New Zealand set to modernise key company legislation
New Zealand set to modernise key company legislation
Thursday 22 August, 2024
Progress on the modernisation of the Companies Act 1993 (Act) continues, as Hon Andrew Bayly, Minister of Commerce and Consumer Affairs, announced the Government’s support for a package of reforms aimed at streamlining business operations, reducing compliance costs, and bolstering safeguards against fraudulent activities.
The reforms will unfold in two phases in 2025:
- Phase 1: Modernisation of the Act, simplification of compliance requirements, and deterrence of poor and illegal business practices.
- Phase 2: Review by the Law Commission of directors’ duties and issues relating to director liability, sanctions, and enforcement.
Phase One Reform Highlights:
- Act Modernisation and Digitalisation:
- Simplifying the share capital reduction process to minimise the need for costly court approvals.
- Updating the definition of "major transaction" to exclude transactions relating to the capital structure of a company and ensuring that related series of transactions are captured.
- Expanding the scope of unanimous shareholder consent processes.
- Establishing protocols for managing unclaimed dividends.
- Enhanced Identity Verification:
- Implementing unique identifiers for directors and general partners of limited partnerships.
- Allowing the use of service addresses instead of residential addresses on public registers to address privacy concerns.
- Insolvency Law Improvements:
- Adopting previously overlooked recommendations from the 2015 Insolvency Working Group, including extending clawback periods for related-party transactions before liquidation.
- New Zealand Business Number (NZBN) Enhancements:
- Boosting NZBN adoption to improve business efficiency and identity verification.
- Proposing amendments to the New Zealand Business Number Act 2016, including the public disclosure of owner and director names by default.
Next steps
It is expected that the bill containing the Phase One reforms will be introduced in 2025. Once it progresses to the Select Committee, stakeholders will have the opportunity to contribute through public submissions.
