Legislation

Legislation affecting the Companies Office

The Acts listed below can be found at the New Zealand Legislation website.

Acts under which bodies corporate are incorporated or registered

• Building Societies Act 1965
• Charitable Trusts Act 1957
• Companies Act 1993
• Co-operative Companies Act 1996 – [registration]
• Incorporated Societies Act 1908
• Industrial and Provident Societies Act 1908

Acts that allow voluntary associations to register or that regulate certain types of investments

• Friendly Societies and Credit Unions Act 1982
• Unit Trusts Act 1960

Acts regulating financial reporting, prospectuses, superannuation and takeovers

• Financial Reporting Act 1993
• Securities Act 1978 [part]
• Superannuation Schemes Act 1989 [part]
• Takeovers Act 1993 [part]

Some other acts that affect companies

• Corporations (Investigations and Management) Act 1989
• Insurance Companies (Ratings and Inspections) Act 1994

Legislation relating to the Companies Office

Acts under which bodies corporate are incorporated

Building societies

A building society may be established under the Building Societies Act 1965 with a minimum of 20 members.  On registration of its rules a building society becomes a body corporate with the members having limited liability.  Funds are raised by the issue of shares to members who usually pay for them by subscription over time.  The funds are used to provide financial services of a wide definition including, traditionally, mortgage advances for the purchase of house properties. 

For more information on Building Societies

Charitable trust boards

If a trust is established for purposes considered by the law to be charitable and having a public or community benefit, the trustees may apply to the Registrar of Incorporated Societies to be registered as a Board under the Charitable Trusts Act 1957.  Unincorporated societies consisting of at least five members associated for a charitable purpose or, for example, where the members of the society are too numerous, trustees for the property of such a society, may apply for incorporation as a Board.

For more information on Charitable Trusts

Companies Act 1993

Co-operative companies, overseas companies registered to carry on business in New Zealand and unlimited companies

The Companies Act 1993 permits investors to form a body corporate – a company – on delivering the prescribed application form and consents of shareholders and directors to the Companies Office and paying a prescribed fee.  In return the State confers the privilege of limited liability on those investors.  This means that instead of being personally liable for their trading debts – guarantees, indemnities and other personal liabilities excepted – they are only liable for the amount they have agreed to pay for their shares in the company - hence the term limited liability company.

A company has all the powers of a natural person.  Its activities are regulated by the text of the Companies Act 1993 and, where adopted, by an optional document called a constitution. Companies must have a minimum of one shareholder, one share and one director.  Directors manage the business and affairs of the company.  They are accountable to the company for the proper performance of their duties.  These duties are written into the Act in a comprehensive but not exhaustive list.

Cooperative companies

A co-operative company is a company incorporated under the Companies Act 1993 that applies for registration as a cooperative company under the Cooperative Companies Act 1996.  Application can be made on incorporation or at a later time.  Cooperative status can also be revoked, whereupon the company reverts to its registration under the Companies Act 1993. 

For more information on Cooperative Companies

The Securities Act 1978 applies to co-operative companies with exemption from some requirements contained in Exemption Notices made under that Act.  Most co-operative companies will be issuers under the Financial Reporting Act 1993 and will be obliged to file copies of their financial statements and a copy of the auditor’s report on these.

Overseas companies registered to carry on business

An overseas company – a body corporate incorporated outside New Zealand – that commences to carry on business in New Zealand must register on the overseas register within ten working days.  Its overseas identity and name are unaffected.  It extends its activities to New Zealand in a manner comparable to a local company commencing business in another city. 

An overseas company applying for registration must have a nominee in New Zealand to accept service.  This is central to the concept of registration of overseas companies.  It enables a New Zealand creditor to serve proceedings locally without being put to the trouble having to do so in another country, often with laws that may be difficult to ascertain and where another language is spoken.  This nominee has to be a person, that is, an individual or a body corporate, and the address has to be a street address.

For more information on Overseas Companies

Unlimited companies

An unlimited company can be incorporated with the shareholders having unlimited liability; that is, an ultimate liability to meet any shortfall to creditors on a liquidation.  These are rare.  They are registered in the same way as limited liability companies and operate similarly.  The difference lies in the presence of a constitution providing for unlimited liability and a name that does not end in Limited or Tapui (Limited).

Incorporated societies

An incorporated society is a body corporate established under the Incorporated Societies Act 1908 on application to the Registrar of Incorporated Societies.  It exists for furthering the non-profit objects established in its registered rules.  Incorporated societies encompass a wide range of activities.  These extend from cultural groups to ratepayers associations and sports clubs. 

For more information on Incorporated Societies

Industrial and provident societies

An industrial and provident society may be established under the Industrial and Provident Societies Act 1908 on the application of 7 persons.  These societies are identifiable by having names ending in Society Limited and operate according to registered rules.    Under an amendment in 1939 a society has to be either a bona fide co-operative society or where the business to be carried on will improve the conditions of living or the social well-being of members of the working classes or be for community benefit.

