When does a director “live in New Zealand”?

Since 1 May 2015, the Companies Act 1993 has required that at least one director of each New Zealand company “live in New Zealand” or “live in an enforcement country and be a director of a company that is registered … in that enforcement country”. The aim is to ensure there is an individual who can be questioned about, and held to account for, a company’s activities. The Registrar of Companies, drawing on tax legislation, has interpreted “live in New Zealand” to mean living in New Zealand for at least 183 days a year.

This interpretation was recently challenged in the High Court. In Re John Malcolm Carr [2016] NZHC 1536, the Court found that a broader test is to be applied and that the 183 day threshold only provides “a criterion through which directors can automatically meet the statutory test”. If a director does not meet the threshold, the test can be satisfied by other means. While the Court did not set any definitive criteria for assessing whether a director “lives in New Zealand”, it noted that the following considerations will be relevant:

• the amount of time the person spends in New Zealand;
• their connection to New Zealand;
• the ties they have to New Zealand; and
• the manner of their living when in New Zealand.

When incorporating a company, bear in mind this New Zealand resident director requirement and how it is to be interpreted.

Image courtesy of Jocelyn Kinghorn.