NZ Resident Director Requirement: What New Company Directors Need to Know

Every company registered in New Zealand must have at least one director who is ordinarily resident in New Zealand or Australia. If you are incorporating a company with all-overseas directors, or if you are an overseas founder setting up a NZ entity, this requirement directly affects you.

The Legal Requirement

Under the Companies Act 1993, a New Zealand company must have at least one director who is a natural person and is ordinarily resident in New Zealand, or is ordinarily resident in Australia and is a director of a company incorporated in Australia.

Ordinary residence means your primary home and centre of life is in that country. Being present on a working visa may qualify, but being a non-resident with a NZ bank account does not.

What Happens If You Do Not Have a Resident Director?

The Companies Office will not refuse to register a company that lacks a resident director, but if the company operates without one in breach of the Act, it faces potential penalties. More practically, banks and suppliers in NZ often require confirmation of local directors before opening accounts or extending credit.

Nominee Director Services

A number of NZ law firms and corporate services providers offer nominee director services. Under this arrangement, a local professional agrees to be listed as a director for legal compliance purposes while the beneficial owner retains operational control.

Key considerations when using a nominee director:

• Director's duties still apply - A nominee director is legally a director and owes fiduciary duties to the company. They must understand the business well enough to fulfil those duties.
• Nominee agreements - Most providers use a nominee agreement and a resignation letter signed in advance, held in escrow. The beneficial owner controls day-to-day operations.
• Cost - Nominee director services in NZ typically cost NZ00 to NZ,500 per year depending on the provider and involvement required.
• Not a substitute for local substance - Banks and some contracts require genuine local management, not just a listed address.

Australian Directors

If one of the company's directors is an Australian resident and is a director of an Australian company, they qualify as the required resident director for NZ purposes. This is commonly used by trans-Tasman businesses expanding into New Zealand.

Changing Directors

If your resident director resigns and no replacement is appointed within 20 working days, the company is in breach of the Act. Any changes to directors must be notified to the Companies Office within 20 working days via the online portal.

Getting Legal Advice

Director structure decisions have lasting implications for liability, tax, and governance. A New Zealand commercial lawyer can advise on the right structure for your situation.

If you are a legal or governance professional advising new NZ companies, FreshFirms delivers a daily feed of newly-incorporated companies in your region so you can reach directors during the critical first 30 days when these decisions are being made.

See how many new companies incorporated in your region this week with a free 7-day trial.