Last year an Auckland registered company, SP Trading Ltd, was linked to the sale of arms from North Korea to Iran. When investigations commenced, the Director of SP Trading Ltd, Lu Zhang, was unable to be found. The Companies Office records showed the sole shareholder of SP Trading Ltd to be Vicam (Auckland) Ltd, whose shareholder was GT Group Ltd. The registered office of all three companies was the same Queen Street address. This case raised concerns that New Zealand‟s reputation as one of the best countries in which to conduct business may also have opened it up for abuse. Currently there are no requirements to provide proof of identity or to verify a company‟s address when completing company registration. However, there is concern that increasing compliance requirements will affect our ability to do business and increase costs for honest business people. There is a fine balance between ensuring that it is easy to do business and protecting ourselves from risk. November 2010 – January 2011 Page 4 of 4 Swayne McDonald Lawyers Manurewa Office 09 267 2700 Botany Junction Office 09 265 2700 Postal: P O Box 75 442 Manurewa, Auckland 2243 On 9 September 2010 the Commerce Minister, Hon. Simon Power, announced that the Government will tighten up the requirements around company directors and the registration process in an effort to prevent overseas interests using New Zealand registered companies to undertake criminal activity. A Bill is expected to be introduced into Parliament next year that will include the following key changes:  All New Zealand companies will be required to have either one New Zealand resident director or a local agent, who will be responsible for ensuring that accurate information is given to the Registrar of Companies („the Registrar‟).  The resident director or local agent will be held liable if any of the above information is found to be misleading.  The powers of the Registrar will be increased to provide a greater ability to take action where there is any doubt about the accuracy of information. This includes having the ability to make note or „flag‟ on the register any company that is under investigation.  The Registrar will be able to remove a company from the register or prohibit a director from acting for up to five years if it is found that they have breached companies related legislation or if they have been misleading in any way. It is anticipated that these changes will make it easier to deal with compliance issues around company registration and to remedy issues surrounding the authenticity of directors and shareholders of companies. Individuals will be able to check the Companies Office records if they have any concerns surrounding a company with which they are doing business. Mr Power states that this will shore up the integrity of New Zealand‟s company registration process against increasing criminal activity from overseas. Most importantly, it will ensure that New Zealand upholds its reputation as one of the best places in the world to do business.