ON THE GROUND DIRECTOR REQUIREMENTS FINALISED
Government has released regulations that now confirm details for the new director residency requirements that were imposed into the Companies Act 1993 (“Companies Act”) by the Companies Amendment Act 2014 (“Amendment Act”).
Background
The Amendment Act introduced a number of key amendments to the Companies Act including the requirement that all companies incorporated in New Zealand have either a director resident in New Zealand or a director resident in an “Enforcement Country”. An Enforcement Country was to be prescribed by regulation and was to be one with which New Zealand has reciprocal arrangements concerning the enforcement of fines.
Regulations
The Companies Act 1993 Amendment Regulations (No. 2) 2014 (“Regulations”) have prescribed Australia as the only Enforcement Country for the purposes of the resident director requirements under the Amendment Act. The Regulations have also introduced the effective date for the implementation of the Amendment Act. The effective date is 1 May 2015 (“Effective Date”).
Effect
The Amendment Act and the Regulations combined mean that as and from the Effective Date all New Zealand companies (whether incorporated after that date or before that date) will need to have at least one director resident in either New Zealand or Australia.
Where the company has a director resident in Australia only and no director resident in New Zealand, in order to satisfy the requirement under the Regulations, that director will also need to be a director of a company incorporated in Australia.
What to do
You must ensure that prior to the Effective Date any company incorporated in New Zealand complies with the Amendment Act and the Regulations. You will need to look now at implementing arrangements to appoint a director or directors as appropriate to comply with the Amendment Act.