Home based directors?

Home based directors?

From today, 28th October 2015, all New Zealand companies are required to have a New Zealand based director (or one based in Australia, who is also a director of an Australian incorporated company). In addition, if a shareholder is an “ultimate holding company” (UHC) then they need to provide more details on that shareholder.

New Zealand company law has often been criticized over the years for not requiring a New Zealand based director. Internationally it is normal to require for legal and taxation purposes a locally based director. Why the change now? Because there is a risk to the New Zealand tax and legal base where a company registered in New Zealand is not genuine, is a front for offshore interests, could be involved in money laundering, drug or gun running or terrorist activities. Ultimately, it comes done to this (or to quote my good friend Iago):

Good name in man and woman, dear my lord,
Is the immediate jewel of their souls.
Who steals my purse steals trash; 'tis something, nothing;
'Twas mine, 'tis his, and has been slave to thousands;
But he that filches from me my good name
Robs me of that which not enriches him,
And makes me poor indeed.

Othello by William Shakespeare

If our personal reputation is worth protecting, then so is our national and international reputation.

New Zealand has an excellent reputation for the lack of public corruption, we have a strong constitution, access to justice and stable government. We also have strong and fair commercial laws. What we do not have is a strong sense of suspicion or mistrust. And in this respect we come to New Zealand registered companies. As soon as you see it, you know (or you think you know) that the company must be legitimate simply because – well it must be, mustn’t it? The New Zealand Government would not allow someone to register a company without doing background checks on them, would they?

Recently I was looking into an “investment” that a client of a client had entered into. Great website, fully legit company registration. So far so not good, because they also appear on the Serious Fraud Office website,  and I gathered a number of newspaper clippings (old fashioned as that may be) within the week on the company, its shareholders and directors and the people behind the company. Yes, the website looked a wee bit dodgy: statements that didn’t reconcile with other parts of the website, the occasional spelling or grammatical mistake – but these exist in many company websites. It was only because I was looking for them did they ring great big gongs.

So, I’m OK with these company law changes. Yes, it will mean some more disclosure but not that much, and we will be consistent with other countries. Some companies will have to appoint a New Zealand based director, as they currently don’t have one, but that is not going to kill anyone is it?

So what’s new? A New Zealand company will now have to:

  • Have a director who lives in New Zealand (or lives in Australia and is also a director in an Australian registered company)
  • Provide the home address of each director
  • Provide the date and place of birth of each director (not published)
  • For Australian based directors (as well as the above) the Australian Company Number
  • Details of an ultimate holding company (UHC) – see below

That is not too much trouble to protect your greatest asset, is it?

 Want to know more, contact us. Want to know more about Shellock Consulting Ltd (fully compliant with the new rules), then check out our website on who we are and the services we offer.

Ultimate Holding Company (UHC)
Ultimate Holding Company (UHC) refers to the body corporate that has ultimate control of a registered company, and is not itself a subsidiary of any other body corporate. An UHC controls a registered company, whether through, shareholding or other means such as controlling the makeup of the company’s board of directors.

If a New Zealand Company has an UHC, it will need to provide the Registrar of Companies with information about that UHC. The information that must be provided is:

  • the name of the ultimate holding company
  • the ultimate holding company’s country of registration
  • the ultimate holding company’s registration number or code (if any)
  • the registered office of the ultimate holding company.

 

Disclaimer
The comments in this paper are the personal opinion of the writer and are not necessarily the opinions of Shellock Consulting Ltd.

 

Posted: Wednesday 28 October 2015