For more information on Industrial and Provident Societies

Acts that allow voluntary associations to register or that regulate certain types of investment

Friendly societies

A friendly society is not a body corporate.  It is a voluntary society funded by the subscriptions from members for their welfare and that of their families and near relations in sickness, childhood, old age and infirmity.  Friendly societies may be registered or unregistered.  If registration is desired, this can only be done through the Friendly Societies and Credit Unions Act 1982 on the application of 7 adults.  To register, a society must comply with the conditions in Part II of the Act.  The purposes for which they can be established are set out in the First Schedule to the Act. 

For more information on Friendly Societies
 

Credit unions

Part III of the Friendly Societies and Credit Unions Act 1982 covers credit unions.  They are member-owned co-operative financial organisations set up to provide savings and loan facilities for their members.

For more information on Credit Unions

Unit trusts

A unit trust is a form of investment that is established by a trust deed made between a trustee and a manager.  If units are to be offered to the public, the trust deed must be registered under the Unit Trusts Act 1960 and a prospectus must be registered under the Securities Act 1978. 

For more information on Unit Trusts

Acts regulating financial reporting, prospectuses, superannuation and takeovers

The Financial Reporting Act 1993

This Act regulates features of company accounting and auditing.  Certain companies and other entities have audit and filing obligations.  These, in summary, are:

• An overseas company; or

• A subsidiary of a company or body corporate incorporated outside New Zealand; or

• A "large company" in which 25 percent or more of the voting shares are held by:

  • A company or body corporate incorporated outside New Zealand; or 

  • A subsidiary of a company or body corporate incorporated outside New Zealand; or

  • A person not ordinarily resident in New Zealand.

• A person who has allotted securities pursuant to:

  • An offer for which, or for which but for an exemption granted by the Securities Commission pursuant to Section 5 of the Securities Act 1978, an investment statement or a registered prospectus, or both, is or was required under that Act (other than an offer of a unit in a unit trust); or

  • An offer required to be contained in a prospectus required to be registered under the Companies Act 1955.

• A manager of a unit trust (within the meaning of Section 2 of the Unit Trusts Act 1960) in which securities have been allotted, whether before or after the commencement of this Act, pursuant to an offer of securities to the public within the meaning of the Securities Act 1978.

• A recipient of money from a conduit issuer.

• A person who is a party to a listing agreement with a stock exchange registered under the Sharebrokers Act 1908 and who has issued securities, which are quoted on such an exchange.

• An insurer (within the meaning of Section 13 of the Accident Insurance Act 1998).

• An operator of a retirement village (within the meaning of section 5 of the Retirement Villages Act 2003).

• A registered bank (within the meaning of Section 2(1) of the Reserve Bank of New Zealand Act 1989) that has allotted securities to the public within the meaning of the Securities Act 1978.

For a full definition of 'issuer' please refer to section 4 of the Financial Reporting Act 1993.

The Registrar’s consent has to be sought if a company’s balance date is to be changed in such a way that there will be no balance date in a calendar year, but will still comply with the requirement that no more than 15 months can elapse between balance dates.  For example, consent is necessary where a balance date of 31 December is changed to 31 March of the year following.  Newly formed companies may have an initial fifteen-month accounting period.

Securities Act 1978

Raising money from or seeking participation in a commercial venture by the New Zealand public is only possible if a prospectus is registered under the Securities Act 1978.  This is most frequently seen with companies, credit unions and unit trusts.  Exemptions from particular provisions of the Act are granted from time to time and are notified in Securities Act Exemption Notices.  These are gazetted as regulations.

FAQ

Is there a separate register under the Securities Act 1978?

There is no separate register under the Securities Act 1978.  A prospectus is registered against the issuer.  In some cases the issuer might not be registered in New Zealand.  Overseas-based issuers may be listed on the New Zealand Stock Exchange, for example, for their shares to be traded here, but they might not in fact carry on business in New Zealand.  They thus do not need to register as an overseas company under Part XVIII of the Companies Act 1993, but do need to comply with the Act.  Their securities documents are filed with the Registrar and can be searched on the Companies Office website under Search other Registers.

Superannuation Act 1989

The trust deed that creates a scheme under the Superannuation Schemes Act 1989 is registered with the Government Actuary in Wellington.  Those schemes that are not small employer superannuation schemes file a prospectus and related documents with the Registrar of Companies can be searched on the Companies Office website under Search other Registries.

For more information on Superannuation Schemes

Takeovers Act 1993

The Takeovers Act establishes a Takeovers Panel that administers and enforces the Takeovers Code that regulates the takeovers of companies designated specified companies.  These are:

• public issuers comprising companies currently listed on the Stock Exchange or those that have been listed in the preceding 12 months; and
• companies with 50 or more members and $20M or more of assets.

Rules

• A person with 20% or less of the voting rights in a code company cannot become the controller, singly or with others, of more than 20%, unless the transaction can be brought within certain exceptions. 
• If more is held initially, that percentage cannot be increased. 
• The aim of this is to enable all shareholders to participate in the transfer of control, on the premise that 20% is a threshold for control.

There is a detailed procedure for making offers in Part VI of the Takeovers Act 1993. The offeror and the target company are obliged to provide certain information to each other and the offerees. 

