2014 changes to the Companies Act and Limited Partnerships Act
The Companies Amendment Act (No 4) 2014 and the Limited Partnerships Amendment Act (No 2) 2014 became law on 24 June 2014.
The purpose of the Acts
These Acts strengthened the rules applying to the governance, registration, and reconstruction of companies, and the registration of limited partnerships.
The new governance rules created criminal offences for serious breaches of 2 directors’ duties where a director:
- acts in bad faith and not in the best interests of the company and knows that this will cause serious loss to the company
- dishonestly incurs debt for the company when the company is insolvent, or the director knew, the company would become insolvent.
A director who commits an offence is liable on conviction to a fine not exceeding $200,000 or imprisonment not exceeding 5 years.
This work formed part of the Securities Law review and was approved by Cabinet in February 2011:
The new rules applying to registration added a requirement that all New Zealand companies have at least one director who lives in New Zealand, or in an enforcement country, and is a director of a company in that country.
The changes also required the date and place of birth of company directors to be provided to the Registrar of Companies.
Similar requirements were also added to one general partner of a limited partnership.
Registrar powers clarified
The powers of the Registrar of Companies were clarified to require verification of information upon request. Companies need to disclose the details of their ultimate holding company if they have one.
The Companies Registrar was also given more power to identify the true owner of a company by enquiring about individuals that:
- control companies and limited partnerships
- control directors and general partners
- directors and general partners may have delegated their powers to.
These measures were designed to shore up New Zealand's company registration process against criminal activity.
The changes aligned the change in company control procedures under the Companies Act with those under the Takeovers Code.