What is an Annual Return?
Each year, the board of every New Zealand company must deliver a document called an annual return to the Registrar of Companies (see Companies Act 1993, section 214). The annual return must contain prescribed information about the company and its directors and shareholders. It must be delivered in the month allocated for that purpose (the AR Filing Month) and the information must be correct as at the date it is delivered.
Offence and Fine
Filing annual returns on time, and ensuring the information provided is correct and complete, is an important responsibility for company directors. Failure to file an annual return in the AR Filing Month, or providing incorrect information in the annual return, is an offence by every director of the company. Directors who are convicted of the offence can be liable for a fine not exceeding $10,000.
In addition to the possibility of offences and fines, the Registrar can treat a persistent failure to file an annual return as an indication that the company should be removed. Under section 318(1)(b) of the Companies Act 1993, the Registrar has the power to initiate the removal (previously called striking off) of a company if the Registrar has reasonable grounds to believe that the company is not carrying on business and there is no proper reason for the company to continue in existence.
The Registrar routinely does this in response to companies who fail to file their annual return when due and do not remedy that failure within a reasonable time. For example, on 14 July 2022, the Registrar put a notice in the Gazette indicating that he intended to remove 3,820 companies from the companies register under section 318(1)(b) of the Companies Act 1993. Based on a cursory review of the companies listed in that notice, most (perhaps all) had failed to file their annual return on time. A notice to this effect appears when you search the companies’ details on the companies register:
This company is now overdue in its obligation to file an annual return. If the annual return is not filed immediately the Registrar will initiate action to remove the company from the register.
The Registrar intends to remove the company under section 318 of the Companies Act 1993. Refer to the latest Public notices. If you object to its removal, you may wish to contact the company in the first instance or lodge your objection before 5pm on 16 Aug 2022 by selecting this link.
Unless the objection referred to above is received within 20 working days of the Registrar’s public notice, the company will be removed and thereafter cease to exist. While there are grounds on which the company can be restored, the fact of its removal will remain and, depending on the circumstances, could be significant.
Removal of a company for failure to file an annual return is probably the most common way companies get removed from the register. In fact, some directors and advisers seem to almost rely on the Registrar cleaning house in this way, perhaps as a cheaper alternative to liquidation. While this course of action is not recommended, as it involves an offence and possible fines, it is also the most cost-effective and simplest way for a company to be removed (assuming there are no objections to the removal).
Prescribed Information for Annual Returns
The prescribed information for an annual return is set out in Form 12 of Schedule 1 of the Companies Act 1993 Regulations 1994. That form requires the annual return to include the following:
- The company’s registered office, address for service, and address for communication.
- Details of the company’s ultimate holding company (if any).
The names and residential addresses of each director.
- Details of the total number of shares, share allocations, and the names and residential addresses of shareholders with the 10 largest share parcels.
- If a company has extensive shareholding (more than 10 share parcels), a separate document containing a list of all shareholders and share parcels.
- Details of the person filing the annual return. This can be an authorised person acting on behalf of the board, such as an accountant, lawyer, or company secretary.
In practice, the above information is collected, and annual returns are filed, online via the Companies Office website: https://companies-register.companiesoffice.govt.nz/. The Companies Office has a good summary of the annual return requirements and process here: How to file an annual return | Companies Register (companiesoffice.govt.nz).
There is a fee to file an annual return. The current fee is $24.15 (including GST). However, companies can opt to file their annual returns through an app that connects with the Companies Office (an API), such as CataLex Good Companies (CataLex®), and pay a lesser fee of $20.70 (including GST).
At the same time as collecting the annual return filing fee, the Companies Office also collects three levies for the Financial Markets Authority, External Reporting Board, and Insolvency Practitioners Regime. The levies are currently $25, $6.90, and $1.15 (each including GST), respectively, for a total of $33.05. The company must pay these levies in addition to the annual return filing fee.
This means you can expect to pay at least $57.20 (including GST) to complete the annual filing process. This is a liability that every New Zealand company will incur each year. In effect, this is the minimum annual cost to keep a company going.
Get in Touch
If you need help with an annual return or other company administration or compliance issue, get in touch with our business and commercial team today.