Companies (Levies) Amendment Bill

Companies (Levies) Amendment Bill

Government Bill


Explanatory note

General policy statement

This Bill amends the Companies Act 1993 to create a new regulation-making power that will enable regulations to be made that impose levies on certain users of the registers administered by the New Zealand Companies Office. The regulation-making power will expressly provide that the money collected in levies can be used to fund the registry system as a whole, rather than on a register-by-register basis.

The New Zealand Companies Office, a business unit of the Ministry of Business, Innovation and Employment (MBIE), administers the corporate registry system. There are 16 different registers including entity registers (eg, the Companies Register), occupational licensing registers (eg, the register of licensed insolvency practitioners), and disclosure registers (eg, the register of Personal Property Securities). The Companies Office also supports other statutory functions of the various registrars responsible for these registers.

Each register was established under separate legislation. The legislation requires each register to be independently funded from fees charged to the users of the relevant register. This funding model was predicated on each register being operated separately.

Over time the Companies Office has moved towards providing shared services to the registers. A unified approach to the registers has allowed the Companies Office to—

  • establish an organisational structure and operating model that produces economies of scale in the delivery of registry services; and

  • leverage technological developments enabling registry services to be centralised and shared across registers.

These changes have contributed to reduced cost to users. However, it has also made it increasingly difficult to distinguish between the cost of providing services for each register. In addition, the fees charged on some smaller registers have not kept up with the costs of operating them. This shortfall has been met from surpluses that have been generated from fees collected under legislation governing other registers. This practice is not authorised by the legislation.

The Companies Office’s unauthorised funding practices have been addressed by the Companies Office Registers Funding Validation Act 2022 (the Validation Act) by retrospectively validating the Companies Office’s charging and expenditure practices.

This Bill, which forms a package with the Validation Act, supports the Companies Office’s approach to running the corporate registry system by moving away from it being entirely funded on a register-by-register basis, as it is now. The Bill achieves this by amending the Companies Act 1993 to allow for regulations to be made for the Companies Office to charge its users levies as well as fees. The money collected in levies will be able to be used across the different registers to fund the shared registry system.

The Bill provides that the levies will be set by regulations, following consultation. It also sets out the purpose of the levy-making power, which the Minister must have regard to when recommending to the Governor-General that regulations should be made by Order in Council.

Departmental disclosure statement

The Ministry of Business, Innovation, and Employment is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact statement

The Ministry of Business, Innovation, and Employment produced a regulatory impact statement on 3 November 2021 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 provides that the Bill, once enacted, comes into force on the day after the date on which it receives the Royal assent.

Clause 3 provides that the Bill amends the Companies Act 1993 (the principal Act).

Part 1Amendment to allow levies to be imposed in relation to certain persons using services of certain registers

Clause 4 inserts new sections 404 to 408 into the principal Act.

New section 404 sets out the purpose of levies imposed by regulations under new section 405. The purpose, in summary, relates to the need to operate all the different registers listed in new Schedule 14 as a single system of registers for financial purposes, rather than as individual registers. The purpose provision goes on to state that all of those registers should be funded through a levy imposed on users of each registry, in a manner that is equitable, efficient, and justified. Applying the principles of equity, justification, and efficiency should be undertaken having regard to the cost of running the whole system of registers, not on the basis of the costs of running individual registers. Accordingly, money collected from users of 1 register can legitimately be used to meet the costs of operating any or all of these registers. Using money collected from registry users in that way is the most efficient way of financing the registers.

New section 405 provides that every person included in a class of persons listed in new Schedule 15 must pay a levy prescribed by regulations. New section 405(3) to (6) sets out the details of what may be included in a levy.

New section 406 provides that a Registrar of a register may refuse to perform or exercise a function, power, or duty until the prescribed levy is paid. It also deals with the position where a person is in 2 or more classes of levy payer, and provides that a levy may be recovered in a court of competent jurisdiction.

New section 407 sets out the matters to which the Minister of Commerce and Consumer Affairs (the Minister) must have regard before recommending the making of regulations setting the levies.

New section 408 requires the Minister to consult persons who the Minister considers able to represent the views of levy payers before recommending the making of regulations, as well as representatives of the person the Minister considers will be significantly affected by the proposed regulations.

Part 2New Schedules 14 and 15 inserted

Clause 5 and the Schedule insert new Schedules 14 and 15 into the principal Act.

New Schedule 14 sets out the relevant Acts and registers.

New Schedule 15 (in Part 1) sets out the classes of persons that may be subject to a levy, and (in Part 2) a list of persons registering documents that may be subject to a levy.