New compliance requirements for Directors
The Companies Amendment Act 2014 has made significant changes to compliance requirements for directors. The Companies Office asked Registrar of Companies Mandy McDonald to outline some of the changes which lawyers might want to draw to the attention of their clients.
Mandy, with significant changes being made to the Companies Act 1993, what are the Registrar's key priorities in relation to companies?
My current focus is on the implementation of the changes made by the Companies Amendment Act 2014.
Implementation is being done through a phased approach that supports companies and gives them every opportunity to meet their obligations. It also means ensuring changes to the online filing system provide a seamless transition for users.
I am also looking closely at enforcement, and how we can make sure that directors and companies are fulfilling their obligations. At this stage that means ensuring all companies understand their compliance obligations, with the specific enforcement strategy depending on the extent of any non-compliance observed.
In regard to implementation, you mentioned a phased approach; can you tell us more about that?
When looking at the changes being made, you will note that there are three key dates of implementation, with the first two having already occurred. Since 1May 2015 all new incorporations have had to meet the new requirements in full.
The second and most recent key date is 1 July 2015. This means that companies are now required to provide the date and place of birth of all their directors, and details of their ultimate holding company if applicable. This information is being collected in a company's annual return. We have done this so that companies can provide that information as part of their usual compliance cycle. Note that the date and place of birth information will be kept in confidence and not disclosed on the public register.
The third and final date of implementation is 28 October 2015; it is at this date that all companies must have a director who lives in New Zealand or Australia. If a company is relying on a director who lives in Australia, that person must also be a director of a company incorporated in Australia. From this date, companies will also need to indicate whether any director living in Australia is a director of an Australian company, and if so provide details for one of those Australian companies.
Can we expect major changes to the filing system?
No, we are very aware that for this transition to be successful we need to keep our electronic filing system as intuitive as possible, keeping changes to a minimum. With this in mind, we have added additional fields to the electronic forms where the new information is required, and explanations where appropriate. The additional fields will add around 5 minutes to the filing time, with the new information being required before the system will allow you to submit the completed form.
Are there any areas of concern you have regarding compliance?
We expect there may be advertisements from overseas companies looking for directors living in New Zealand, having already seen one targeting audiences not traditionally associated with directorship. This advertisement suggested that the successful applicant would be a 'nominee director' and therefore have no legal liability. We do have concerns that some new directors may not be aware of their duties and responsibilities. This is particularly the case when it comes to advertisements using the term 'nominee director'. From a legislative perspective a nominee director is subject to the same duties and responsibilities as any other director. This is obviously a development that we will continue to monitor.
Are there many companies that don't have a director who meets the new place of living requirement?
The majority of New Zealand companies are already complying with the new requirement. Of over 550,000 companies registered in New Zealand, only around 5000 companies do not currently have a director who lives in Australia or New Zealand. This means that the majority of companies will only be required to provide directors' dates and places of birth, and will not need to make changes to their board.
Last updated on the 22nd July 2015