Documents required for a takeover notice under the Takeovers Act 1993

The principal documents required for a takeover notice under the Takeovers Act 1993 are:

• the takeover notice of Rule 41
• the despatch notice of Rule 45
• the target company statement of Rule 46
• if more than 90% is held by the offeror, an acquisition notice under Rule 54, relating to the compulsory acquisition of the remaining shares. 
• notices to the Stock Exchange, the Takeovers Panel and the Registrar of Companies are required at various phases of a takeover offer.

Other registries – Motor Vehicle Traders and Personal Property Securities

Motor Vehicle Sales Act 2003

This Act regulates the sale of motor vehicles in the interests of consumers.  Only registered motor vehicle traders can carry on the business of motor vehicle traders or hold out that the person is a motor vehicle trader.  The aim of the Act is to enable the public to know who is responsible for a motor vehicle trading business, how to contact a motor vehicle trader in the event of a claim and to determine if a person is in fact registered as a motor vehicle trader.  There are disclosure requirements that must be met for used motor vehicles and regulations as to how a sale takes place and is recorded.  Persons can be banned as traders.

The Act establishes a register of motor vehicle traders.  Applicants complete a form of application and submit this for registration.  If it is accepted, the registration lasts for 12 months unless cancelled or surrendered.  It may be renewed for further 12 month periods.

Registration assists in enforcing the consumer protection aspects of motor vehicle sales.

Personal Property Securities Act 1999

This Act ('PPSA') unified the different registries that existed under the Chattels Transfer Act 1924, Companies Act 1955, Motor Vehicles Securities Act 1989 and Industrial and Provident Societies Amendment Act 1952, all now repealed, relating to securities over personal property. 

There is now one centralised register, the Personal Properties Securities Register,  (PPSR), for all security interests in personal property in New Zealand.  It is entirely electronic, accessible for registration and searching only through the Internet on the Personal Property Securities Register (PPSR) website and covers all types of debtors – individuals, bodies corporate and certain 'organisations'.  The order of registration generally determines the order of priority in the personal property concerned.

Security interests over other property such as land and ships are outside the PPSA’s scope.  They have to be searched in the appropriate registry.  Liens at common law, rights of set off, transfer arrangements for salary or wages, interests in insurance policies and fishing quota, among others, are excluded.  Consumer goods valued at under NZ$2,000 can be bought free of security interests.

The PPSR is accessible at all times.  Registrations and updates are recorded immediately.

Further information is available on the Personal Property Securities Register (PPSR) website.

Some other acts that affect companies

Corporations (Investigation and Management) Act 1989

This Act allows the Registrar to investigate the affairs of corporations to which the Act relates to are or may be operating fraudulently or recklessly to limit or prevent further deterioration in their financial affairs.  This is done to preserve the interests of its shareholders, creditors or the public.  The Registrar has no duty to supervise company affairs but can demand information and documents and appoint a person to carry out an inspection.  Information is confidential to the Registrar.

If the Registrar declares a corporation to be at risk, it gives notice to it and the corporation must then consult with the Registrar.

The Governor-General by Order in Council on the advice of the responsible Minister declare a corporation to be in statutory management by appointing a statutory manager – a receiver of sorts.  This is done for similarly at risk corporations on rare occasions, when the corporation has a high public profile, for example.  The result is a moratorium on debts while the statutory manager manages the corporation and carries on its business etc, until the problem has been resolved.   Such management often ends with the corporation being put into liquidation.

Insurance Companies (Ratings and Inspection) Act 1994

This Act deals with the rating of the claims-paying ability of insurers in relation to the business of insurance except life insurance and authorises the inspection of insurance companies of doubtful solvency.

All insurers must have a rating from an approved agency.  A certificate of this must be delivered to the Registrar.  For first time registrations, a copy of the rating scale must also be filed.  For more information on requirements under this act visit the Insurance and Superannuation Unit website and view the act.

The Registrar has powers of inspection and to demand information to determine if an insurance company can pay its debts.

Receiverships Act 1993

Certain security documents provide that on an event of default a security holder may as a remedy appoint a receiver to manage or realise the assets concerned to recover the debt due to the security holder.

The Receiverships Act 1993 governs all receiverships.  It requires certain notices be given to the Registrar, commencing with an initial notice within 7 days and an initial report, followed by six-monthly reports until the security holder has been paid in full or to the maximum extent.  At that time a final report is filed with a notice that the receivership has ceased.

The Receiverships Act 1993 Act also covers who can be a receiver, what happens if a receiver dies or resigns and gives the High Court certain supervisory powers.

Part 7A of the Property Law Act 1993

Part 7A of the Property Law Act 1952, introduced on 1 July 1994, obliges a mortgagee (lender) in possession of or receiving income from mortgaged property (land, usually) to file certain information where the mortgagor (borrower) is a body corporate (company, usually). 

The procedures are parallel to the Receiverships Act 1993.  The technical difference is that a receiver is almost always expressed as being the agent of the mortgagor, whose business is operated by the receiver for the security holder’s benefit.  Under the Property Law Act provisions, the mortgagee is acting personally or by an agent.