In clause 2(1), replace “Subparts 2 and 4 of Part 1 and Part 2 come into force 6 months” (lines 6 and 7 on page 5) with “Except as provided in subsection (1A), subparts 2 and 4 of Part 1 and Part 2 come into force on the 180th day”.

After clause 2(1) (after line 9 on page 5), insert:

(1A) Sections 39A, 48A, 52AB, 58A, 58B, and 58C and Schedule 2B come into force on the date on which the item relating to the Companies Act 1993 in the Schedule of the Financial Markets (Repeals and Amendments) Act 2013 comes into force.

Clause 4

In the heading to clause 4, replace “section 138A” (line 7 on page 6) with “sections 138A and 138B”.

In clause 4, replace “section is” (line 8 on page 6) with “sections are”.

In clause 4, heading to new section 138A, replace “breaches of certain duties” (line 9 on page 6) with “breach of director's duty to act in good faith and in best interests of company”.

In clause 4, replace new section 138A(1) (lines 10 to 14 on page 6) with:

“(1) A director of a company commits an offence if the director exercises powers or performs duties as a director of the company, or omits to exercise powers or perform duties as a director of the company,—

“(a) in bad faith towards the company; and

“(b) believing the conduct is not in the best interests of the company; and

“(c) knowing, or being reckless as to whether, the conduct will cause—

“(i) serious loss to the company; or

“(ii) benefit or advantage to a person who is not the company (including, for example, to the director).

In clause 4, delete new section 138A(2) (lines 15 to 19 on page 6).

In clause 4, after new section 138A (after line 21 on page 6), insert:

“138B Cases where director charged with offence under section 138A not liable

“(1) Despite section 138A, in any proceeding for an offence under that section, a director who is charged with that offence (the director) in respect of a company (the company) is not liable to be convicted of that offence if subsection (2) or (3) applies to the director.

“(2) This subsection applies to the director if—

“(a) the company is a subsidiary; and

“(b) the constitution of the company expressly permits a director's conduct to be in the best interests of the company's holding company even though it may not be in the best interests of the company; and

“(c) the company's shareholders have given prior agreement to the director's relevant conduct; and

“(d) the director believed that his or her relevant conduct was in the best interests of the company's holding company.

“(3) This subsection applies to the director if—

“(a) the company is carrying out a joint venture between its shareholders; and

“(b) the constitution of the company expressly permits a director's conduct to be in the best interests of a shareholder or shareholders of the company even though it may not be in the best interests of the company; and

“(c) the director believed that his or her relevant conduct was in the best interests of the shareholder or shareholders, even though it was not in the best interests of the company.

“(4) In any prosecution for an offence under section 138A, it is to be presumed that neither subsection (2) nor (3) applies to the director unless the director raises, on the basis of an evidential foundation, the issue of whether either of those subsections applies.

New clauses 4AAA and 4AAB

Before clause 4A (before line 22 on page 6), insert:

4AAA Penalty for failure to comply with Act

Section 373(4)(f) is amended by inserting “or in a manner that causes material or serious loss to 1 or more creditors” after “fraudulently”.

4AAB Carrying on business fraudulently

(1) The heading to section 380 is amended by adding “or in manner that causes material or serious loss to creditors”.

(2) Section 380 is amended by adding the following subsections:

“(4) Every director of a company commits an offence and is liable on conviction to the penalties set out in section 373(4) if—

“(a) the director agrees to, or causes or allows, the business of the company to be carried on in a manner that causes serious loss to 1 or more of the company's creditors; and

“(b) the director knows that a serious loss will be suffered by 1 or more of the company's creditors as a result of the business being carried on in that manner (whether or not the director knows the full extent of the loss or the identity of the creditors concerned); and

“(c) 1 or more of the creditors that suffered the serious loss did not give their prior consent to carrying on the business in that manner.

“(5) Despite subsection (4), in any prosecution for an offence under that subsection, a director (the director) who is charged with an offence in respect of a company (the company) under that subsection is not liable to be convicted of that offence if subsection (6) applies to the director.

“(6) This subsection applies to the director if, at the time that the business of the company is being carried on in the manner described in subsection (4)(a), the director—

“(a) believes on reasonable grounds that all the creditors that will suffer serious loss as a result of the business being carried on in that manner have been identified; and

“(b) believes that all those creditors have consented to the business being carried on in that manner.

“(7) It is to be presumed that subsection (6) does not apply to the director unless the director raises, on the basis of an evidential foundation, the issue of whether subsection (6) does apply to the director.

“(8) Nothing in subsection (4) applies to the carrying on of the business of a company in accordance with any of the following:

“(a) a compromise under Part 14:

“(b) a court-ordered arrangement, amalgamation, or compromise under Part 15:

“(c) an administration under Part 15A:

“(d) a deed of company arrangement made under Part 15A.”

Clause 4A

Delete clause 4A (lines 22 to 29 on page 6).

Clause 7B

In clause 7B, replace new section 94A(d) (line 35 on page 8) with:

“(d) the registered office of the ultimate holding company:

Clause 7F

In clause 7F(1), replace new section 220(1)(c) (lines 32 to 34 on page 9) with:

“(c) in relation to every director of the amalgamated company, his or her full name and the information required by section 12(2)(b)(ii) and (iii):”.

New clause 7FA

After clause 7F (after line 5 on page 10), insert:

7FA Registration of amalgamation proposal

Section 223 is amended by inserting the following paragraph after paragraph (b):

“(ba) the date and place of birth of every director of the amalgamating company; and”.

Clause 22

In clause 22, new section 395(1)(bb), after “section 12(2)(b)(iii)” (line 16 on page 26), insert “and paragraph (gaaa) of Schedule 4”.

Clause 22A

In clause 22A(2), replace “paragraph” (line 28 on page 26), with “paragraphs”.

In clause 22A(2), before paragraph (ga) (before line 30 on page 26), insert:

“(gaaa) if a director is resident in an enforcement country, the prescribed information in respect of the company or companies in that country of which the director is a director:

Clause 22B

In clause 22B(1), replace “Until the expiry of 6 months” (line 6 on page 27) with “Before the close of the 180th day”.

In clause 22B(2), replace “within 6 months” (line 12 on page 27) with “before the close of the 180th day”.

New clause 24A and cross-heading

After clause 24 (after line 26 on page 28), insert:

Transitional provision relating to amendments to Part 13 of principal Act

24A Transitional provision relating to amendments to Part 13 of principal Act

(1) An amalgamation proposal involving 1 or more code companies that has been approved by the boards of all amalgamating companies in accordance with section 221(1) of the principal Act before the commencement of section 24 of this Act is to be continued as if section 24 of this Act had not been enacted, except if the amalgamation takes effect on or after the 180th day after the commencement of section 24 of this Act.

(2) Section 24 of this Act applies to both—

(a) an amalgamation described in subsection (1) that takes effect on or after the 180th day after the commencement of section 24; and

(b) any other amalgamation proposal that has not been approved by the boards of all companies in accordance with section 221(1) of the principal Act before the commencement of section 24.

(3) In this section, takes effect, in respect of an amalgamation, means the date when the amalgamation takes effect in accordance with sections 224 and 225 of the principal Act.

Clause 25

In clause 25, new section 236A(5), after “this section” (line 33 on page 29), insert “and section 236B”.

In clause 25, new section 236A(5), before the definition of interest class (before line 34 on page 29), insert:

“affects the voting rights, in respect of an arrangement or amalgamation, means an arrangement or amalgamation that involves a change in the relative percentage of voting rights held or controlled by 1 or more shareholders

Clause 26

In clause 26(2), new section 8(1)(eb), after “code company” (line 32 on page 30), insert “(within the meaning of that term in section 236A of the Companies Act 1993)”.

In clause 26(3), new section 23A, after “code company” (line 5 on page 31), insert “(within the meaning of that term in section 236A of the Companies Act 1993)”.

