A Bill that proposes to tighten the criteria for company registration and increase the enforcement powers of the Registrar of Companies passed its first reading in Parliament last week. The Companies and Limited Partnerships Amendment Bill would amend the Companies Act 1993 and the Limited Partnerships Act 2008 (to ensure that companies cannot avoid the new rules by registering as a limited partnership).
The Bill as currently drafted would:
- require every company registered in New Zealand to have an agent who resides in New Zealand and who will be held responsible if the company fails to comply with its reporting and record-keeping obligations (if they do not have a director who lives in New Zealand or an enforcement country named in regulations).
- introduce criminal offences for directors who commit a serious breach of their duties, with the potential for imprisonment of up five years or fines of up to $200,000;
- enhance the Registrar's powers to regulate companies and limited partnerships, including empowering the Registrar to remove companies from the register for persistent non-compliance and enabling the Registrar to ban non-compliant directors of such companies from taking part in the management of any company for up to five years;
- give the Registrar new powers to investigate and deal with non-compliance under the Companies Act, including the power to 'flag' companies on the Register that are under investigation; and
- better align the Companies Act with the Takeovers Code to ensure shareholders understand the effect that changes in company control will have on the value of their shares.
The Bill has now been referred to the Commerce Committee for consideration and submissions are due by 6 September 2012.