System description and objectives
The corporate governance regulatory system is foundational, providing the legal infrastructure for businesses, not-for-profit entities and civil society organisations. It underpins crucial aspects of the New Zealand business environment and other regulatory systems, such as the financial markets conduct system.
Its purpose is to promote accountable, transparent and high-performing businesses and other types of entities by setting rules and incentives for how these entities are structured, governed and dissolved. In doing so, the system contributes to both business and investor confidence as key components of a prosperous New Zealand business environment.
The corporate governance regulatory system includes the rules, institutions and practices which govern the creation, operation and dissolution of various types of entities. These entities enable individuals to come together in pursuit of a common objective, whether social or commercial. Without the legislation within this regulatory system, these entities would have no legal basis.
The Companies Act 1993 is the core legislation within the system, as companies are the predominant form of entity.
The regulatory system governs the ‘lifecycle’ of entities, including:
- how they are created (for example, through incorporation)
- entity governance and administration, including:
- the powers and duties of directors or officers
- the rights and obligations of shareholders or members
- business rehabilitation options, including amalgamations, compromises and voluntary administrations, and
- liquidations, including rules for how any assets are to be distributed.
The corporate governance regulatory system includes other statutes that work to support the public confidence goals of the system. This includes legislation that relates to financial reporting, takeovers, personal property securities, fraudulent or reckless management of entities, and insolvency. There are also two occupational regulation statutes within the system.
The system also includes delivery of services to promote high-performing businesses. For example, business.govt.nz(external link) is a service MBIE delivers which focusses on helping small businesses with a range of tools and advice, including in relation to starting up, planning for growth, paying and managing staff, protecting intellectual property and more.