New clause 26B

After clause 26A (after line 24 on page 31), insert:

26B Consequential amendment to Takeovers (Fees) Regulations 2001

(1) This section amends the Takeovers (Fees) Regulations 2001.

(2) Regulation 4(2) is amended by inserting the following paragraph after paragraph (a):

“(aa) considering an application for an order under section 236(1) of the Companies Act 1993 that affects the voting rights of a code company (within the meaning of that term in section 236A of the Companies Act 1993), and indicating whether or not the Panel has an objection to such an order:”.

New clauses 28A and 28B

Before clause 29 (before line 5 on page 32), insert:

28A Interpretation

Section 2(1) is amended by inserting the following definition in its appropriate alphabetical order:

“control interest has the meaning set out in sections 365B to 365E”.

28B Meaning of director

(1) Section 126(1)(b) is amended by inserting “318(1)(bab),” after “301,”.

(2) Section 126(1)(c) is amended by inserting “318(1)(bab),” after “301,”.

Clause 29

In clause 29(1), after new section 318(1)(ba) (after line 16 on page 32), insert:

“(bab) the Registrar has reasonable grounds to believe that the company, or 1 or more of its directors or shareholders, has failed to respond to a requirement made in relation to that or another company under section 365F or 365G; or

In clause 29(2), new section 318(1A), after “subsection (1)(aaa),” (lines 29 and 30 on page 32), insert “(bab),”.

In clause 29(4), new section 318(4A), after “(ba),” (line 2 on page 33), insert “(bab),”.

Clause 30

In clause 30(1), after “(ba),” (line 22 on page 33), insert “(bab),”.

In clause 30(2), after “(ba),” (line 24 on page 33), insert “(bab),”.

In clause 30(4A), after new section 319(2)(c) (after line 31 on page 34), insert:

“(ca) if section 318(1)(bab) applies, that the company will be removed from the New Zealand register unless—

“(i) the Registrar does not, in accordance with section 322, proceed to remove the company from the register; or

“(ii) by the date specified in the notice, which must be at least 20 working days after the date of the notice, the company satisfies the Registrar (by notice in writing) that—

“(A) information has been disclosed as required by the Registrar under section 365F or 365G (in accordance with any specification under section 365H); or

“(B) there is a proper reason for the company to continue in existence:

In clause 30(5), after “(ba),” (line 34 on page 35), insert “(bab),”.

Clause 31

Replace clause 31(2) (lines 9 to 19 on page 36) with:

(2) Section 321 is amended by adding the following subsection:

“(4) Where a notice is given of an intention to remove a company from the New Zealand register, in addition to an objection to the removal on 1 or more of the grounds identified in subsection (1), in relation to any of the grounds for removal specified in the first column of the following table, any person may deliver to the Registrar, not later than the date specified in the notice, an objection to the removal on any of the corresponding grounds specified in the second column of the following table:”

Grounds for removal Grounds for objection

The company does not comply with section 10 The company complies with section 10

The company has failed to respond to a requirement made under section 365(1)(caaa) or (c) The company has responded to the requirement made under section 365(1)(caaa) or (c)

The Registrar has reasonable grounds to believe that the company, or 1 or more of its directors or shareholders, has failed to respond to a requirement made in relation to that or another company under section 365F or 365G Information has been disclosed as required by the Registrar under section 365F or 365G (in accordance with any specification under section 365H)

The Registrar has reasonable grounds to believe that the company, or 1 or more of its directors or shareholders, has intentionally provided the Registrar with inaccurate information The company has provided accurate information or inaccurate information was provided unintentionally

The Registrar has reasonable grounds to believe that the company, or 1 or more of its directors or shareholders, has failed to comply with duties relating to the company under this Act or the Financial Reporting Act 1993 in a serious or persistent way There has been no serious or persistent failure to comply with duties relating to the company under this Act or the Financial Reporting Act 1993

In clause 31(3), replace “subsection (2)” (line 21 on page 36), with “subsection (4)”.

In clause 31(3), new section 321(2A), replace “(2A)” (line 22 on page 36), with “(5)”.

In clause 31(3), new section 321(2A), after “subsection (1)” (line 22 on page 36), insert “or (4)”.

Clause 32

Replace clause 32(1AAA) (lines 27 to 29 on page 36) with:

(1AAA) Section 322(1) is amended by inserting “or (4)” after “or (c)”.

In clause 32(1), new section 322(1)(ba), after “(ba),” (line 32 on page 36), insert “(bab),”.

Clause 33

In clause 33(3), after “(ba)” (line 18 on page 37), insert “(bab),”.

Clause 36

In clause 36, new section 362(2)(ba), replace “; or” (line 7 on page 38) with “, 365F, or 365G; or”.

New clause 37A

After clause 37 (after line 34 on page 38), insert:

37A New sections 365A to 365H and headings inserted

The following sections and headings are inserted after section 365:

“Registrar's powers to identify controllers of company

“365A Purpose of sections 365B to 365H

“(1) The purpose of sections 365B to 365H is to ensure that the Registrar may, for law enforcement purposes, obtain adequate, accurate, and timely information on the beneficial ownership and control of companies in order to conform with New Zealand's obligations under the FATF Recommendations.

“(2) In this section,—

“FATF means the Financial Action Task Force on Money Laundering established in Paris in 1989

“FATF Recommendations means the revised Recommendations adopted by FATF at its plenary meeting on 15 to 17 February 2012.

“365B Control interests in shares (basic rule)

“(1) In sections 365D to 365F, a person has a control interest in a share if the person—

“(a) is a shareholder; or

“(b) is a beneficial owner of the share; or

“(c) has the power to exercise, or to control the exercise of, a right to vote attached to the share; or

“(d) has the power to acquire or dispose of, or to control the acquisition or disposal of, the share.

“(2) Subsection (1) applies regardless of whether the power or control is express or implied, direct or indirect, legally enforceable or not, related to a particular share or not, exercisable presently or in the future, or exercisable alone or jointly with another person or persons (but a power to cast merely 1 of many votes is not, in itself, a joint power of this kind).

“(3) Subsection (1) applies regardless of whether or not the power or control is or can be made subject to restraint or restriction or is exercisable only on the fulfilment of a condition.

“(4) If 2 or more persons can jointly exercise a power, each of those persons is taken to have that power.

“Compare: 1988 No 234 s 5

“365C Extension of basic rule to powers or controls exercisable through trust, agreement, etc

“(1) A person has a power or control referred to in section 365B if the power or control is, or may at any time be, exercised under, by virtue of, by means of, or as a result of a revocation or breach of, a trust or an agreement (or any combination of them).

“(2) Subsection (1) applies regardless of whether or not the trust or agreement is legally enforceable or whether or not the person is a party to it.

“Compare: 1988 No 234 s 5A

“365D Extension of basic rule to interests held by other persons under control or acting jointly

“(1) A person (A) has a control interest in a share that another person (B) has if—

“(a) B or B's directors are accustomed or under an obligation (whether legally enforceable or not) to act in accordance with A's directions, instructions, or wishes in relation to a power or control referred to in section 365B; or

“(b) A has the power to exercise, or control the exercise of, 20% or more of the votes that may be cast at a meeting of shareholders of B; or

“(c) A has the power to acquire or dispose of, or to control the acquisition or disposal of, shares that have 20% or more of votes that may be cast at a meeting of shareholders of B; or

“(d) A and B are related bodies corporate; or

“(e) A and B have an agreement, arrangement, or understanding to act in concert in relation to a power or control referred to in section 365B.

“(2) For the purposes of subsection (1),—

“share includes—

“(a) a share in a company:

“(b) a share in an industrial and provident society:

“(c) a share in a building society:

“(d) a partnership interest in a partnership

“shareholder means a holder of a share.

