but if you are affected, please contact Carole carole.smith@chestergrey.co.nz directly.

*Ultimate Holding Company is the term used to refer to the body corporate that has ultimate control of a registered company, and is not itself a subsidiary of any other body corporate. In other words, an ultimate holding company is a company which controls a registered company, whether through, shareholding or other means; for example, by controlling the makeup of the company’s board of directors.

The disclosure of a UHC is a matter of public interest and record so that people dealing with acompany know where ultimate“control” of the company lies.

New criminal offences

One change, now in force, was the creation of new criminal offences for serious breaches of directors’ duties. It is now an offence where:

  • A director acts in bad faith and not in the best interests of the company and knows that this will cause serious loss to the company (section 138A of the Act),
  • A director dishonestly incurs debt for the company when the company is insolvent, or the director knew the company would become insolvent (section 380 of the Act).

These changes were introduced following the wide scale collapse of finance companies between 2006 and 2012. The collapse of these companies left many ‘mum and dad investors’ stripped of their nest eggs. There was concern following the collapse of these companies that it was sometimes not possible to take action against directors for their reckless or dishonest conduct (although many were prosecuted under provisions in the Securities Act, Financial Reporting Act and the Crimes Act). In introducing the new offences, the Government sought to balance the effect of potential criminal liability deterring people from becoming directors or taking business risk, against the need to deter dishonesty and prevent the substantial harm resulting from breaches of directors’ duties.

The new offences require that the mental elements of dishonesty, bad faith, knowledge and belief must be proved beyond reasonable doubt. These are high thresholds, and should put honest directors at ease. 

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