Proposed Company Law Reforms

Phase one 

Director Identification and Privacy

The announcement includes the proposed introduction of unique identification numbers for directors of companies and general partners of limited partnerships. This is intended to help identify and enforce against poor and illegal business practices, including phoenixing (where insolvent companies or bankrupt directors reappear through new entities). This proposal aligns with the recent roll out of a similar director identification scheme in Australia and will make it easier to link individuals to the various companies they are involved with. 

Importantly, these reforms will enable directors and shareholders to list an address for service (such as that of their lawyer or accountant) instead of their home address on the Companies Register. This move will no doubt be welcomed by directors across the country, and help to address increasing safety and privacy concerns. We note that this proposal goes further than the Member’s Bill introduced in February 2024, that sought to enable directors to substitute their home address for an “address for service”, but only following lodgement of a statutory declaration evidencing likely physical or mental harm. There are many varied and valid reasons that a director may not want their residential address so easily discoverable, and this proposal should deliver a sound compromise between privacy and accountability.

Modernise and Simplify

The first phase also aims to modernise, simplify and digitise the Act to better reflect the modern business environment and reduce compliance costs and complexity, including:

• introducing a simpler and cheaper process for a company to reduce its share capital (without court approval subject to a board resolution and agreement of shareholders);

• amending the major transaction provisions to avoid duplication of processes and strengthening the current provisions so that they cannot be avoided;

• allowing easier execution of certain actions with unanimous shareholder approval, such as issuing options or convertible securities, and acquiring shares to be held as treasury stock;

• permitting the use of unclaimed dividends after two years and after reasonable efforts have been made to contact the shareholder, while the shareholder's claim still remains;

• increasing digitisation to allow more actions to be carried out online; and 

• technical improvements to insolvency law, such as extending the claw back period for transactions with related parties prior to liquidation to four years.

It also intends to encourage increased use of the New Zealand Business Number (NZBN), a unique global identifier available to every New Zealand business, which is used to facilitate easier business connections and transactions. 

The bill containing these amendments is expected to be introduced in early 2025.