New Zealand companies are fortunate to have a transparent and easily accessible Companies Office share registry, which contains an excellent snapshot of the information and records for registered companies. However, NZ companies cannot rely on this register alone to be fully compliant.
In itself, the NZ Companies Office platform is not a fully compliant share register for a New Zealand company and is missing a lot of additional information which all companies need to maintain. For a share registry, every company in New Zealand must record:
The number and type of shares every shareholder owns. In comparison, the Companies Office only requires holdings for the 20 largest shareholders and does not record share classes/types
Any restrictions or limitations on the transfer of shares, and where to find the details
Dates and details of any repurchase or redemption of shares for each shareholder for up to 10 years
Details and dates of any transfer of shares to and from each shareholder for up to 10 years.
These requirements apply to all New Zealand companies regardless of size – it is not just a necessity for big companies who have a large shareholder base.
Companies must also keep a range of other important information documented for at least 7 years including:
Written communications with shareholders, including emails
Resolutions from shareholders
A copy of the Company Constitution that must be kept at the Company’s Registered Office
Certificates issued by directors
Copies of all financial statements
Company records about assets and liabilities.
If NZ companies do not meet their legal obligations, the Companies Office has grounds to prosecute the company or the individual. A significant breach can carry severe penalties- fines up to $200,000 or imprisonment for Directors who fail to meet their obligations.
When there is a breach of the law, the Companies Office will typically issue a formal warning or infringement notice, and company registration could even be suspended or cancelled. Directors are equally liable and may be prohibited or even disqualified from managing companies.
While the Companies Office will always work with companies to ensure that they are meeting their legal obligations, action can be taken against a company and its directors who continue to breach minimum standards.
The good news is that meeting the New Zealand company compliance minimum requirements doesn’t need to be a concern or a tedious job. Instead, it is a case of developing a process to keep on top of updates, using an effective system, and ensuring changes are reflected with the Companies Office.
An online equity management platform like Orchestra offers an easy way to ensure company and share registry requirements are met, whilst also creating a single source of truth with the Companies Office. Any update to a share registry on Orchestra will also update the NZ Companies Office, plus company documents can be saved in the Orchestra Document Vault for stakeholders to access.
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DISCLAIMER: This article is for informational purposes only, and contains general information only. Orchestra is not, by means of this information, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This information is not intended as a recommendation, offer or solicitation for the purchase or sale of any options or shares.