New Zealand is lucky to have one of the best (if not the best) Companies Office websites in the world. We also have a very liberal company law regime – which is generally a good thing. It is little surprise therefore that New Zealand ranks #1 in the world for ease of setting up a business – the process is almost ridiculously easy and often only takes a few minutes. The proportionally large number of registered companies confirms that setting up and maintaining a company is an easy thing to do.
Two changes will affect this slightly.
First, from 1 August a $45 charge has been introduced for filing of annual returns (previously this was free). As the process is fully automated and does not involve filing accounts, it is difficult to see what this charge is actually for. But it should be a nice little earner: the Companies Office says there were 563,856 active companies at June 2011, and assuming each one files annual returns this will bring in over $25 million.
This will also sting those people who, for whatever reason, sit on numerous shelf companies. Someone with say ten shelf companies will now have an annual holding cost of at least $450 per year, or face having them struck off.
The second, more substantive change (which has not yet occured) are reforms requiring, among other things, companies to have at least one director or agent resident in New Zealand (or an “enforcement country” with whom we have reciprocal arrangements). As Stuff reports:
The Government is fast-tracking reforms to prevent New Zealand companies being used as tools by international criminals.
The move comes after criticism from opposition parties that the Government was dragging its feet on the issue and as the Sunday Star-Times uncovers New Zealand links to a rort of the Ukraine health system, where publicly purchased vaccines were subjected to 300 per cent mark-ups.
As in previous cases of shell company abuse, the vaccine scam relied on New Zealand-registered companies using foreign directors – in this case a Panamanian mother – to obscure transactions.
This is a sensible and probably overdue change. It will not affect the vast majority of New Zealand companies. But there have been numerous instances of New Zealand companies having no local directors, being involved in international money laundering. The requirement for a local director / agent will address this by:
- Making it harder to register a company without a New Zealand resident being involved; and
- Ensuring (or at least making more likely) that there is at least one person in the jurisdiction (or one with enforcement arrangements in place) who can be investigated or potentially prosecuted if the company becomes involved in suspicious activities.