“(3) For the purposes of subsection (1)(a), director means,—

“(a) in relation to a company, any person occupying the position of a director of the company by whatever name called:

“(b) in relation to a partnership (other than a limited partnership), any partner:

“(c) in relation to a limited partnership, any general partner:

“(d) in relation to a body corporate or unincorporate other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company.

“(4) For the purposes of subsection (1)(d), a body corporate (A) is related to another body corporate (B) if—

“(a) B is A's holding company or subsidiary; or

“(b) more than half of A's issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital) are held by B and bodies corporate that are related to B (whether directly or indirectly, but other than in a fiduciary capacity), or vice versa; or

“(c) more than half of the issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital) of each of A and B are held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or

“(d) the businesses of A and B have been so carried on that the separate business of each body corporate, or a substantial part of that business, is not readily identifiable; or

“(e) there is another body corporate to which A and B are both related.

“Compare: 1988 No 234 s 5B(1)

“365E Situations not giving rise to control interests

A person (A) does not have a control interest in a share under section 365B merely because—

“(a) the ordinary business of A consists of, or includes, the lending of money or the provision of financial services, or both, and A has the control interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of A; or

“(b) A is authorised to undertake trading activities on a licensed market and A acts for another person to acquire or dispose of the share on behalf of that person in the ordinary course of A's business of carrying out those trading activities; or

“(c) A has been authorised by resolution of the directors of a company to act as its representative at a particular meeting of shareholders, or of a class of shareholders, of the company, and a copy of the resolution is deposited with the company before the meeting; or

“(d) A is appointed as a proxy to vote at a particular meeting of shareholders, or of a class of shareholders, of a company and the instrument of A's appointment is deposited with the company before the meeting; or

“(e) A is a shareholder of a company and the company's constitution gives the shareholder pre-emptive rights on the transfer of the shares, if all shareholders have pre-emptive rights on the same terms.

“Compare: 1988 No 234 s 6

“365F Registrar may require persons to disclose control interests and powers to get control interests

“(1) The Registrar (or a person authorised by the Registrar) may, by notice given after having regard to the purpose in section 365A, require a specified person to disclose full details of all (or any class of)—

“(a) control interests that the specified person has in shares of a company and of the circumstances that give rise to those interests; or

“(b) powers that the specified person has or may at any time have to acquire a control interest in shares of a company and of the circumstances that give rise to that interest; or

“(c) control interests that any other person (whom the specified person must identify by name and with current contact details) has in shares of a company and of the circumstances that give rise to the other person's interests.

“(2) However, a matter referred to in subsection (1)(c) need only be disclosed to the extent to which it is known to the specified person required to make the disclosure.

“(3) Subsection (1) applies regardless of whether the shares referred to in subsection (1) have voting rights or not or are issued or yet to be issued.

“(4) Sections 365B to 365E apply in determining whether or not a person has a power referred to in subsection (1)(b) (and for this purpose every reference in those sections to a control interest must be read as including a reference to the power to acquire a control interest).

“(5) The person must disclose the information required under subsection (1) in accordance with any specifications under section 365H.

“(6) For the purposes of this section, specified person, in relation to the company to which the requirement under subsection (1) relates, means—

“(a) a shareholder in the company:

“(b) a director of the company:

“(c) a person named in a previous disclosure under subsection (5) as having a control interest in shares of the company.

“(7) If a person fails to comply with subsection (5), he or she commits an offence and is liable on conviction to the penalty set out in section 373(2).

“Compare: 1988 No 234 ss 34, 35; Corporations Act 2001 ss 672A, 672B (Aust)

“365G Registrar may require disclosure about controllers or delegates of directors

“(1) The Registrar (or a person authorised by the Registrar) may, by notice given after having regard to the purpose in section 365A, require a specified person to disclose control information in relation to a company.

“(2) However, the following types of control information need only be disclosed to the extent to which they are known to the specified person:

“(a) directions or instructions given to any other person:

“(b) directions or instructions—

“(i) given to the board that were not provided to the specified person; or

“(ii) given to the board when the specified person was not a director.

“(3) A specified person must disclose the information required under subsection (1) in accordance with any specifications under section 365H.

“(4) If a specified person fails to comply with subsection (3), he or she commits an offence and is liable on conviction to the penalty set out in section 374(2).

“(5) For the purposes of this section,—

“control information, in relation to the company to which the requirement under subsection (1) relates, means—

“(a) any directions or instructions relating to the management and administration of the company given to a specified person (A) (or to the board or to any other person who is responsible for the management and administration of the company) by another person (B); or

“(b) any delegation of powers relating to the management and administration of the company by a specified person to another person

“specified person, in relation to the company to which the requirement under subsection (1) relates, means—

“(a) a director of the company:

“(b) a person named in a previous disclosure under subsection (3) concerning that company.

“365H Registrar may specify deadlines, form, and verification for information required under section 365F or 365G

When exercising a power described in section 365F or 365G, the Registrar (or a person authorised by the Registrar) may specify—

“(a) a particular form in which the information must be provided; and

“(b) a date by which the information must be provided; and

“(c) whether the information must be verified by the production of original documents or certified copies of original documents or by a statutory declaration.”.

“Other matters relating to Registrar's powers”.

New clause 38AAA

Before clause 38 (before line 1 on page 39), insert:

38AAA Disclosure of information and reports

(1) Section 366(1) is amended by—

(a) omitting “purpose” and substituting “purposes”; and

(b) inserting “365F, 365G, or 365H” after “section 365”.

(2) Section 366(1)(g) is amended by inserting “except in the case of an authorisation under section 365F, 365G, or 365H,” before “any person”.

(3) Section 366 is amended by inserting the following subsections after subsection (1):

“(1A) The Registrar or any person authorised by the Registrar may give information disclosed to the Registrar under section 365F or 365G to a government agency for law enforcement purposes if the Registrar is satisfied that the agency has a proper interest in receiving the information.

“(1B) For the purposes of subsection (1A),—

“government agency means—

“(a) the Crown Law Office:

“(b) the Department of Internal Affairs:

“(c) the Financial Markets Authority:

“(d) the Government Communications Security Bureau:

“(e) the Inland Revenue Department:

“(f) the Ministry of Business, Innovation, and Employment:

“(g) the Ministry of Justice:

“(h) the New Zealand Customs Service:

“(i) the New Zealand Security Intelligence Service:

“(j) the New Zealand Police:

“(k) the Reserve Bank of New Zealand:

“(l) the Serious Fraud Office:

“(m) any international counterpart of the entities in paragraphs (a) to (l)

“law enforcement purposes means—

“(a) the administration of this Act and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:

“(b) the detection, investigation, and prosecution of—

“(i) any offence under this Act; or

“(ii) any offence under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009; or

“(iii) a money laundering offence (within the meaning of section 5 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009); or

“(iv) any offence under section 143B of the Tax Administration Act 1994; or

“(v) any serious offence (within the meaning of section 243(1) of the Crimes Act 1961):

“(c) the enforcement of the Proceeds of Crime Act 1991 or the Criminal Proceeds (Recovery) Act 2009:

“(d) the enforcement of the Misuse of Drugs Act 1975:

“(e) the enforcement of the Terrorism Suppression Act 2002:

“(f) the administration of the Mutual Assistance in Criminal Matters Act 1992:

“(g) the investigation of matters relating to security under the New Zealand Security Intelligence Service Act 1969:

“(h) any action referred to in paragraphs (a) to (g) taken in respect of legislation of an overseas jurisdiction that is broadly equivalent to the enactments listed in those paragraphs.”

(4) Section 366(2) and (3) are amended by inserting “, 365F, 365G, or 365H” after “section 365”.

(5) Section 366(3)(c) is amended by omitting “(1) or subsection (2)” and substituting “(1), (1A), (1B), or (2)”.

