Time to Update your Ts and Cs

New legislation in force from 1 September 2017
In February the Contract and Commercial Law Act 2017 (CCLA) was enacted which will repeal a number of commercial statutes and consolidate them in the CCLA. It comes into force on 1 September 2017.

If you operate a business that uses standard form contracts, terms of trade or other such documents which refer to the old laws, you should update those to take account of the new legislation. Read more…

Up In the Air - Using your drone

The use of drones is no longer limited to government agencies, technical gurus or the super wealthy. The market has been flooded with drones that are reasonably priced and are easy to use. These high-tech pieces of equipment are, however, bound by Civil Aviation Rules. In this article, we explore what rules there are around their use. Read more…

Options for parents to help
It's every Kiwi's dream to own their own quarter-acre share of paradise. Unfortunately for many young people today, not only are the quarter-acre sections fast disappearing into multi-complex developments, but it's also becoming harder than ever before with an ever-rising property market.

Every time you turn on the news, we hear something about the housing unaffordability in Auckland. Those south of the Bombay Hills start to get a bit glassy-eyed when listening to this on repeat. However, since the government's introduction of the 'LVR' rules in October 2016 aimed at improving affordability in these markets, we must pay attention as all of New Zealand is affected. Read more…

Business Briefs - Winter 2017

It will all come out in the wash: non-compliance with minimum employment standards

The Employment Relations Authority (ERA) has imposed a significant penalty of $145,000 on Manukau Auto Valet Limited for its failure to pay minimum wages and/or holiday pay to at least 115 of its employees (Labour Inspector of the Ministry of Business, Innovation and Employment v Manukau Auto Valet Ltd [2017] NZERA Auckland 85). The penalty was imposed in addition to Manukau Auto Valet's reimbursement of $96,451 to its employees, which was owed as a result of its non-compliance.

In total there were 322 separate breaches of employment law, each being capable of being penalised with a fine of up to $20,000 that created a total potential liability of $6,440,000. However, as is usual in situations like this, the ERA applied a globalised approach in respect of the breaches and considered other relevant matters such as Manukau Auto Valet's co-operation. The penalty was reduced to $145,000, which is still a significant sum.

We remind employers to ensure that your payroll systems and record keeping meet all the relevant employment law requirements. Otherwise there could be an expensive lesson.


Further Takeovers Code relief on the way for small companies

The Takeovers Panel has recommended to the Minister of Commerce and Consumer Affairs that three substantive and numerous technical changes be made to the Takeovers Code.

The main change proposed is that the definition of 'Code Company' will only capture companies that, together with their subsidiaries, have a total annual revenue of at least $15 million, or assets of $30 million, at the end of the most recent accounting period. This will exclude small unlisted companies, and will remove the disproportionate cost of Code-compliance for them, while retaining appropriate restrictions for larger and listed companies.

Two other important changes are:
1. 'Days' in the Code: Amending the Code to state timing obligations in 'working days' in line with other legislation, such as the Companies Act 1993, rather than in 'days.' Amending the timing rules to refer to 'working days', which will exclude weekends, public holidays and the Christmas/New Year period, will address practical issues, including the potential for interested parties to be subject to tight timeframes where takeovers take place over holiday periods.
2. Electronic access for shareholders: Amending the Code to facilitate electronic communication and the public availability of Code documents by:
• Requiring target companies to provide offerors with the email addresses of shareholders who have provided them to the target for the purposes of receiving documents electronically
• Requiring that Code-regulated communications by a target or offeror are made electronically, subject to the target, the offeror or an affected shareholder having the right to request hard copy communications, and
• Allowing the Takeovers Panel to publish Code-regulated documents on the Panel's website.


Employee share schemes, your time is up

A great deal of Inland Revenue's recent work on employee share schemes has culminated in the recently-introduced Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill.

The Bill, which sets out the new rules for taxing employee share schemes, is very important – to both companies that have employee share schemes in place, and to those people who are currently participating in them.

Over the years, schemes have been put in place which ultimately provide non-taxable capital gains to employees. Usually they're structured by providing employees with the ability to buy company shares using a loan from the company. Essentially, under the Bill these types of schemes will be taxed on the same basis as employee option schemes, which is that employees are taxed on the difference between the strike price they pay to exercise their options and the value of the shares at the time of exercise.

If you're operating a business that currently has a share scheme that could be caught by the proposals, or you're a participant in such a scheme, you should talk with us for advice on the implications of the Bill.

Shareholders' Agreements

Relationship property for companies
Shareholders' agreements are comparable to relationship property agreements (colloquially known as 'pre-nuptial agreements'), as the objective of each is to establish rules for relationship property – whether it's in your business or your personal life. Read more…

Budget 2017 - An Overview

The pundits were right. The Minister of Finance, the Hon Steven Joyce, presented his first Budget on Thursday 25 May and it was definitely a 'steady as she goes affair' with few surprises. Read more…

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PO Box 1345, Dunedin 9054 |  Fax: 03 477 4021  |  E: info@downiestewart.co.nz