Government efforts to improve disclosure on the beneficial owners of New Zealand companies and limited partnerships is again on the backburner, suggesting it has been kicked into touch until after October's election.
In March 2022 the then-Commerce and Consumer Affairs Minister David Clark said the Government would introduce a bill to Parliament changing the rules around beneficial owners of NZ companies and limited partnerships, but not trusts, in an attempt to make it easier to tell who the ultimate owner or controller is, and thus reduce misuse of these entities. The proposed legislation was to be introduced in late 2022, following further consultation with industry stakeholders and the public, Clark said.
Clark's announcement closely followed the Financial Action Taskforce (FATF) stepping up its expectations around beneficial ownership for member countries such as NZ. The Paris-based FATF is an inter-governmental body that sets international standards and is considered the global money laundering and terrorist financing watchdog.
However, since Clark's announcement neither the consultation pledged nor the bill have yet emerged.
Duncan Webb, Clark's successor as Commerce and Consumer Affairs Minister, says work continues on an exposure draft of the Corporate Governance (Transparency and Integrity) Bill.
"It remains important to improve beneficial ownership information for NZ companies and limited partnerships which is why this Bill will go out for publication in due course," Webb says.
"This Bill is still in the drafting process. There isn’t currently a timeline for its introduction."
Whilst NZ's cheap and simple company registration system is great for legitimate businesspeople, it has been exploited for nefarious purposes with dodgy and crooked entities dragging NZ's reputation through the mud in almost all corners of the world. Interest.co.nz has reported on many examples of this over the years.
Criminals can and do obscure the true ownership of a corporate entity using nominee directors and shareholders, a web of shell companies, intermediaries and complex business structures based in multiple jurisdictions. Such ownership structures can be used to enable investment scams, money laundering, terrorism financing, drugs or arms trafficking, tax evasion and to hide assets.
Information about the beneficial ownership of NZ companies isn't currently collected by the Ministry of Business, Innovation & Employment's Companies Office, although Companies Registrar Sanjai Raj can request it for law enforcement purposes. The Government has described beneficial owners as "the natural persons who ultimately own or, directly or indirectly, exercise effective control over a corporate entity."
Improving the transparency of beneficial ownership is proving a very slow burner for NZ. It emerged in 2017 that MBIE was considering the creation of a public central register of company beneficial ownership information following a commitment made at a London Anti-Corruption Summit in May 2016, which was attended by then-Police Minister Judith Collins.
A consultation paper followed in 2018. Progress was subsequently delayed by Covid-19 and while funding issues were worked through, a spokesman for Clark told interest.co.nz in 2021.
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