Clause 38

In clause 38, new section 366A(1)(a), after “or (c)” (line 9 on page 39), insert “, 365F, 365G, or 365H”.

In clause 38, delete new section 366C (lines 21 to 26 on page 39).

New clauses 38A and 38B

After clause 38 (after line 26 on page 39), insert:

38A Inspector's report admissible in liquidation proceedings

Section 369 is amended by inserting “, or in relation to a disclosure under section 365F, 365G, or 365H,” after “section 365”.

38B Exercise of powers under section 365 not affected by appeal

(1) The heading to section 371 is amended by inserting “, 365F, 365G, or 365H” after “section 365”.

(2) Section 371(1) is amended by inserting “, 365F, 365G, or 365H” after “section 365”.

New clauses 39AAA and 39AAB

Before clause 39 (before line 31 on page 39), insert:

39AAA Persons prohibited from managing companies

Section 382(1) is amended by repealing paragraph (a) and substituting the following paragraph:

“(a) a person has been convicted of an offence in connection with the promotion, formation, or management of a company (being an offence that is punishable by a term of imprisonment of not less than 3 months); or”.

39AAB Court may disqualify directors

Section 383(1) is amended by repealing paragraph (a) and substituting the following paragraph:

“(a) a person has been convicted of an offence in connection with the promotion, formation, or management of a company (being an offence that is punishable by a term of imprisonment of not less than 3 months), or has been convicted of a crime involving dishonesty as defined in section 2(1) of the Crimes Act 1961; or”.

Clause 39

In clause 39, new section 385AA(1), after “318(1)(ba),” (line 6 on page 40), insert “(bab),”.

New clause 39A

After clause 39 (after line 15 on page 41), insert:

39A Additional power for Registrar or FMA to prohibit person from managing companies

Section 385AA(2) (as inserted by section 39 of this Act) is amended by omitting “5 years” and substituting “10 years”.

Clause 42

Delete clause 42 (lines 26 to 34 on page 41).

Clause 46

In clause 46(1), replace new section 8(4) (lines 9 to 20 on page 43) with:

“(4) Subject to subsection (5), a limited partnership must have 1 or more of the following:

“(a) a general partner who is a natural person who—

“(i) lives in New Zealand; or

“(ii) lives in an enforcement country and is a director of a company that is registered (except as the equivalent of an overseas company) in that enforcement country:

“(b) a general partner that is a limited partnership and that has 1 or more general partners who are natural persons who—

“(i) live in New Zealand; or

“(ii) live in an enforcement country and are directors of a company that is registered (except as the equivalent of an overseas company) in that enforcement country:

“(c) a general partner that is a partnership governed by the Partnership Act 1908 and that has 1 or more partners who are natural persons who—

“(i) live in New Zealand; or

“(ii) live in an enforcement country and are directors of a company that is registered (except as the equivalent of an overseas company) in that enforcement country:

“(d) a general partner that is a company:

“(e) a general partner that is an overseas company registered under the Companies Act 1993 and that has 1 or more directors who are natural persons who—

“(i) live in New Zealand; or

“(ii) live in an enforcement country and are directors of a company that is registered (except as the equivalent of an overseas company) in that enforcement country.

“(5) Every natural person who is a general partner, or who is a director, partner, or general partner of a general partner, must be qualified under section 19A.”

Clause 47

Replace clause 47(1) (lines 24 to 27 on page 43) with:

(1) Section 18(1) is amended by inserting “general” before “partner”.

Clause 48

In clause 48, delete new section 19A(3) (lines 12 to 15 on page 45).

In clause 48, replace new section 19B (lines 16 to 24 on page 45) with:

“19B Disqualified general partner still has duties or obligations under Act

A person who is disqualified from being a general partner but who acts as a general partner is a general partner for the purposes of a provision of this Act that imposes a duty or an obligation on a general partner of a limited partnership.”

New clause 48A

After clause 48 (after line 24 on page 45), insert:

48A Qualifications of general partners: natural persons

Section 19A(2)(f) (as inserted by section 48 of this Act) is amended by omitting “the Securities Act 1978, the Securities Markets Act 1988,” and substituting “the Financial Markets Conduct Act 2013”.

Clause 49A

In clause 49A(1), replace “following paragraph” (line 3 on page 46) with “following paragraphs”.

In clause 49A(1), replace new section 52(1)(d) (lines 4 to 14 on page 46), with:

“(d) in relation to every natural person who is a proposed general partner or who is a director, partner, or general partner of a proposed general partner, state—

“(i) his or her full name and date and place of birth; and

“(ii) his or her residential address; and

“(iii) if the residential address is in an enforcement country, whether the natural person is a director of a company that is registered (except as the equivalent of an overseas company) in that enforcement country and, if so, the prescribed information; and

“(da) in relation to every proposed general partner who is not a natural person, state the general partner's name and address; and”.

Replace clause 49A(2) (lines 15 and 16 on page 46) with:

(2) Section 52(1) is amended by repealing paragraph (e) and substituting the following paragraphs:

“(e) contain a list of the full names, residential addresses, and dates and places of birth of the proposed limited partners who are natural persons; and

“(ea) contain a list of the names and addresses of the proposed limited partners who are not natural persons; and”.

Clause 49B

In clause 49B(1), replace new section 57(1)(e) (lines 20 to 22 on page 46) with:

“(e) the full name and residential address of—

“(i) every general partner who is a natural person; and

“(ii) every general partner's director, partner, or general partner who is a natural person:

“(ea) the name and address of every general partner who is not a natural person:”.

Replace clause 49B(2) (lines 23 and 24 on page 46) with:

(2) Section 57(1) is amended by repealing paragraph (f) and substituting the following paragraph:

“(f) the date and place of birth of—

“(i) every general partner who is a natural person; and

“(ii) every general partner's director, partner, or general partner who is a natural person:”.

Replace clause 49B(3) (lines 25 and 26 on page 46) with:

(3) Section 57(1) is amended by repealing paragraph (g) and substituting the following paragraphs:

“(g) the full name, residential address, and date and place of birth of every limited partner who is a natural person:

“(ga) the name and address of every limited partner who is not a natural person:”.

After clause 49B(3) (after line 26 on page 46), insert:

(4) Section 57(2) is amended by omitting “and (g)” and substituting “, (g), and (ga)”.

Clause 49C

Before clause 49C(1) (before line 28 on page 46), insert:

(1AAA) Section 64(2) is amended by repealing paragraph (g) and substituting the following paragraphs:

“(g) the name and residential address of—

“(i) a general partner who is a natural person; and

“(ii) a general partner's director, partner, or general partner who is a natural person:

“(ga) the name and address of a general partner who is not a natural person:”.

Replace clause 49C(2) (lines 30 and 31 on page 46) with:

(2) Section 64(3) is amended by repealing paragraph (d) and substituting the following paragraph:

“(d) the name and date and place of birth of—

“(i) a general partner who is a natural person; and

“(ii) a general partner's director, partner, or general partner who is a natural person.”

New clause 49CA

After clause 49C (after line 31 on page 46), insert:

49CA Records of limited partnership

Section 74(1) is amended by repealing paragraph (c) and substituting the following paragraphs:

“(c) the full name and residential address of—

“(i) each current partner who is a natural person; and

“(ii) each current partner's director, partner, or general partner who is a natural person:

“(ca) the name and address of each current partner who is not a natural person:

“(cb) the last known names and addresses required by paragraphs (c) and (ca) in respect of each person who has ceased to be a partner within the last 7 years:”.

Clause 49D

Replace clause 49D (lines 32 to 34 on page 46) with:

49D Annual return

(1) Section 76(1) is amended by adding “that contains as much of the information specified in Schedule 2 as is prescribed”.

(2) Section 76 is amended by repealing subsection (2).

New clause 51A

Before clause 52 (before line 11 on page 55), insert:

51A Use of name by overseas limited partnership

Section 109(1) is amended by omitting “full”.

