Directors' Interest Registers in New Zealand: Companies Act Requirements

If you are a director of a New Zealand company, an interest register can feel like one of those admin tasks that gets pushed down the list until a deal, board decision, or investor question suddenly brings it into focus.

The common mistakes are usually the same: assuming only major shareholdings count, forgetting to disclose an interest before the board makes a decision, or treating the register as a one-off setup document instead of something that needs regular updates.

The problem is that the Companies Act 1993 expects directors to deal with interests properly, and poor record-keeping can create real governance issues. It can also make due diligence, capital raising, shareholder discussions, and internal decision-making much messier than they need to be. If you are not sure what goes into an interest register, when a director must disclose an interest, or what practical process your company should follow, this guide answers those questions in plain English.

Overview

The interest register companies act rules are about transparency. A New Zealand company must keep a record of certain interests disclosed by directors, and directors also have duties around when and how those interests are disclosed to the board.

• Directors must disclose interests in transactions and proposed transactions in the way required by the Companies Act 1993.
• Companies must keep an interests register recording disclosures and certain related details.
• The issue often arises before the board approves a contract, issues shares, enters a lease, signs a supplier agreement, or approves a related party deal.
• Conflicts are not limited to obvious self-dealing, they can include indirect interests through relatives, associated entities, trusts, or other business roles.
• A practical internal process matters, because the main risk is not just the conflict itself, but failing to identify, record, and manage it properly.

What Interest Register Companies Act Means For New Zealand Businesses

The Companies Act 1993 requires directors to disclose certain interests, and it requires companies to maintain an interests register that records those disclosures.

In simple terms, a director has to tell the board when they are interested in a transaction or proposed transaction with the company. The company then needs to record that disclosure in its interests register. This helps the business show that potential conflicts were identified and handled openly.

For founders and small business owners, this often gets missed because the same person may be director, shareholder, employee, and the person negotiating the deal. In early-stage companies, related party arrangements are common, but common does not mean exempt.

What is an interest?

An interest is broader than many directors expect. It is not just a direct personal financial benefit. A director can be interested because of another role, another company, a family connection, or an economic interest held indirectly.

The exact legal position depends on the facts, but situations that often need attention include:

• the director personally entering a contract with the company
• the company contracting with another business owned or controlled by the director
• the company dealing with a trust connected to the director
• the director standing to gain financially from the transaction in some other way
• the director being a director, officer, trustee, or shareholder of the other party
• the director having a close family connection to the person or entity involved

This is where founders often get caught. They assume an arrangement is informal, fair value, or approved by everyone, so disclosure is optional. It is not the director's view of fairness that matters first. The question is whether the director is interested and whether the Companies Act disclosure process applies.

What is the interests register?

The interests register is the company's formal record of director interest disclosures. It is part of good corporate record-keeping, alongside documents such as the constitution, share records, board resolutions, shareholder resolutions, and other statutory registers.

The register should accurately record what was disclosed and when. In practice, businesses often keep this as a dedicated register maintained with their company records, supported by board minutes where relevant.

Depending on the circumstances, the record may include:

• the name of the director making the disclosure
• the nature and extent of the interest
• the transaction or proposed transaction concerned
• the date of disclosure
• any relevant board consideration or acknowledgement
• updates when the interest changes or ends

The register is not just a note for internal memory. It is evidence that the company has treated conflicts seriously. That can matter when investors carry out due diligence, when shareholders ask questions, or when a later dispute turns on whether a director's role was properly disclosed.

Why does this matter for SMEs and startups?

For a smaller company, director conflicts are especially common because people wear multiple hats. A founder might lend money to the company, lease office space to it, sell software to it through another entity, or join the board of a strategic partner. None of these situations is automatically improper, but each can trigger disclosure obligations.

A tidy interest register also makes day-to-day management easier. Before you sign a contract, before you spend money on company setup, or before you issue shares to a new investor, you want confidence that no director conflict has been overlooked.

The legal issue sits alongside other practical governance tasks, such as:

• choosing the right business structure
• keeping Companies Office records up to date
• documenting shareholder rights clearly
• using written contracts for related party arrangements
• protecting confidential information and personal data with a privacy policy
• registering a trade mark where your brand matters

Those wider issues do not replace the interests register requirement. They work alongside it.

When This Issue Comes Up

Interest register companies act issues usually come up at the moment a company is about to make a decision, not when the company is first incorporated.

That is why directors often miss them. The company might have been operating for months or years without a formal register, then a new supplier agreement, investment round, lease, or restructuring exposes a governance gap.

Common founder and SME scenarios

The issue often arises in situations like these:

• a founder-director wants the company to buy services from another company they own
• the company is taking a loan from a director or a director's family trust
• the board is approving salaries, bonuses, or benefits connected with a director
• the company is issuing shares, options, or convertible rights to a director or an associated person
• the business is signing a commercial lease where a director has an interest in the landlord entity
• the company is entering a joint venture or partnership where one director is involved on both sides
• the company is appointing a distributor, reseller, or contractor connected with a director

These moments are common in startups because resources are tight and related party arrangements can be commercially sensible. The legal risk comes from poor process, especially where the deal is informal or rushed.

During board approvals

Board meetings are a frequent trigger point. Before the board approves a contract, acquisition, financing arrangement, or strategic deal, each director should turn their mind to whether they have an interest that should be disclosed.

This matters even where the board is small. A company with only one or two active directors can still have disclosure obligations. Small size does not remove the requirement to keep proper records.

During fundraising and due diligence

Investors, buyers, and lenders often review company records closely. They want to know whether related party transactions were disclosed, whether directors acted transparently, and whether governance practices match the company's growth stage.

If the interests register is missing, incomplete, or inconsistent with board minutes and contracts, it can raise broader concerns. The immediate problem might be a disclosure gap, but the commercial signal is that governance may be loose in other areas too.

