NZ Non-Resident Director Enforcement Country Test (s.10(d))

When founding a New Zealand company from outside the country, the single hardest threshold is not capital, not name approval, and not paperwork. It is the director residency test in Companies Act 1993, s.10. Most overseas founders see the headline “at least one director must live in New Zealand or in an enforcement country and also be a director of a company incorporated there” and assume Australia automatically qualifies. It does — but the rule has more layers than the headline suggests, and the Companies Office checks compliance at incorporation and on every annual return.

This article walks through the s.10 test as written, the enforcement country list maintained under s.10(d), the dual-link requirement that trips up most applicants, and what happens when a company falls out of compliance.

The statute, word for word

Companies Act 1993, s.10 sets the qualification of directors. The relevant text:

“A person must not be appointed a director of a company unless that person consents in writing to being a director and certifies that he or she is not disqualified from being appointed or holding office as a director of a company. At least one director of a company must — (a) live in New Zealand; or (b) live in an enforcement country and be a director of a company that is registered in that enforcement country.”

The two limbs (a) and (b) are alternatives. You satisfy s.10 if any one director meets either limb. The other directors can live anywhere on earth.

Limb (a) is straightforward — physical residence in New Zealand. Limb (b) is the one foreign founders rely on, and it has two conjunctive elements joined by “and”:

1. The director lives in an enforcement country, and
2. The same director is also a director of a company registered in that enforcement country.

You cannot mix and match. A founder who lives in Sydney but is not a director of any Australian company does not pass s.10(b). A founder who is a director of an Australian Pty Ltd but lives in Singapore does not pass s.10(b). Both prongs must be satisfied by the same director, in the same country.

The enforcement country list (s.10(d))

The “enforcement country” list is set by regulations made under s.10(d) of the Companies Act 1993. As of the date of this article, the only prescribed enforcement country is Australia, set out in the Companies Act 1993 Amendment Act 2014 and operationalised by Order in Council. The Companies Office publishes the current list on its website.

Practical effect: foreign founders relying on s.10(b) almost always do so via Australia. They must hold a current Australian directorship of an Australian-incorporated company (Pty Ltd, Ltd, or other ASIC-registered entity) and physically reside in Australia.

For founders outside Australia or New Zealand, s.10(b) does not apply. They must either (i) appoint a New Zealand-resident director or (ii) appoint an Australia-resident person who already holds an Australian directorship.

What “lives in” means

“Lives in” is not defined in the Act. The Companies Office interprets it as ordinary residence, applying the ordinary tax-style test: physical presence, settled home, family ties, employment, and intention to remain. A director who spends half the year in Auckland and half in Singapore may still “live in” New Zealand if their settled home, tax residence, and centre of life are in Auckland.

Visiting on a tourist visa, holding a postal address, or owning property is not sufficient. The Companies Office can request evidence (utility bills, IRD number, lease, electoral roll registration) and has powers under s.365 to demand documents.

The dual-link requirement: why most applications fail

The most common s.10(b) failure is the dual-link miss. Founders provide a residential address in Sydney but cannot produce evidence of a current Australian directorship. The Companies Office will reject the incorporation. Conversely, founders provide an ASIC director appointment but live in New Zealand — that is fine for s.10(a), not s.10(b).

To satisfy s.10(b), the qualifying director must supply:

• A current Australian residential address (with evidence on request).
• An ASIC ACN number for an Australian-incorporated company in which they currently serve as director, evidenced by an ASIC search.

If the Australian directorship lapses (resignation, company deregistration), the NZ company immediately falls out of s.10 compliance until a replacement director is appointed.

What happens when s.10 is breached

Section 10 is not just a registration check — it is continuing. If at any time the company has no director who satisfies s.10(a) or (b), the Companies Office can initiate removal proceedings under s.318. Specifically, s.318(1)(a) allows the Registrar to remove a company from the register if it “is not carrying on business” or fails to comply with the Act.

In practice, the sequence is:

1. Companies Office identifies the breach (often during the annual return check, where directors must reaffirm their addresses).
2. A s.318 letter is sent to the registered office, giving the company 20 working days to remedy.
3. If unremedied, the company is removed from the register. Removal extinguishes the company’s separate legal personality.
4. Restoration is possible under s.328 but requires a court application or Registrar’s discretion, plus payment of fees and a fresh director appointment.

Removal triggers practical chaos: bank accounts frozen, contracts unenforceable, GST registration cancelled, and any property held by the company vests in the Crown under s.324.

Dialogue: an Owl, a Chick, and a Cow read s.10

🦉 Owl: “Founders read s.10 as ‘one director in NZ or Australia.’ That is incomplete.”

🐣 Chick: “Because Australia requires the dual link?”

🐮 Cow: “Right. Live in Australia and be a director of an Australian company. Both, same person, same country.”

🦉 Owl: “And the enforcement country list is set by regulation — currently Australia only.”

🐣 Chick: “What if the Australian directorship ends?”

🐮 Cow: “Immediate non-compliance. The NZ Companies Office can remove the company under s.318.”

🦉 Owl: “Annual return is the trip wire — directors reaffirm residence each year. Lying is a s.377 offence.”

🐣 Chick: “So the safest path for a founder outside both NZ and Australia is to appoint a resident director?”

🐮 Cow: “Yes. Either appoint an NZ-resident as a co-director, or use a professional resident-director service. Just understand they are a fiduciary, not a nominee — they bear personal liability under s.131-138.”

Practical compliance checklist for foreign founders

Under s.10(a) (NZ-resident director route):

• The director’s NZ residential address is current and evidenced.
• The director understands their duties under s.131-138 (good faith, care, no improper benefit).
• A consent and certificate is signed under s.152.

Under s.10(b) (Australia route):

• The director’s Australian residential address is current and evidenced (utility bill, lease, ATO assessment).
• An ASIC search confirms the director is currently appointed to an Australian-incorporated company.
• An annual diary reminder ensures the Australian directorship is renewed/maintained.

Under both routes:

• Annual return filed via the Companies Office online portal under s.214.
• All director changes notified within 20 working days under s.159.
• Director consents retained at the registered office under s.189.

Closing notes

Section 10 looks simple. In practice it is the most unforgiving threshold in the Companies Act. The dual-link requirement under s.10(b) and the continuing nature of the obligation mean foreign founders should plan for the long term, not just incorporation day. A strong path is: appoint one trusted resident director (NZ or Australian-with-Australian-directorship) and diary the annual return plus the Australian-directorship status check.

A Gyoseishoshi (行政書士) drafts the consent forms, certificate forms, and the bilingual founder briefing — but a New Zealand lawyer should review the final structure if your shareholding is complex or you anticipate cross-border tax issues.

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not New Zealand lawyers. For binding advice on s.10 compliance, removal proceedings under s.318, or director liability under s.131-138, consult a New Zealand-qualified barrister or solicitor.

Sources

• Companies Act 1993, s.10 — https://www.legislation.govt.nz/act/public/1993/0105/latest/DLM320206.html
• Companies Act 1993, s.318 (removal) — https://www.legislation.govt.nz/act/public/1993/0105/latest/DLM323274.html
• Companies Office, Director residency requirements — https://www.companiesoffice.govt.nz/companies/learn-about/managing-a-company/directors/
• Companies Office, Annual return guidance — https://www.companiesoffice.govt.nz/companies/learn-about/annual-return/
• Companies Act 1993 Amendment Act 2014 — https://www.legislation.govt.nz/act/public/2014/0046/latest/DLM5621213.html