Recently, the Government announced its intention to progress numerous company law reforms, aimed at making New Zealand an easier and safer place to do business.
The Minister of Commerce and Consumer Affairs, Andrew Bayly, commented that the Companies Act 1993 “is a foundational piece of legislation for our economy. It sets the rules for the birth, life and death of all our companies, of which there are over 730,000. However, the Act has not been substantially updated in 30 years and, as a result, aspects of it do not reflect the modern business environment and hamper growth and innovation.”
A number of the “phase one” company law reforms and the problems they seek to address are summarised in the table below. They will be implemented through the Corporate Governance Amendment Bill, which is expected to be introduced to Parliament in early 2025. The public will be able to make submissions on that legislation, through Parliament’s website, as it goes through the Select Committee stage.
A “phase two” Law Commission review of directors’ duties and related issues is also planned. Detail around what that review will involve is yet to be released, but more significant changes to company law are expected as a result of that review.
A central beneficial ownership register proposed by the previous Government will not be progressed as the current Government considers that the key policy objectives (e.g. to combat money laundering, terrorism financing and tax evasion) and expected outcomes (e.g. increased compliance costs) of that proposal are not aligned with those of the proposed “phase one” company law reforms (e.g. to reduce the burden of compliance and costs).
Proposed Company Law Reforms
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Problem to address / reason for change |
Examples of proposed company law changes to address problems |
|---|---|
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Out-of-date, ambiguous and onerous requirements |
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Certain activity and poor business practices causing harm and distress |
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Publicly available director and shareholder residential addresses causing safety and privacy concerns |
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Creditors failing to get fair share of assets from failed company |
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NZBN number not being used to full potential (missing out on $550 million per annum in productivity gains) |
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Crown funding majority of cost of winding up failed companies where private insolvency practitioner not appointed |
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This is a summary of some of the key “phase one” company law reforms recently proposed by the Government. The information contained in this summary is of a general nature and is not intended as legal advice. It is important any legal advice sought is tailored to your specific to your circumstances. Please contact us if you require any further information.
Jackson Russell is one of New Zealand’s most respected and oldest law firms. They provide family businesses with legal expertise and guidance.
Disclaimer
The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Association provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.
