Most Read Contributor in New Zealand, September 2016
Registering a company in New Zealand is a simple
on-line, one-step process taking about two minutes to complete.
Little wonder then that New Zealand routinely takes out first place
in the World Bank survey for ease of starting up a new
But recent media reports indicate that New Zealand is also a
popular location for shell companies, suggesting that we do not yet
have the regulatory balance right between efficiency and integrity.
So far this year, there have been reports of:
a New Zealand company registered to a vacant driveway in
Auckland being party (along with companies incorporated in the UK
and Belize) to a US$1.2 billion money laundering scandal in central
a New Zealand shell company linked to an alleged fraud
involving more than US$150 million in the Ukraine and Latvia,
New Zealand (and Russia) being blacklisted off an EU banking
and corporate "white list" because of weak money
All of which is embarrassing and threatens to undermine New
Zealand's reputation as a trusted and solid place to do
business. Given these risks, and New Zealand's reliance on
foreign capital, it is perhaps surprising that the government did
not move faster to fill the perceived holes in our regulatory
But change is on the way.
The Anti-Money Laundering and Countering Financing of Terrorism
Act (AMLCFT Act) was passed in 2009 and the supporting Codes of
Practice and regulations are now being put in place for a "go
live" date of 30 June 2013. This will bring New Zealand into
greater alignment with international standards, including the
critically important Financial Action Task Force (FATF) 40+9
a requirement that all New Zealand incorporated companies
have a director resident in New Zealand or in an approved
appoint a "resident agent" who will be responsible
for ensuring that the company fulfils its administrative
requirements and will be liable for any breaches in record-keeping
or filing requirements
increased powers for the Registrar of Companies to investigate
and deal with non-compliance under the Companies Act, including a
power to "flag" companies which are under investigation,
the ability to deregister companies for failing to provide
accurate information or for persistent failure to comply with their
Australian-owned companies will be exempted from the
Similar changes will be made to the Limited Partnerships Act so
that people cannot escape the new requirements by registering a
limited partnership instead.
But, although the Bill is an improvement on the status quo, it
needs to go further if it is to bring New Zealand into line with
international norms. It does not, for example, require directors to
provide even basic information such as date of birth and occupation
– a lack which, unless remedied, would restrict the
Registrar's ability to run identity and competence checks.
These details are required under the Financial Service Providers
(Registration and Dispute Resolution) Act 2008 and under the
Limited Partnerships Act 2008, suggesting that their omission from
the Bill is a drafting oversight which will be corrected at the
select committee stages.
In which case, the changes introduced through the Bill, together
with the new anti-money laundering regime coming into force next
year, should enhance New Zealand's credentials as a nation with
appropriate controls over the misuse of corporate forms for
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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