Since 2015 the Companies Act has required that a company registered in New Zealand must have at least one resident director. The Registrar of Companies, drawing on tax law, interpreted that as living here at least 183 days a year.
The High Court has ruled that the test is broader than this and encompases factors such as ties to New Zealand and the regularity with which an individual spends significant periods of time here.
We owe this insight to an appeal taken by John Carr.
…is sole director of a number of New Zealand registered companies but spends much of his time overseas so fell short of the Registrar’s 183 rule and was ruled non-compliant. He appealed the decision to the High Court.
- spends about one third of the year in New Zealand
- has two residences here and several parcels of land
- has a partner who lives here most of the year
- has his primary GP here
- is a member of several clubs and organisations here
- has businesses here employing a significant number of people, and
- votes here.
This was sufficient to persuade the Court that he ‘lives’ in New Zealand for the purposes of section 10(d) of the Act.
The Court did not go so far as to lay down definitive criteria for when a director is taken to live in New Zealand, but with the purpose of enforcement in mind suggested these relevant factors:
- the amount of time spent in New Zealand
- the person’s connection to New Zealand
- the person’s ties to New Zealand, and
- the person’s manner of living in New Zealand.
It described the 183 day threshold as “a sifting mechanism that….definitely includes, but does not automatically exclude. It is open to directors to meet the test by other means”.
The Registrar’s 183 rule still has relevance - anyone spending over 183 days in New Zealand will still automatically qualify. However for those directors who fall short of this bright line measure, the test can also be satisfied by a more holistic assessment.