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
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
The Amendment Act also introduces further changes to the Act.
new criminal offences for directors for the following
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.
Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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