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Statutory obligations of companies and their directors
On this page we have collected some hints regarding the duties of the company and their directors. Please use it as a guidance only - it is not a complete list. The company or its directors may risk penalties that may be incurred through failure to comply with the Companies Act 1993.
Filing of Documents
Books and Register
Share register
Accounting Records
Charges
Particulars of Director
Annual Meeting
Appointment of Auditors
Adoption, Alteration and Revocation of Constitution
Issue of Shares
Distributions to Shareholders
Filing of Documents
All forms forwarded to the Companies Office for filing must show the name and number of the company to which the document relates and the name, address and telephone/facsimile number of the person by whom the document is filed.
The Registrar of Companies may decline the registration of a document if:
- it is not in the prescribed form [the forms are prescribed in the First Schedule to the Companies Act 1993 Regulations 1994]
- it does not comply with the Companies Act 1993 or regulations made under the Act
- it is not printed or typewritten
- it has not been properly completed
- it contains matter that is not clearly legible
All documents relating to a company must be filed at the Companies Office National Processing Centre, Private Bag 92061, Auckland Mail Centre. Charge and satisfaction documents must be sent to the regional Companies Office where the company file is held.
The Registrar may refuse to register or accept a document for registration if the correct fee is not paid.
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Books and Registers
A Company must maintain the following books and registers:
- a share register
- company records
- accounting records
- a register of charges created
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Share Register
A Company must maintain a share register that records the shares issued by the company and states:
- whether, under the company's constitution, or the terms of issue of the shares, there are any restrictions or limitations on their transfer,
- where any document that contains the restrictions or limitations may be inspected.
The share register must also state the following with respect to each class of shares:
- an alphabetical list of the names and last known address of each person who is or has within the last 10 years been a shareholder,
- the number of shares of that class held by each shareholder within the last 10 years,
- the date of any:
- issue of shares to each shareholder within the last 10 years and the name of the person to whom the shares were issued
- repurchase or redemption of shares from each shareholder within the last 10 years and the name of the person from whom the shares were repurchased/redeemed
- transfer of shares by or to each shareholder within the last 10 years and the name of the person to or from whom the shares were transferred.
An agent (such as a professional share registry) may maintain the share register of any company.
A share register may be divided into two or more registers and kept in different locations if a company's constitution expressly permits such a division. A notice of the location of each register must be delivered to the Registrar no less than 10 working days after the share register is divided.
There is no prescribed form for this notice.
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Accounting Records
The board of a company must ensure that the company keeps accounting records. These records must:
- correctly record and explain the company's transactions
- at any time enable the financial position of the company to be determined with reasonable accuracy
- enable the directors to ensure that the company's financial statements comply with section 10 of the Financial Reporting Act 1993 and any group financial statements comply with section 13 of that Act
- enable the company's financial statements to be readily and properly audited
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Charges
The registration of charges created by or existing on property acquired by companies that are registered under the Companies Act 1993 is governed by the Companies (Registration of Charges) Act 1993.
Not every charge created by a company over its assets is required to be registered; only those listed in section 102(2) of the Companies Act 1955. The most common of these are debentures, mortgages, and instruments by way of security.
A copy of every document that creates a charge over a company's assets and is required to be registered must be filed with the Registrar. Each must be accompanied by a "Certificate of Execution of Instrument Creating a Charge and Particulars of Charge" form.
If the document that creates the charge has already been registered under another Act (e.g. a mortgage under the Land Transfer Act 1952), then it is not necessary to file a copy of the document with the Registrar. Instead, a company may complete and file only the "Certificate of Execution of Instrument Creating a Charge and Particulars of Charge".
A copy of the document that creates a charge and/or a certificate of particulars of charge must be filed within 30 days after the date a charge is executed in New Zealand or the property subject to a charge is acquired. If a charge has been executed outside New Zealand, then filing must take place within three months after the date of execution. A charge that is filed out of time is accepted for registration provided it has been registered under another Act and evidence of such registration is produced. A penalty fee for late filing may be payable to the Registrar. In other cases, an order from the Court extending the time for registration will be necessary.
There is a fee for registering a charge.
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Particulars of Directors
Changes in the director of a company or particulars relating to the director must be notified to the Registrar, if they are one of the following:
- Changes to a director's name or residential address
- Removal from office in accordance with the Companies Act 1993 or the company's constitution.
- Disqualification from holding office as a director
- Appointments
- Resignations
- Deaths
New appointments or resignations must be notified within 20 working days of an appointment being made or a resignation taking effect. The other changes must be notified within 20 working days of the company first becoming aware of the change or event. Penalty fees may be incurred when the notice is not filed within that timeframe.
A new director must consent to act as a director and certify that he/she is not disqualified from being appointed or holding office as a director. There is a prescribed form of consent - Form 10, which should be completed and attached to the "Notice of Change of Directors and Particulars of Directors". A person cannot be a director of a company if he/she is:
- under 18 years of age, or
- an undischarged bankrupt, or
- prohibited from directing/promoting/participating in the management of a company under any statutory provisions, or
- subject to a property order made under sections 30 or 31 of the Protection of Personal and Property Rights Act 1988, or
- not qualified pursuant to the constitution of a particular company.
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Annual Meeting
Every company must hold an annual meeting of shareholders once in each calendar year. The meeting must be no later than six months after the company's balance date (ten months for an exempt company as defined in the Financial Reporting Act 1993 if all shareholders agree) and no later than 15 months after the previous annual meeting.
A Company does not have to hold its first annual meeting in the calendar year of its registration, but must hold that meeting within 18 months of the date of its registration.
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Appointment of Auditors
At each annual meeting, a company must appoint an auditor to hold office until the next annual meeting, unless a unanimous resolution is passed at or before the meeting that stipulates that an auditor is not necessary.
There are, however, some classes of companies that must always appoint an auditor.
These are:
- a New Zealand subsidiary of a company that is incorporated outside New Zealand
- a company in which 25% or more of the voting power is controlled by overseas interests
- a company that is an issuer of securities within the meaning of section 4 of the Financial Reporting Act 1993.
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Adoption, Alteration and Revocation of Constitution
The shareholders of a company without a constitution may adopt one by special resolution. The board of a company must ensure that notice of an adoption, alteration or revocation is filed with the Registrar within 10 working days of the event taking place.
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Issue of Shares
After registration, a company must issue to any person named in the application as a shareholder, the number of shares that the application says the shareholder will receive.
After the first issue of shares, the board of a company may issue shares at any time, to any person, and in any quantity it sees fit. This power is subject to the provisions of the Companies Act 1993 and any provisions in a company's constitution that may modify its right to issue shares.
The Registrar must receive notice of the share issue within 10 working days of the issue.
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Distributions to Shareholders
The board of a company may authorise a distribution by the company at any time, and of any amount, and to any shareholders it sees fit. However, before doing so it must:
- be satisfied, on reasonable grounds, that the company will be able to satisfy the "Solvency Test" immediately after the distribution.
- ensure that it does not breach section 53 of the Companies Act 1993, or any provision in its constitution relating to distributions.
Directors who vote in favour of a distribution must sign a certificate stating that the company can satisfy the "Solvency Test" and give the grounds for that opinion.
A Company satisfies the "Solvency Test" if:
- it is able to pay its debts as they become due in the normal course of business, and
- the value of the company's assets is greater than the value of its liabilities including contingent liabilities.
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