When a business expands operations

As a company grows, directors often pick up new roles, side ventures, advisory positions, or equity interests. Expansion can also bring new contracts involving software licences, supply agreements, employment contracts, privacy compliance, online terms, and brand protection.

Each new relationship creates another chance for overlap. A director who had no relevant interest six months ago may now have one because of a new appointment or investment. The register should keep pace with those changes.

Practical Steps And Common Mistakes

The best approach is to treat the interests register as a live governance tool, not a document you create once and forget.

For most SMEs, the practical goal is simple: identify interests early, disclose them clearly, record them properly, and make sure related decisions are handled with care.

Step 1: Set up a clear internal disclosure process

Every company should decide how directors will disclose interests and who updates the register. In a small company, this may be the chair, another director, the company secretary if there is one, or an external adviser who helps maintain corporate records.

Your process should cover:

• when a director must raise a possible interest
• who receives the disclosure
• how the disclosure is documented
• where the register is kept
• how board minutes cross-reference the disclosure
• how updates are made when circumstances change

If your company has a constitution or internal governance policy, it should align with this process.

Step 2: Ask the right question before each significant decision

Before you sign a contract or approve a major transaction, ask each director a direct question: do you have any personal, financial, family, trustee, management, or ownership connection to this deal or the other party?

That question is more useful than asking whether anyone has a conflict. Many directors will say no to a vague conflict question, but yes when asked about specific connections.

Step 3: Record enough detail

A common mistake is writing something too vague to be useful, such as “director noted an interest”. If the company is ever reviewed later, that entry may not say enough about what was disclosed.

The entry should be clear enough that someone reading the records later can understand the nature of the interest and the transaction involved. The aim is transparency, not legal shorthand.

Step 4: Keep the register current

An old register can be almost as risky as having no register at all. Interests change when directors acquire or sell shares in another business, become trustees, join another board, or stop being connected with a transaction.

Put the register on the agenda for regular governance reviews. This is especially useful before:

• a capital raise
• a shareholder buy-in or exit
• a major customer or supplier contract
• a debt or security arrangement
• a business sale or acquisition
• annual record-keeping reviews

Step 5: Match the register with contracts and minutes

The register should not sit in isolation. If a director disclosed an interest in a lease, loan, services agreement, or share issue, your board minutes and deal documents should broadly tell the same story.

Inconsistency is a red flag. If the minutes say a director had no conflict, but the contract shows they were effectively on both sides of the deal, the records need attention.

Common mistakes to avoid

Most problems come from ordinary business habits rather than deliberate wrongdoing.

• assuming the rule only applies to large companies
• treating founder-to-company dealings as too informal to document
• forgetting indirect interests through trusts, spouses, family members, or associated entities
• failing to update the register after a director's circumstances change
• recording disclosures in emails but never transferring them into the formal register
• focusing on the commercial fairness of the deal while ignoring the disclosure process
• leaving governance records until due diligence starts

What about one-director companies?

Single-director companies can still face related party and disclosure issues. The governance process may be simpler, but the need for accurate records remains. If you are the sole director and are dealing with the company in another capacity, good documentation becomes even more important because there are fewer internal checks.

This is one of those areas where a bit of discipline early on can save time and cost later. The same founder who keeps clean records for incorporation, registration changes, online terms, privacy documents, and trade mark protection should apply that mindset to director interests too.

When should you get legal help?

You should get legal help when the position is unclear, the transaction is significant, or there is disagreement about whether a director is interested. This is especially true before you sign where the deal involves:

• share issues or changes in shareholder rights
• financing from directors or related entities
• asset sales or purchases involving related parties
• commercial leases or property arrangements connected to directors
• joint ventures, distribution arrangements, or long-term service contracts
• investor due diligence where company records are being reviewed closely

A lawyer can help assess the disclosure position, tidy the register, prepare board resolutions, and make sure related agreements are documented properly.

FAQs

Does every New Zealand company need an interests register?

Companies generally need to keep proper records of director interest disclosures under the Companies Act 1993. If your company has directors who may become interested in transactions or proposed transactions, a formal interests register is the practical way to meet that obligation.

What kinds of interests must a director disclose?

The rule can extend beyond direct personal benefit. Interests may arise through another company, a trust, a family connection, or another role the director holds. The exact position depends on the facts, so if there is doubt, it is sensible to assess it early.

Is a related party transaction automatically prohibited?

No. A related party transaction is not automatically banned just because a director has an interest. The key issue is whether the interest is properly identified, disclosed, recorded, and managed in line with the company's legal and governance obligations.

Can we just record the disclosure in board minutes instead of keeping a separate register?

Board minutes are helpful, but they are not always enough on their own. A dedicated interests register is the cleaner and safer approach because it creates a central record that can be updated and reviewed over time.

What happens if the register has not been kept properly?

The immediate risk is poor governance and uncertainty around past decisions. It can also create problems during investment, sale, finance, or shareholder reviews. If the register is incomplete, the company should get advice on how to review past transactions and improve its records going forward.

Key Takeaways

• The interest register companies act requirements are about director transparency, not just admin.
• Directors need to disclose certain interests in transactions and proposed transactions, and the company should record those disclosures in an interests register.
• Interests can be direct or indirect, including through associated entities, trusts, or family connections.
• The issue commonly arises before the board approves contracts, loans, leases, share issues, and other related party arrangements.
• The safest approach is a clear internal process, accurate board minutes, current register entries, and properly documented contracts.
• If the position is unclear or the transaction is significant, legal advice can help avoid governance problems later.

If your business is dealing with interest register companies act and wants help with director disclosure obligations, interests register record-keeping, board resolutions, and related party contracts, you can reach us on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.