NEW ZEALAND Law and Practice Contributed by: Fiona Ashby, Luke Bowers, Daniel Erickson, Jessica Phillips, Natalie Foster, Shelley Slade-Gully, Tina Liu and Theresa Le Bas, Tompkins Wake
datory two-tier supervisory structure as found in some civil law jurisdictions. Director Residency Requirements Overseas investors who do not have a resident direc - tor available should consider engaging a professional director or a corporate service provider to fulfil this role. 3.5 Directors’, Officers’ and Shareholders’ Liability Limited Liability for Shareholders The limited liability company structure provides a sep - arate legal entity status and limits shareholders’ liabil - ity to their investment. This means that, in the event of the company’s insolvency or other adverse events, shareholders are not personally liable for the com - pany’s debts or obligations beyond what they have invested. The limited liability company thus provides an important layer of protection for overseas investors participating in the New Zealand market. Director and Officer Liability Directors owe statutory duties to the company under the Companies Act 1993, including duties to: • act in good faith and in the best interests of the company; • exercise reasonable care, diligence and skill; and • avoid reckless trading. Where these duties are breached, directors may face personal liability in proceedings brought by the com - pany or its liquidators. Significant fines can also apply for breaches of health and safety legislation, with pen - alties of up to NZD3 million for companies. Company directors may face personal liability, including fines and imprisonment, for failing to meet their health and safety obligations. Piercing the Corporate Veil New Zealand courts have the power to disregard the separate legal personality of a company, commonly described as “piercing the corporate veil”, in circum - stances where the corporate structure is being used to perpetrate fraud, evade legal obligations or otherwise achieve an unlawful purpose. This is an exceptional remedy, applied narrowly by the courts. Investors
should be aware that relying solely on the corporate form to shield against liability will not be effective where there is clear evidence of improper conduct.
4. Employment Law 4.1 Nature of Applicable Regulations Statutory Framework
New Zealand’s employment and health and safety framework is a combination of legislation and estab - lished case law, and is intended to protect workers’ rights, promote fair treatment and ensure safe work -
places. The key pieces of legislation are: • the Employment Relations Act 2000;
• the Holidays Act 2003 (note this Act has now been repealed and replaced with the Employment Leave Bill which commences two years after receiving Royal Assent (save for some provisions)); and • the Health and Safety at Work Act 2015. The Employment Relations Act 2000 is the corner - stone of New Zealand’s employment law, and sets out: • a statutory duty of good faith – all parties in employment relationships must act honestly, openly and without misleading one another; • minimum requirements for written employment agreements (individual and collective); and • a personal grievance procedure – all employees who earn less than NZD200,000 per annum may access this procedure, which provides a mecha - nism to challenge dismissals or other actions the employee considers unjustifiable. The Employment Relations Act 2000 applies to all employment relationships, including senior and executive roles. It excludes independent contractors, although courts or Inland Revenue may reclassify cer - tain arrangements as employment if necessary. Other Key Legislation The Holidays Act 2003 provides for: • four weeks of paid annual leave after 12 months of continuous service;
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