One of the primary intentions of the Bill is to ensure that the requirements for conducting business in New Zealand are more efficiently and effectively achieved with minimum compliance costs.
The most significant amendments to the Companies Act provide that:
1. Overseas directors:
- To satisfy the New Zealand resident director requirements, a company director who resides outside New Zealand must live in an enforcement country and be a director of a body corporate incorporated in that enforcement country under a law equivalent to the Companies Act. Currently it is sufficient for the director to be a director of a ‘company that is registered’ in the enforcement country.
2. Annual meeting of shareholders:
- Under a new section 120(5), an annual meeting of shareholders is not required if a board resolves that there is nothing required to be done at the meeting, that it is in the company’s interests not to hold the shareholder meeting and the constitution of the company does not require the shareholder meeting to be called or held.
- The new section 120(5) does not limit the ability of a company to pass a written resolution in lieu of an annual meeting of shareholders under section 122(4) (if everything required to be done at the meeting is done and the requisite shareholder approval is obtained).
- This provision will be useful for the likes of small closely held companies, inactive entities, and subsidiaries. However it will likely require companies to amend their constitutions to be able to rely on the provision.
3. Preparation and registration of financial statements by subsidiaries:
- A subsidiary of a New Zealand or overseas company, that itself has no subsidiaries, is not required to prepare financial statements if financial statements for that group of companies are prepared.
- A subsidiary of a New Zealand or overseas company is not required to prepare group financial statements if group financial statements for that group of companies, comprising the parent company and all of its subsidiaries, are prepared.
- A subsidiary of a New Zealand or overseas company is not required to register financial statements if financial statements for that group of companies are registered.
4. Removal of overseas companies from Register:
- The Registrar of Companies may remove an overseas company from the Register if it is satisfied that the overseas company has ceased to carry on business in New Zealand, having first notified the overseas company and the public of its intention to remove the overseas company from the Register and received no objection to it doing so.
- Currently the process to remove an overseas company from the Register can only be initiated by the overseas company itself giving notice to the Registrar and the public of its intention to cease carrying on business in New Zealand.
The Bill also contains proposed amendments to a range of other commercial legislation. These include a significant number of minor amendments to the Financial Markets Conduct Act 2013 that are proposed to address technical matters identified during that Act’s implementation. Most of the proposed changes relate to managed investment schemes, although there are minor changes that apply to companies as well.