Company rules to be tightened

The use of New Zealand shell companies by overseas criminal organisations will be curtailed under new rules announced today by Commerce Minister Simon Power.

Among the measures designed to tighten the company registration process, New Zealand companies must have at least one New Zealand resident director or agent. 

"Our company registration processes are highly-respected but there have been increasing threats to our international reputation posed by overseas interests which use New Zealand-registered companies to undertake criminal activity.
 
"These changes will help ensure New Zealand retains its position as one of the best places in the world to do business.''

The measures will require amendments to the Companies Act and related legislation. A bill setting out these measures is expected to be introduced to Parliament next year.

In January a New Zealand company, SP Trading Ltd of Queen St, Auckland, was exposed as charterer of a Georgia-registered cargo plane that was seized by Thai police on December 12. It was carrying 35 tonnes of explosives and anti-aircraft missiles from North Korea to Iran.

SP Trading was believed to be a "one-time use'' entity set up solely to charter the plane and was part of a web of hundreds of shell companies fronted by nominees and linked to overseas tax havens.

Its current sole director is listed as Leo Boe of Port Vila, Vanuatu, and its current owner is Vicam (Auckland) Ltd, whose sole director is listed as Nesita Manceau of Mataki City in the Philippines.

Under the new rules, New Zealand-resident directors or agents will be responsible for ensuring companies provide accurate information to the Registrar of Companies and will be liable if companies breach their filing requirements under the Companies Act.

The Registrar of Companies will also get expanded powers.

There will be a greater ability to remedy issues concerning the bona fides of directors and shareholders of companies, and to deal with compliance issues around company registration. 

There will also be greater powers to take action where doubt exists about the accuracy of information about a company on the register. 

"In particular, the Registrar will be able to `flag' companies which are under investigation,"  Power said.

"This will provide greater protection for legitimate businesses, which will be able to check the Companies Office website to see if there are concerns about the bona fides of the companies they are doing business with.

"If the investigation shows that a company and its directors or agent have given inaccurate or misleading information, or have committed other breaches of companies legislation, the registrar will be able to remove that company from the register.

"The registrar will be able to also prohibit any person from acting as a director for up to five years where they were a director of such a company."

Similar provisions will be put in place for limited partnerships.

- © Fairfax NZ News