New Zealand Amendment BillAug 08, 2014
Last June 24, 2014, the Limited Partnerships Amendment Act (No 2) 2014 and the Companies Amendment Act (No 4) 2014 were passed into law. The amendments will be implemented around June 2015. The changes were introduced to improve confidence in the financial markets in New Zealand as well as the regulation of corporations. It also introduced stricter registration requirements to improve compliance with the recommendations of the Financial Action Task Force on Money Laundering.
The new legislation helps in the prevention of misuse of shell companies in New Zealand as well as Limited Partnerships by overseas criminal groups. The law also gives the Registrar with more powers to prevent an individual from becoming a promoter or a general partner of a limited partnership in some instances. They can also determine the controllers of a limited partnership and give out a warning against an LP. In some instances, the Registrar of Companies can deregister an LP. Some of the grounds of deregistration include non-filing of the annual return or providing inaccurate information.
Because of the new amendments, existing companies and limited partnerships have six months to comply with the requirement to have at least one director, or a partner in the LP, who is a resident of New Zealand or an enforcement country. The enforcement countries are still unnamed at this point, but they are likely to be Australia, the United States and United Kingdom.
The Acts also require directors and partners to submit their personal information to the Registrar of Companies. Information include the date and place of their birth. Each company is also required to submit the details of its ultimate holding company if there is one.
The new amendments also protect multinational companies against breaches made by their directors. If a director acts in bad faith towards a company, or allow an insolvent company to accumulate debts, the person will be punished with a maximum of five years imprisonment or a fine amounting up to $200,000.
New Zealand topped the list for countries to start a business in and ranked third for overall ease of doing business, according to World Bank Doing Business Index. The new legislation would protect the country’s reputation as being one of the most trusted locations to start a business. The amendments prevent criminal elements to use shell companies in the country.
The stricter regulations brought about by the Companies and Limited Partnership Amendments means only legitimate multinational companies are allowed to operate in New Zealand. There will be more transparency from companies who want to start or continue to operate in the country. The changes are part of the business growth agenda of the Government.
The new amendments will have an impact on multinational companies that need to comply with the requirements within the six month period. Contact us if you need expert advice on how your company and its New Zealand legal entities can conform to the new regulations set by the Companies and Limited Partnership amendments.