Director Interests Register

Section 189(1)(c) of the Companies Act requires that after its registration a company must establish an interests register. This is a list of the material interests that the directors have in:

• Businesses with which the company is dealing
• Transactions involving the company
• Businesses or transactions which may impact on the company in some way

The interests register must record the nature and extent of any director's interest.

Entries in the register are disclosed in the annual report to shareholders: s211(1)(e).

For all company transactions you must be alert to situations where disclosure of interests may be required so that you can brief your clients and update the Interests Register where necessary.

The interests register must be kept at the registered office of the company unless the Registrar is given notice of some other place in New Zealand: Companies Act s189.

This means that whenever any of your Directors have interests in transactions relating to the matters specified by the Act, the interests register must be updated. Some firms will keep a separate Interests Register. Others will keep these records in the Directors’ Register in the Company folder.

The following is a summary of the matters that must be entered on the interests register.

1. Material interests in transactions of the Company (Companies Act s140, s139)

A director who is party to or may gain a material financial benefit from the transaction OR who has a financial interest in another party to the transaction must disclose the interest as soon as he or she becomes aware of it (Companies Act s140).

A director will be interested in the transaction if he or she:

• Is a party to, or will or may derive a material financial benefit from the transaction
• Has a material financial interest in another party to the transaction
• Is a director, officer, or trustee of another party to, or person who will or may derive a material financial benefit from the tranaction
• Is the parent, child or spouse of another party to, or person who will or may derive a material financial benefit from the transaction
• Is otherwise directly or indirectly materially interested in the transaction

2. Use of Information (Companies Act s145)

A director of a company who gains information by virtue of being a director may disclose that information provided:

• They are authorised to do so by the board
• Particulars of that use of information are entered in the interests register
• The use of information is not prejudicial to the company’s interests

3. Disclosure of Share Dealings by Directors (Companies Act s148)

A director of a company who has a relevant interest in the acquisition or disposal of any shares issued by the company must:

• Disclose this to the board
• Ensure the particulars disclosed are entered into the interests register

4. Payments to or Benefits Received by a Director from the Company
(Companies Act s161)

The board must ensure, upon approving payments or benefits to a director, that the particulars of the payment or benefit are entered into the interests register.

5. General Disclosures (Companies Act s140(2))

Directors may also make general disclosures of interest. A general disclosure will normally disclose a director’s interest in other directorships, shareholdings and positions of office held by that director. These may not be relevant to the company’s interests at the time of disclosure but come to be relevant because of subsequent transactions. If a director has made a general disclosure of these interests, no subsequent disclosure of interest would then be required.

6. Indemnities and Insurances (Companies Act s162(7))

If a company does indemnify, in accordance with the provisions of the Act, details must be entered into the interests register. The board must ensure that particulars of any indemnity given to, or insurance effected for, any director or employee of the company or a related company are entered in the interests register.

Where the nature of a material interest can be quantified in dollar terms, this should be included in the statement of the nature and extent of the interest which is entered into the register.