Clause 52

In clause 52(2), new section 116(1)(gca), after “section 52(1)(d)(iii)” (line 29 on page 55), insert “and paragraphs (h) and (n) of Schedule 2”.

New clauses 52AA and 52AB

After clause 52 (after line 33 on page 55), insert:

New Schedule 2 added

52AA New Schedule 2 added

The principal Act is amended by adding as Schedule 2 the Schedule 2 set out in Schedule 2A of this Act.

52AB Schedule 2 amended

Schedule 2 of the principal Act (as inserted by Schedule 2A and section 52AA of this Act) is amended in the manner indicated in Schedule 2B of this Act.

Clause 52A

In clause 52A(1), replace “Until the expiry of 6 months” (line 6 on page 56) with “Before the close of the 180th day”.

In clause 52A(2), replace “within 6 months” (line 12 on page 56) with “before the close of the 180th day”.

Cross-heading above clause 52B

In the cross-heading above clause 52B, after “general” (line 28 on page 56), insert “and limited”.

Clause 52B

In the heading to clause 52B, after “general” (line 30 on page 56), insert “and limited”.

In clause 52B(1), after “each general partner” (line 34 on page 56), insert “and each limited partner”.

New clause 52C

Before clause 53 (before line 7 on page 57), insert:

52C Interpretation

Section 4 is amended by inserting the following definition in its appropriate alphabetical order:

“control interest has the meaning set out in sections 78B to 78E”.

Clause 54

In clause 54(2), new section 63(2)(a), after “or (a)” (line 23 on page 57), insert “, 78F, 78G, or 78H”.

Clause 55

In the heading to clause 55, replace “sections 63A and” (line 32 on page 57) with “section 63A”.

In clause 55, replace “sections are” (line 33 on page 57) with “section is”.

In clause 55, delete new section 63B (lines 5 to 10 on page 58).

New clause 56A

After clause 56 (after line 2 on page 59), insert:

56A New sections 78A to 78H and headings inserted

The following sections and headings are inserted after section 78:

“Registrar's powers to identify controllers of limited partnership

“78A Purpose of sections 78B to 78H

“(1) The purpose of sections 78B to 78H is to ensure that the Registrar may, for law enforcement purposes, obtain adequate, accurate, and timely information on the beneficial ownership and control of limited partnerships in order to conform with New Zealand's obligations under the FATF Recommendations.

“(2) In this section,—

“FATF means the Financial Action Task Force on Money Laundering established in Paris in 1989

“FATF Recommendations means the revised Recommendations adopted by FATF at its plenary meeting on 15–17 February 2012.

“78B Control interests in partnership interests (basic rule)

“(1) In sections 78D to 78F, a person has a control interest in a partnership interest if the person—

“(a) is a partner; or

“(b) has a right (other than under the partnership agreement) to any of the following:

“(i) to share in the assets of the partnership:

“(ii) to receive a share of the distributions from the partnership:

“(iii) to receive a share of other benefits provided by the partnership to partners; or

“(c) has the power to exercise, or to control the exercise of, any decision-making powers arising from the partnership interest (where that partnership interest relates to a general partner); or

“(d) has the power to acquire or dispose of, or to control the acquisition or disposal of, all or part of a partnership interest (where that partnership interest relates to a general partner).

“(2) Subsection (1) applies regardless of whether the power or control is express or implied, direct or indirect, legally enforceable or not, related to a particular partnership interest or not, exercisable presently or in the future, or exercisable alone or jointly with another person or persons (but a power to cast merely 1 of many votes is not, in itself, a joint power of this kind).

“(3) Subsection (1) applies regardless of whether or not the power or control is or can be made subject to restraint or restriction or is exercisable only on the fulfilment of a condition.

“(4) If 2 or more persons can jointly exercise a power, each of those persons is taken to have that power.

“Compare: 1988 No 234 s 5

“78C Extension of basic rule to powers or controls exercisable through trust, agreement, etc

“(1) A person has a power or control referred to in section 78B if the power or control is, or may at any time be, exercised under, by virtue of, by means of, or as a result of a revocation or breach of, a trust or an agreement (or any combination of them).

“(2) Subsection (1) applies regardless of whether or not the trust or agreement is legally enforceable or whether or not the person is a party to it.

“Compare: 1988 No 234 s 5A

“78D Extension of basic rule to interests held by other persons under control or acting jointly

“(1) A person (A) has a control interest in a partnership interest that another person (B) has if—

“(a) B or B's directors are accustomed or under an obligation (whether legally enforceable or not) to act in accordance with A's directions, instructions, or wishes in relation to a power or control referred to in section 78B; or

“(b) A has the power to exercise, or control the exercise of, 20% or more of the votes that may be cast at a meeting of shareholders of B; or

“(c) A has the power to acquire or dispose of, or to control the acquisition or disposal of, shares that have 20% or more of votes that may be cast at a meeting of shareholders of B; or

“(d) A and B are related bodies corporate; or

“(e) A and B have an agreement, arrangement, or understanding to act in concert in relation to a power or control referred to in section 78B.

“(2) For the purposes of subsection (1),—

“share includes—

“(a) a partnership interest in a partnership:

“(b) a share in a company:

“(c) a share in an industrial and provident society:

“(d) a share in a building society

“shareholder means a holder of a share.

“(3) For the purposes of subsection (1)(a), director means,—

“(a) in relation to a company, any person occupying the position of a director of the company by whatever name called:

“(b) in relation to a partnership (other than a limited partnership), any partner:

“(c) in relation to a limited partnership, any general partner:

“(d) in relation to a body corporate or unincorporate other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company.

“(4) For the purposes of subsection (1)(d), a body corporate (A) is related to another body corporate (B) if—

“(a) B is A's holding company or subsidiary; or

“(b) more than half of A's issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital) are held by B and bodies corporate that are related to B (whether directly or indirectly, but other than in a fiduciary capacity), or vice versa; or

“(c) more than half of the issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital) of each of A and B are held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or

“(d) the businesses of A and B have been so carried on that the separate business of each body corporate, or a substantial part of that business, is not readily identifiable; or

“(e) there is another body corporate to which A and B are both related.

“Compare: 1988 No 234 s 5B(1)

“78E Situations not giving rise to control interests

A person (A) does not have a control interest in a partnership interest under section 78B merely because—

“(a) the ordinary business of A consists of, or includes, the lending of money or the provision of financial services, or both, and A has the control interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of A; or

“(b) A is authorised to undertake trading activities on a licensed market and A acts for another person to acquire or dispose of the partnership interest on behalf of that person in the ordinary course of A's business of carrying out those trading activities; or

“(c) A has been authorised by resolution of the limited partnership's partners (or class of partners) to act as their representative at a particular meeting of partners (or a class of partners), and a copy of the resolution is deposited with the limited partnership before the meeting; or

“(d) A is appointed as a proxy to vote at a particular meeting of the limited partnership's partners (or a class of partners) and the instrument of A's appointment is deposited with the limited partnership before the meeting; or

“(e) A is a partner of a limited partnership and the limited partnership's partnership agreement gives the partner pre-emptive rights on the transfer of the partnership interest, if all partners have pre-emptive rights on the same terms.

“Compare: 1988 No 234 s 6

“78F Registrar may require persons to disclose control interests and powers to get control interests

“(1) The Registrar (or a person authorised by the Registrar) may, by notice given after having regard to the purpose in section 78A, require a specified person to disclose full details of all (or any class of)—

“(a) control interests that the specified person has in partnership interests of a limited partnership and of the circumstances that give rise to those control interests; or

“(b) powers that the specified person has or may at any time have to acquire a control interest in partnership interests of a limited partnership and of the circumstances that give rise to that control interest; or

“(c) control interests that any other person (who the specified person must identify by name and with current contact details) has in partnership interests of a limited partnership and of the circumstances that give rise to the other person's control interests.

