News & Thinking

Addressing company directors’ right to privacy

Contributed by:

Chris Dann

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Chris Dann

Cate McArthur

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Cate McArthur

Directors may have an easier pathway to avoid publication of their residential address to protect them from potential harm under a new Bill recently introduced to Parliament. However, doubts remain about the proposed process and there are questions about its limited scope.

The Companies (Address Information) Bill (Bill) – a private member’s bill introduced by Labour MP Deborah Russell and drawn from the ballot – proposes to create an exemption to the current requirement to provide and publish a director’s residential address.

The Bill passed its first reading in Parliament in March. Despite opposition from National and NZ First, the Bill has cross-party support from ACT. ACT Deputy Leader Brooke van Velden, now Internal Affairs and Workplace Relations and Safety Minister, previously submitted the Companies (Non-publication of Directors’ Residential Addresses) Amendment Bill in 2021, and ACT MP Laura Trask had a similar bill in the ballot.

What does the current law require?

On appointment as a director of any New Zealand company, section 215 of the Companies Act 1993 requires director’s residential addresses to be made available to the public in a register and are readily accessible on the Companies Office.

Currently, 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. Privacy issues are prevalent, which was highlighted last year following an incident in Auckland where a female director was stalked and harassed by a former employee. The director was only able to have her address removed once she had obtained a permanent protection order against the man.

What changes are proposed in the Bill?

The Bill allows directors to substitute their residential address for an address for service if they:

  1. Sign a statutory declaration verifying that the public availability of their address “is likely to result in physical or mental harm” to the director or a person with whom the director resides; and
  2. Make a personal application to the Registrar of Companies specifying an alternative “address for service” (not being the company’s registered office or address for service); and
  3. Pay the prescribed fee.

How do other countries compare?

In Australia, director identification numbers (DINs) were introduced in 2021. DINs are a 15-digit number given to every director of an Australian company, which replace the need to publicly disclose director’s residential addresses. Company directors are required by law to apply for a DIN.

In the UK, a director or officer of a company must submit two addresses: a correspondence/service address for the public register and their home address. While a director’s home address must be provided, this is kept on a private register. Only the correspondence/service address is available to the public which allows protection of personal information.

In Canada, directors must provide either a residential address or an address for service that is not their residential address which allows directors to safeguard their residential privacy.

What are the advantages and disadvantages of the Bill?

The disclosure of directors’ residential addresses provides accountability and transparency, for example by allowing third parties to contact directors directly, including serving legal documents and protecting against the risks of phoenix companies (being companies that have been known by the same/similar name as a company in liquidation). However, there are clear privacy concerns which come with disclosing director’s residential addresses.

While the Bill is a welcomed acknowledgement of the risks of harm to directors, criticisms include:

Limited scope

The Bill only applies where the director is prepared to sign a statutory declaration that publication of their residential address is “likely to result in physical or mental harm” – quite a high threshold. Further, the Bill does nothing to protect the publication of shareholders’ residential addresses on the Companies Office – often the same people as the directors. On the other hand, because only a personal declaration is required, directors could abuse the Bill to conceal their address for reasons unrelated to safety.

Administratively burdensome

The Bill requires a statutory declaration, completion of an application form and payment of a fee (the amount of which has not yet been set).

Why not use director identification numbers instead?

The Bill does not deliver the same benefits as DINs. For example, directors with the same name could conceivably provide the same service address (e.g. lawyers or accountants address), compromising accountability and transparency.

DINs seem to us to deliver on the accountability and transparency objectives behind director address publication, without the same risks of harm. Indeed, DINs may make it easier for creditors, regulators and other interested persons to identify and trace the activities of a director and easier for directors to update their name or address across the companies register and allow for one-time identify verification (for AML/CFT purposes).

Interestingly, the Ministry of Business, Innovation and Employment consulted on the introduction of DINs in 2017 and 2018. It seems nothing much came from those discussion documents and proposals from the Labour-led Government for a corporate registry identifier (DINs and beneficial owner identifiers) were stalled.

What happens next?

The Bill passed its first reading in Parliament and has been sent to the Economic Development, Science and Innovation Committee for review, with submissions closing on 2 May 2024.

We will continue monitoring progress of the proposed Bill. If you would like more information about the changes, please get in touch.