The Companies (Address Information) Amendment Bill (the Bill) has passed its first reading in Parliament. The Bill aims to address the privacy and safety concerns of directors of New Zealand companies that arise from having their residential address made available to the public. Currently, the residential addresses of company directors are easy to access online on the Companies Office website.
The Bill
The Bill proposes to allow directors to apply to the New Zealand Registrar of Companies (the Companies Office) to have their residential address removed from the Companies Register, so that it is no longer publicly available, and replaced with an address for service.
An application to remove a director’s residential address will need to include a statutory declaration made by the director verifying that having their residential address publicly available is likely to result in physical or mental harm to the director or a person who lives with the director. In addition, a fee will also be payable and an alternative address for service (which must not be the company’s registered office or address for service) will need to be provided for the director.
Discussion
The first reading of the Bill highlighted the tension which exists between the privacy and safety concerns of individual directors and the need for corporate transparency.
While the disclosure of a director’s residential address may provide a layer of accountability and protection, for example, against the risks of phoenix companies or seeking to evade creditors, there is equally a legitimate need to protect directors from risks of harm, including in particular identity theft and harassment which can arise from the disclosure of their residential address.
Currently, there is only limited protection for a director wishing to remove their residential address from the public register. Only a director who has been issued a protection order under the Family Violence Act 2018 may apply for their residential address to be suppressed. This creates a gap in the regime for directors to safeguard their residential address from the public on the basis of other privacy or safety concerns.
The new exemption proposed under the Bill applies where a director certifies, by statutory declaration, that disclosure of their residential address is “likely to result in physical or mental harm.” The standard appears to be subjective, and there is no current guidance in the Bill on what is likely to constitute physical or mental harm, or what extent of likelihood is required.
The scope of the proposed reform is relatively limited. It is important to note that the current version of the Bill means that directors will not be able to have their residential address removed from the public register for general privacy concerns, such as where the individual is a public figure, in the absence of a likelihood of physical or mental harm. In addition, in its current form, the Bill only covers the suppression of the residential addresses of directors, not shareholders, and also does not address other registers that the Companies Office administers (such as Limited Partnerships). We expect these details will receive further attention through the Select Committee process.
Next Steps
Following its first reading, the Bill will progress to the Economic Development, Science and Innovation Committee Select Committee for further consideration and public submission. We will monitor the progress of the Bill as it moves through Parliament and continue to provide you with relevant updates throughout.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.