“(2) However, a matter referred to in subsection (1)(c) need only be disclosed to the extent to which it is known to the specified person required to make the disclosure.

“(3) Subsection (1) applies regardless of whether the partnership interests referred to in subsection (1) have voting rights or not or are issued or yet to be issued.

“(4) Sections 78B to 78E apply in determining whether or not a person has a power referred to in subsection (1)(b) (and for this purpose every reference in those sections to a control interest must be read as including a reference to the power to acquire a control interest).

“(5) The person must disclose the information required under subsection (1) in accordance with any specifications under section 78H.

“(6) For the purposes of this section, specified person, in relation to the limited partnership to which the requirement under subsection (1) relates, means—

“(a) a partner in the limited partnership:

“(b) a person named in a previous disclosure under subsection (5) as having a control interest in shares of the limited partnership.

“(7) If a person fails to comply with subsection (5), he or she commits an offence and is liable on conviction to a fine not exceeding $10,000.

“Compare: 1988 No 234 ss 34, 35; Corporations Act 2001 ss 672A, 672B (Aust)

“78G Registrar may require disclosure about controllers or delegates of general partners

“(1) The Registrar (or a person authorised by the Registrar) may, by notice given after having regard to the purpose in section 78A, require a specified person to disclose control information in relation to a limited partnership.

“(2) However, control information that is directions or instructions given to any other person need only be disclosed to the extent to which they are known to the specified person.

“(3) A specified person must disclose the information required under subsection (1) in accordance with any specifications under section 78H.

“(4) If a specified person fails to comply with subsection (3), he or she commits an offence and is liable on conviction to a fine not exceeding $10,000.

“(5) For the purposes of this section,—

“control information, in relation to the limited partnership to which the requirement under subsection (1) relates, means—

“(a) any directions or instructions relating to the management and administration of the limited partnership given to a specified person (A) (or any other person who is responsible for the management and administration of the limited partnership) by another person (B); or

“(b) any delegation of powers relating to the management and administration of the limited partnership by a specified person to another person

“director means,—

“(a) in relation to a company, any person occupying the position of a director of the company by whatever name called:

“(b) in relation to a partnership (other than a limited partnership), any partner:

“(c) in relation to a limited partnership, any general partner:

“(d) in relation to a body corporate or unincorporate other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company

“specified person, in relation to the limited partnership to which the requirement under subsection (1) relates, means—

“(a) a general partner of the limited partnership:

“(b) a person named in a previous disclosure under subsection (3) concerning that limited partnership.

“78H Registrar may specify deadlines, form, and verification for information required under section 78F or 78G

When exercising a power described in section 78F or 78G, the Registrar (or a person authorised by the Registrar) may specify—

“(a) a particular form in which the information must be provided; and

“(b) a date by which the information must be provided; and

“(c) whether the information must be verified by the production of original documents or certified copies of original documents or by a statutory declaration.”.

“Other matters relating to Registrar's powers”.

New clauses 56B, 56C, and 56D

Before clause 57 (before line 3 on page 59), insert:

56B Disclosure of information and reports

(1) Section 79(1) is amended by—

(a) omitting “purpose” and substituting “purposes”; and

(b) inserting “, 78F, 78G, or 78H” after “section 78”.

(2) Section 79 is amended by inserting the following subsections after subsection (1):

“(1A) The Registrar or any person authorised by the Registrar may give information disclosed to the Registrar under section 78F or 78G to a government agency for law enforcement purposes if the Registrar is satisfied that the agency has a proper interest in receiving the information.

“(1B) For the purposes of subsection (1A),—

“government agency means—

“(a) the Crown Law Office:

“(b) the Department of Internal Affairs:

“(c) the Financial Markets Authority:

“(d) the Government Communications Security Bureau:

“(e) the Inland Revenue Department:

“(f) the Ministry of Business, Innovation, and Employment:

“(g) the Ministry of Justice:

“(h) the New Zealand Customs Service:

“(i) the New Zealand Security Intelligence Service:

“(j) the New Zealand Police:

“(k) the Reserve Bank of New Zealand:

“(l) the Serious Fraud Office:

“(m) any international counterpart of the entities in paragraphs (a) to (l)

“law enforcement purposes means—

“(a) the administration of this Act and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:

“(b) the detection, investigation, and prosecution of—

“(i) any offence under this Act; or

“(ii) any offence under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009; or

“(iii) a money laundering offence (within the meaning of section 5 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009); or

“(iv) any offence under section 143B of the Tax Administration Act 1994; or

“(v) any serious offence (within the meaning of section 243(1) of the Crimes Act 1961):

“(c) the enforcement of the Proceeds of Crime Act 1991 or the Criminal Proceeds (Recovery) Act 2009:

“(d) the enforcement of the Misuse of Drugs Act 1975:

“(e) the enforcement of the Terrorism Suppression Act 2002:

“(f) the administration of the Mutual Assistance in Criminal Matters Act 1992:

“(g) the investigation of matters relating to security under the New Zealand Security Intelligence Service Act 1969:

“(h) any action referred to in paragraphs (a) to (g) taken in respect of legislation of an overseas jurisdiction that is broadly equivalent to the enactments listed in those paragraphs.”

(3) Section 79(2) and (3) are amended by inserting “, or in relation to a disclosure under 78F, 78G, or 78H,” after “section 78”.

(4) Section 79(3)(a) is amended by omitting “(1) or subsection (2)” and substituting “(1), (1A), (1B), or (2)”.

56C Inspector's report admissible in liquidation proceedings

Section 80 is amended by inserting “, or in relation to a disclosure under section 78F, 78G, or 78H,” after “section 78”.

56D Exercise of powers under section 78 not affected by appeal

(1) The heading to section 81 is amended by inserting “, 78F, 78G, or 78H” after “section 78”.

(2) Section 81(1) is amended by inserting “, 78F, 78G, or 78H” after “section 78”.

Clause 57

In clause 57, after new section 98A(1)(b) (after line 16 on page 59), insert:

“(ba) the Registrar has reasonable grounds to believe that the limited partnership, or 1 or more of its general partners, has failed to respond to a requirement made in relation to that or another limited partnership under section 78F, 78G, or 78H; or”.

Clause 58

In clause 58, replace new section 103A(2)(a) (lines 14 to 18 on page 60) with:

“(a) a person who has been convicted of an offence in connection with the promotion, formation, or management of a company (being an offence that is punishable by a term of imprisonment of not less than 3 months); or

In clause 58, replace new section 103B(2)(a) (lines 9 to 15 on page 61) with:

“(a) a person who has been convicted of an offence in connection with the promotion, formation, or management of a company (being an offence that is punishable by a term of imprisonment of not less than 3 months), or has been convicted of a crime involving dishonesty as defined in section 2(1) of the Crimes Act 1961; or

In clause 58, new section 103E(1), after “98A(1)(b),” (line 15 on page 66), insert “(ba),”.

New clauses 58A to 58C

After clause 58 (after line 17 on page 68), insert:

58A Court may disqualify general partners

(1) Section 103B(1) (as inserted by section 58 of this Act) is amended by omitting “for such period not exceeding 10 years as may be specified in the order” and substituting “permanently or for a period specified in the order”.

(2) Section 103B (as inserted by section 58 of this Act) is amended by inserting the following subsection after subsection (1):

“(1A) The court may make an order under this section permanent or for a period longer than 10 years only in the most serious of cases for which an order may be made.”

(3) Section 103B(2)(c)(i) (as inserted by section 58 of this Act) is amended by omitting “or the Companies Act 1955, the Securities Act 1978, the Securities Markets Act 1988” and substituting “, the Financial Markets Conduct Act 2013”.

