As a means to regulate governance of New Zealand registered companies, the Companies Act 1993 (Act) was amended to provide that New Zealand incorporated companies must have at least one director who:

  • lives in New Zealand; or
  • lives in Australia and is also a director of an Australian company.

The Act does not provide any guidance as to what constitutes ‘living in New Zealand’.  However, the issue was recently addressed in Re Carr [2016] NZHC 1536.

In summary, Mr Carr spent around one-third of the year in New Zealand and the rest of the year overseas.  The Registrar of Companies considered that Mr Carr did not satisfy the residency requirement under the Act due to the fact that he was absent from New Zealand for large parts of the year.

The High Court disagreed and found that Mr Carr did satisfy the residency requirement.  The Court determined that while a director’s physical presence in New Zealand was important, large absences could not be determinative to a finding against the residency requirement.

In coming to its decision, the Court considered that a director’s “connection to New Zealand, the ties they have to New Zealand and their manner of living when here” should be taken into account when determining the residency requirement.  Such factors ought to include:

  • the amount of time the director spends in New Zealand;
  • the director’s connection to New Zealand;
  • other ties the director might have to New Zealand; and
  • how the director lives when in New Zealand.

The Court’s reasons for finding that Mr Carr satisfied the residency requirement included the following:

  • he spent about one-third of the year in New Zealand;
  • he had a partner who lived in New Zealand;
  • he had a home in New Zealand;
  • his primary doctor was a New Zealand GP;
  • he had New Zealand bank accounts; and
  • he was a member of various clubs and organisations in New Zealand.

The decision is important in that it provides some useful criteria for assessing the residency requirement.  In particular, directors of New Zealand companies may still satisfy the residency requirement even if they spend long periods overseas. A director’s presence in New Zealand should not be considered on its own. Other factors connecting that person to New Zealand will also be important in assessing the residency requirement.