[MUSIC PLAYING]
Hello, my name is Calantha Juneja,
and I'm a senior solicitor at the company's office
in Auckland.
Hello, my name is David Josland, and I'm also
a senior solicitor in the legal team in the company's
office in Auckland.
Calantha and I are responsible for reviewing
amalgamation applications when they are lodged online.
You'll be hearing more from me later on.
This webinar covers common errors
we encounter with short form amalgamation documents.
It is not intended to be a high level discussion
of the amalgamation process.
The purpose of this presentation is
to highlight these common areas.
And from a practical perspective,
identify ways to resolve or prevent them.
It is important to note that our role as legal advisors
to the registrar of companies is not to review draft documents
or to provide advice to presenters
about the content of the documentation.
When we review the documents, we are assessing them
as to their registerability.
And whether they satisfy the requirements
for amalgamations prescribed by the Companies Act 1993.
Further information about the registrars role in this matter
has been published in a recent LawTalk article.
You may have already seen it.
For completeness, please note that we will not
be reviewing draft documents prior to lodgement
with the registrar.
Given the high number of rejections of amalgamations
over this year, we thought it would
be beneficial to highlight some of these common errors
that we have seen with documentation to assist you
with preparing your amalgamation documents in the future.
We have all at some stage in our career
experienced a few choice words from our clients
when we have made a mistake.
Or if asked them to re-signed documentation,
particularly in a time sensitive matter such as an amalgamation.
So let's get it right the first time.
Of course we are happy to take any questions
on this presentation.
Please note that the company's office
is in the process of considering improvements to the register.
We are also happy to take any feedback or comments you
may have on this presentation or the online amalgamation
service itself.
So let's have a look at these common errors.
The common errors that we will be discussing today
are content and directors resolutions.
The unintended cancellation of a shareholder
in a continuing company.
Another error we'll be looking at
is the change of the company name upon amalgamation,
whether this is a new name or if you
would like to adopt one of the company
names of the removed companies as a result of the amalgamation
process.
We'll also be looking at incorrect content and director
certificates-- for example, reference to Section 10
of the Financial Reporting Act 1993.
And lastly, David will be taking you
through incomplete or inaccurate directory information.
He'll also be discussing some practical tips
to assist you with your future amalgamation documentation.
Before I take you through these errors, as you know,
short form amalgamations are covered by Section 222
of the Companies Act.
There are two forms of amalgamation under Section 222.
And the ones that we see are the most common
is Section 222 subsection 2.
You will need to identify which subsection the proposed
amalgamation is captured by.
We may raise this as an issue with you,
but it is really up to you to check the particular company
structure and identify whether a vertical or horizontal
amalgamation is appropriate.
Let's have a look at their content for resolutions.
Section 222 prescribes the content for resolutions.
Ideally, the resolutions should mirror each other.
If the continuing company has a constitution,
generally this will need to be adopted
as the amalgamated company's constitution.
If it does not, then please address
this issue in your resolutions.
For example, you could say something
along the lines of company X does not have a constitution.
Therefore, the amalgamated company
will not have a constitution.
And as such, its procedures will be governed
by the Companies Act 1993.
The resolution must also provide for the shares of all
of the amalgamated companies, but not
the continuing company, canceled, without payment,
or other consideration.
And those words, without payment or other consideration,
are important because they are adopted directly
from the wording of the act.
So please do use that wording.
The cancellation of shares gives rise to another common error.
So having a look at the next slide,
cancellation of shareholders.
If the sole shareholder of a continuing company
is a company which is to be removed
as part of the amalgamation, this
is fatal to the amalgamation itself.
What it means is that the continuing company will not
have a shareholder.
So to address this issue, you will
need to appoint a shareholder and specify share allocations
in the resolutions.
This is critical.
And the wording that you use to set out this in each resolution
should be exactly the same.
We have also seen resolutions that appoint the shareholders
with the same share allocations from the removed company.
In other words, it is possible to carry across the shares.
Where it may become problematic is
where the relevant company has a constitution,
but that constitution is not adopted by the continuing
company.
In that case, you can adopt the removed company's constitution
to carry across those shares.
Again, this does need to be clearly detailed
in the resolutions.
A tip is to print out each amalgamating companies extract
and cross out the shareholders to see whether the continuing
company will be left without a shareholder.
That's what we do.
Now the last error that I will be taking you through
before you hear from my colleague, David Josland,
is the change of name.
If you do wish to change the name of the continuing
company upon amalgamation and have already received
preapproval for that name change, and it has not expired,
the change of name needs to be specified in the resolutions.
The reason for this is when the amalgamation is registered,
the certificate will record the company's previous name,
as well as its new name.
The name approval letter will need
to be lodged with your amalgamation documents
in the Supporting Documents section.
Where it does become complicated as where
you want to retain the name of the company that is removed
as a result of the amalgamation and reserve
that name for the continuing amalgamated company.
Obviously, this cannot be addressed in the resolutions
because you cannot apply to reserve the name,
as the name is already in use at that time the amalgamation
documents are registered.
However, what you can do is add a note
in the Presenters Comment section
when lodging your documents online.