(4) Section 103B(8) (as inserted by section 58 of this Act) is amended by omitting “section 43F of the Securities Markets Act 1988, section 44F of the Takeovers Act 1993, and section 60A of the Securities Act 1978” and substituting “section 44F of the Takeovers Act 1993, and subpart 6 of Part 8 of the Financial Markets Conduct Act 2013”.

58B Registrar or FMA may prohibit persons from managing limited partnerships

Section 103D(3) (as inserted by section 58 of this Act) is amended by omitting “5 years” and substituting “10 years”.

58C Additional power for Registrar or FMA to prohibit persons from being involved in management of limited partnerships

Section 103E(2) (as inserted by section 58 of this Act) is amended by omitting “5 years” and substituting “10 years”.

Clause 59

Delete clause 59 (lines 18 to 34 on page 68).

Schedule 2

In Schedule 2, item relating to section 373(2), after the item relating to new paragraph (ha) (after line 11 on page 74), insert:

Insert after paragraph (s):

“(sa) section 365F(7) (which relates to the Registrar's powers to require disclosure in relation to control interests):”.

In Schedule 2, item relating to section 373(4), replace new paragraph (aaa) (lines 15 and 16 on page 74) with:

“(aaa) section 138A (which relates to serious breach of director’s duty to act in good faith and in best interests of company):”.

In Schedule 2, item relating to section 374(2), after the item relating to paragraph (20) (after line 6 on page 75), insert:

Insert after paragraph (31):

“(32) section 365G(4) (which relates to the Registrar's powers to require directors to disclose their controllers).”

New Schedules 2A and 2B

After Schedule 2 (after page 75), insert:

Schedule 2A
New Schedule 2 added

s 52AA

Schedule 2
Information to be contained in annual return

s 76(1)

The information is—

(a) the limited partnership's name:

(b) its registered number:

(c) the address of its registered office:

(d) its address for service:

(e) the full name, residential address, and date and place of birth of—

(i) every general partner who is a natural person; and

(ii) every general partner's director, partner, or general partner who is a natural person:

(f) the name and address of every general partner who is not a natural person:

(g) the full name, residential address, and date and place of birth of—

(i) every general partner who is a natural person and who has ceased to be a general partner since the last annual return; and

(ii) every general partner's director, partner, or general partner who is a natural person and who has ceased to be a general partner since the last annual return:

(h) if the natural person meeting the residency requirement under section 8(4) is resident in an enforcement country, the prescribed information in respect of the company or companies in that country of which the natural person is a director:

(i) the name and address of every general partner who is not a natural person and who has ceased to be a general partner since the last annual return:

(j) the full name, address, and date and place of birth of every limited partner who is a natural person:

(k) the name and address of every limited partner who is not a natural person:

(l) the full name, address, and date and place of birth of every limited partner who is a natural person and who has ceased to be a limited partner since the last annual return:

(m) the name and address of every limited partner who is not a natural person and who has ceased to be a limited partner since the last annual return:

(n) any other prescribed information.

Schedule 2B
Schedule 2 of principal Act (as inserted by Schedule 2A and section 52AA of this Act) amended

s 52AB

Insert after paragraph (l):

“(la) a statement as to whether the limited partnership at any time since the last annual return or, in the case of the first annual return, since the date of registration has been the offeror of financial products under a regulated offer (as defined in section 41 of the Financial Markets Conduct Act 2013):

“(lb) a statement as to whether the limited partnership at any time since the last annual return or, in the case of the first annual return, since the date of registration has been the offeror of financial products for which a disclosure document was required to be provided under clause 26 of Schedule 1 of the Financial Markets Conduct Act 2013, and, if so, the exclusion under that schedule that the offeror relied on:

“(lc) a statement as to whether the limited partnership at any time since the last annual return or, in the case of the first annual return, since the date of registration has been the offeror of financial products and has knowingly relied on an exclusion under clause 3(2)(b) or (3), 4(3), 8, 10, 11, 12, 15, 16, or 19 of Schedule 1 of the Financial Markets Conduct Act 2013, and, if so, which of those exclusions the offeror relied on:”.

Explanatory note

This Supplementary Order Paper amends the Companies and Limited Partnerships Amendment Bill (the Bill), a Bill that amends the Companies Act 1993 and the Limited Partnerships Act 2008. The Supplementary Order Paper supersedes and incorporates, with modifications, Supplementary Order Paper No 249.

Amendments to Companies Act 1993

Criminalisation of breaches of certain directors' duties

As introduced, the Bill amended the Companies Act 1993 (the Companies Act) to criminalise serious breaches of 2 duties of directors. Clause 4 of the Bill inserted new section 138A into the Companies Act. New section 138A provided for offences in relation to serious breaches of—

the duty provided for in section 131 of the Companies Act (the duty of directors to act in good faith and in the best interests of the company); and
the duty provided for in section 135 of the Companies Act (the duty of directors not to agree to, or cause or allow, company business to be carried on in a manner likely to create a substantial risk of serious loss to the company's creditors).

The Supplementary Order Paper removes the second offence. Instead, the Supplementary Order Paper amends the existing offence provision in section 380 of the Companies Act (see the description of new section 380(4) below). The Supplementary Order Paper also changes the offence created by the Bill relating to the section 131 duty. Now, the offence is to become one of exercising powers or performing duties as a director of a company (or omitting to exercise powers or perform duties as a director of a company) in bad faith towards the company and in a manner that the director believes is not in the best interests of the company. There must also be knowledge that, or recklessness as to whether, the conduct will cause the company serious loss or will benefit or advantage a person who is not the company (including, for example, the director).

The Supplementary Order Paper provides in new section 138B for cases in which a director will not be liable under the revised offence relating to the section 131 duty. These cases are based on the qualifications in section 131(2) to (4) of the Companies Act. The director will need to raise, on the basis of an evidential foundation, the question of whether he or she had the requisite authority for the relevant conduct, along with the belief that the conduct was in the best interests of that company’s holding company (in relation to subsidiaries) or shareholder or shareholders (in relation to joint ventures between shareholders) rather than in the best interests of the company.

New section 380(4) (inserted by new clause 4AAB) creates a new offence where a director agrees to, or causes or allows, the business of the company to be carried on in a manner that causes serious loss to 1 or more of the company's creditors and knows that serious loss will be suffered. A serious loss is a loss of a kind that is more significant than a material loss (as referred to in section 380(3) of the Companies Act). The offence is not committed if the creditors concerned consented to the business being carried on in that manner (the policy being to allow companies that are close to insolvency to enter into arrangements with their creditors to save the company without the directors facing a risk of prosecution).

The requirements of the new offence are based on those of the duty in section 135 of the Companies Act not to agree to, or cause or allow, reckless trading. However, the offence requires actual serious loss to be suffered (rather than a substantial risk of such a loss) and knowledge on the part of the director that such a loss will be suffered. The Supplementary Order Paper provides that a director is not liable if he or she believes on reasonable grounds that the creditor or creditors who will suffer the serious loss have been identified and if he or she also believes that those creditors have consented to the business being carried on in the relevant manner. It is for the director charged with the offence to raise these matters on the basis of an evidentiary foundation.

It is further provided that the new offence will not be triggered by the carrying on of the business of a company in accordance with a compromise under Part 14, a court-ordered arrangement, amalgamation, or compromise under Part 15, an administration under Part 15A, or a deed of company arrangement made under Part 15A.

A director convicted of the offence is liable under section 373(4) of the Companies Act to imprisonment for a term not exceeding 5 years or to a fine not exceeding $200,000. New clause 4AAA consequentially amends section 373(4)(f).

Registrar's powers to identify controllers of company

The Supplementary Order Paper gives the Registrar new powers to identify the controllers of a company for defined law enforcement purposes. In order to achieve this, new sections 365A to 365H (inserted by new clause 37A) give the Registrar the powers to ascertain—

who has (and who has the power to acquire) a control interest in shares of a company and full details of that interest (new section 365F)—control interest is defined in new sections 365B to 365E, in a similar way to the definition of relevant interest in sections 5 to 6 of the Securities Markets Act 1988; and
control information relating to a company—this is defined in new section 365G as directions or instructions relating to the management and administration of a company or any delegation of powers relating to the management and administration of a company.

Arrangements, amalgamations, and compromises of code companies

The Supplementary Order Paper creates a transitional arrangement (in new clause 24A) for a code company that has already begun a process to amalgamate under Part 13 of the Companies Act before the Bill comes into force. If the boards of the amalgamating companies have agreed to an amalgamation, the law as it was before the Bill comes into force will apply to that amalgamation—as long as the amalgamation takes effect within a period of 180 days.

The Supplementary Order Paper amends new section 236A of the Companies Act (inserted by clause 25 of the Bill) to clarify that the new Part 15 provisions about the reconstruction of code companies do not apply where there is no change in the relative holding or control of voting rights.

The Supplementary Order Paper also amends the Takeovers (Fees) Regulations 2001 (in new clause 26B) to include the ability for the Takeovers Panel to charge applicants for considering whether or not to provide a no-objection statement to applications under section 236(1) of the Companies Act.

Information about director's date and place of birth

The Supplementary Order Paper amends an amendment made to the Companies Act at select committee that required a director's date and place of birth to be sent to all shareholders of amalgamating companies. Instead, the Supplementary Order Paper requires these details to go only to the Registrar (see the change to new section 220(1)(c) in clause 7F(1), the amendment to section 223 made by new clause 7FA, and the change to clause 22A).

Amendments to Limited Partnerships Act 2008

Registrar's powers to identify controllers of limited partnership

The provisions enabling the Registrar to identify the controllers of companies are also inserted in the Limited Partnerships Act 2008 (the Limited Partnerships Act).

In order to achieve this, new sections 78A to 78H of the Limited Partnerships Act are inserted by new clause 56A. These new provisions are very similar to those inserted by new clause 37A into the Companies Act; the only changes relate to the differences between a limited partnership and a company (and between shares and partnership interests).

Requirements for general partner of limited partnership

The Supplementary Order Paper clarifies—

the requirement in the Bill for limited partnerships to have at least 1 general partner with a substantive connection to New Zealand; and
that the qualification requirements for general partners do not prevent overseas companies from being general partners.

This clarification is achieved by changes to clauses 46 to 49A of the Bill, which amend the Limited Partnerships Act.

The revisions in the Supplementary Order Paper reflect the policy that all natural persons who are general partners, or who are directors, partners, or general partners of a general partner, must be qualified under new section 19A of the Limited Partnerships Act. (New section 19A essentially requires that the person not be a minor and not have various criminal convictions.) This policy is articulated in new section 8(5) of the Limited Partnerships Act, which is inserted by a change in the Supplementary Order Paper to clause 46 of the Bill.

Name, address, and date and place of birth information: general partners

Various amendments in the Supplementary Order Paper to clauses 49A, 49B, and 49C of the Bill ensure that the following information must be provided in applications to become a limited partnership (and in annual returns) and must also appear on the register of limited partnerships:

the full name and residential address of—
- every general partner who is a natural person; and
- every general partner's director, partner, or general partner who is a natural person; and
the name and address of every general partner who is not a natural person:
the date and place of birth of—
- every general partner who is a natural person; and
- every general partner's director, partner, or general partner who is a natural person.

However, only the Registrar would be able to search the register for date and place of birth information.

Section 74 of the Limited Partnerships Act, which is about the records that a limited partnership must keep, is amended to require limited partnerships to keep records of the new types of name and address information, including the last known such information in respect of each person who has ceased to be a partner within the last 7 years.

Annual return information changes

The Supplementary Order Paper amends the requirements in the Limited Partnerships Act relating to the information to be contained in the annual returns of a limited partnership. The information required currently by section 76 is largely unchanged, but the requirements are placed instead into a new Schedule 2 (mirroring Schedule 4 of the Companies Act). There are a few minor additions, which reflect the changes made elsewhere in the Supplementary Order Paper. One such addition is a new paragraph (h) in the new Schedule 2, which mirrors the requirements in relation to a company annual return (see the amendments to clause 22A of the Bill). That amendment requires a company annual return to include prescribed information in respect of the company or companies in an enforcement country of which the director is a director. In respect of a limited partnership, the requirement is that a limited partnership's annual return must supply prescribed information about the company or companies in the enforcement country of which the natural person meeting the residency requirement is a director.

Transitional provision relating to requirement for existing limited partnerships to provide place of birth information about partners

Clause 52B of the Bill requires existing limited partnerships to inform the Registrar of the place of birth of natural persons who are general partners. The Supplementary Order Paper extends that requirement to limited partners.

Miscellaneous amendments

The Supplementary Order Paper also makes consequential amendments associated with the changes described above. For example, it inserts into the Companies Act and the Limited Partnerships Act various cross-references to the Supplementary Order Paper's new provisions.

Updates resulting from enactment of Criminal Procedure Act 2011

A reference to the term indictment in new sections 103A and 103B of the Limited Partnerships Act 2008 (inserted by clause 58 of the Bill) is no longer appropriate given the move away from that concept in the Criminal Procedure Act 2011. The Supplementary Order Paper replaces this reference with a reference to offences that are punishable by a term of imprisonment of not less than 3 months. Sections 382 and 383 of the Companies Act , on which new sections 103A and 103B of the Limited Partnerships Act are based, had already been changed in Schedule 3 of the Criminal Procedure Act 2011. However, these changed provisions are now adjusted in the Supplementary Order Paper to match the amended new sections 103A and 103B of the Limited Partnerships Act (see new clauses 39AAA and 39AAB).

The Bill amends Schedule 1 of the Summary Proceedings Act 1957 in clauses 4A, 42, and 59. However, that schedule was repealed on 1 July 2013 as part of the package of reforms relating to the Criminal Procedure Act 2011. The Supplementary Order Paper therefore deletes the redundant references to the repealed schedule.

Updates resulting from enactment of Financial Markets (Repeals and Amendments) Act 2013

Changes are made in the Supplementary Order Paper to reflect the amendments to be made to the Companies Act by the Financial Markets (Repeals and Amendments) Act 2013. That Act extends the allowable period for banning certain directors from company management from 5 years to 10 years, with a new ability for the court to make a permanent ban or a ban for a specified period over 10 years. New section 385AA of the Companies Act, which is inserted by clause 39 of the Bill, is amended to the same effect by the Supplementary Order Paper (see new clause 39A). The changes made by the Financial Markets (Repeals and Amendments) Act 2013 to the Companies Act are then copied into the Bill's amendments to the Limited Partnerships Act by the Supplementary Order Paper.

The Financial Markets (Repeals and Amendments) Act 2013 also amends the Companies Act to set out requirements for a company's annual return if the company has been the offeror of financial products. These requirements are also put into the Limited Partnerships Act by the Supplementary Order Paper.

The relevant amendments in the Financial Markets (Repeals and Amendments) Act 2013 are not yet in force, and so the amendments made to the Companies Act and the Limited Partnerships Act by the Supplementary Order Paper are to commence when the relevant amendments in the Financial Markets (Repeals and Amendments) Act 2013 come into force (see the amendment to clause 2 of the Bill in the Supplementary Order Paper).

Updates resulting from enactment of State Sector Amendment Act 2013

The State Sector Amendment Act 2013 replaced the previous immunity in the State Sector Act 1988 that applied to the Registrar. The new immunity is in more comprehensive and certain terms. This means that the immunities in the Bill (see new section 366C of the Companies Act and new section 63B of the Limited Partnerships Act) are no longer required.

Companies and Limited Partnerships Amendment Bill - Amendment paper No 403