Your comment could note that you intend
to reserve the name of a removed company
as soon as the removal occurs.
Of course, there will be a window
where the company is off the register, which
is risky as someone else may reserve the name before you do.
Name reservation applications are assessed independently
and on a case-by-case basis at the time
the application is made.
We can cater for this type of name change
if we do a manual registration of the amalgamation,
as our processing team can complete the name reservation
process on a client's behalf as part of the actual amalgamation
itself.
This does negate the risk of the removed companies name being
reserved by a third party.
I'll now leave you in the capable hands
of my colleague, David Josland, who will discuss the remaining
areas that we see.
Thank you, Calantha.
Moving on from resolutions to a different amalgamation
document, directors certificates.
All registered directors need to sign the certificates.
These are personally given.
So if there is a sole director, remember
to use I instead of we in the content of the certificates.
For solvency certificates under section 2225,
please do not refer to Section 10 of the Financial Reporting
Act 1993.
Most applications this year have been rejected for this reason.
Section 10 of the Financial Reporting Act 1993
has been repealed.
With the repeal of the set from the 1st of April 2014,
when it ceased to apply to balance states
on or after that date, new wording
was introduced for the solvency test in Section 4,
particularly Section 4 subsection 3 that applies
the test to amalgamations.
Section 4 used to refer to the Financial Reporting Act
1993, hence the need for it now to be
amended in your documents.
The Financial Reporting Act 2013 incidentally is different,
as it deals with matters such as financial standards
and auditors.
Financial reporting is under Part 11
of the Companies Act 1993.
The test was also amended in Section 4 subsection 2
for single company exercises of the solvency test,
where money is to leave the company
for no apparent benefit, such as with the distribution
or an acquisition of shares from shareholders.
Section 4 subsection 3 substituted a general review
of the latest financial statements
for the amalgamating companies and a specific review
of the accounting records of the particular company.
We have also seen reference to the New Zealand tax
administration financial statements order
2014, which is also incorrect.
You can adopt the wording from the specimen documents which
reflects the current position.
The reference to accounting records
needs to refer to the company for which the certificate is
given and not the name of the continuing company.
So in this regard, we recommend that you update your directors
certificates accordingly.
For Section 223(c) certificates, each board
of the amalgamating companies must signed certificates
confirming that they have approved
the amalgamation in accordance with the Companies Act 1993
and the constitution of the particular company,
if it has one.
Now a common error that we see is
where clients have left out reference to the constitution
in the certificate.
A really good idea is to check the registered documents
for the company on the company's register
to see if each of the companies involved in the amalgamation
have a constitution.
I'm now going to talk about another document that trips up
a lot of our presenters of documents.
This relates to the directory information
that is provided as part of the amalgamation documentation.
All that is required under Section 223(b)(a) is the name
of the directory, the date and place of their birth,
and also the country of their birth.
A single page headed up with the name of the continuing
company with the above information listed
will suffice.
Please do not screenshot director details
from the company's register or upload a copy
of the director's passport.
This results in many amalgamations
being rejected whether documentation
is otherwise correct.
Director information must be uploaded separately
to the amalgamation documentation.
If it is uploaded together with the director resolutions
and certificates, then the application
will be rejected as the directory information must not
form part of the public register.
I'm now going to cover some tips that hopefully you'll
find useful.
The tips list is self-explanatory.
One tip I will discuss, however, is the lodgement date.
Any presenter, whether it is your first amalgamation or not,
should try to lodge the documents
at least three weeks before the effective amalgamation date.
This will give us sufficient time
to review the documents for registration purposes.
And if there are errors, we will have ample time
to resolve them.
Try not to submit fresh applications to us
on the day of the amalgamation.
Check for any unusual features.
If there is to be a change of directors
or a change of name of the amalgamated company
is going to take place, make sure
that the documents provide for these changes.
And draw the registrar's attention to them
by adding a note to the Comments field online
when you submit the documents.
Documents that are resubmitted will not be backdated.
The registrar must register documents
on the lodgement date, provided that the documentation is
an order, unless there is a future amalgamation
date specified.
For further information, we invite
you to review our amalgamation checklists on the website
before you submit your documents.
There are checklists for short form
and long form amalgamations available.
We trust you all will update your templates where necessary.
We have seen incorrect documents from firms
where different offices used different template.
So in some cases, a firm-wide update may be necessary.
Two additional things to look out
for are in relation to companies that
are taking part in an amalgamation
is whether or not they're up-to-date with their annual
return filing requirements.
It may be necessary to file an annual return--
for instance-- for one of the companies or for a company
that may be removed from the register
as part of the amalgamation.
Another thing to watch out for is the removed company
registered on the financial service providers register?
Remember that licenses are not transferable so
ensure that the removed company does not hold a license.
If the company is registered on the financial service providers
register, the financial service providers registrar
will get notification that the company is being removed
from the company's register.
This starts the financial service providers
de-registration process.
And just a reminder, please be aware
that we no longer review draft amalgamation documentation.
[MUSIC PLAYING]
Thanks for joining us for our presentation today.
We trust you found it helpful.
And we look forward to receiving your feedback
on this presentation.