Nigor Trading Ltd: Gordon Roger Arcus [now called Paul Jones]and Nicholas Ronald Seja (directors). This company is described on a business website as a “Distributor/Wholesaler” dealing with “adult sex toys, herbal erection pills , and sexy lingerie”. It had R18 retail outlets in Hastings and Palmerston licenced to sell psychoactive substances (“legal highs”) to the public. The company’s board has failed to file its 2014 annual return with the Registrar of Companies which was due in November 2014 (the 2013 Return was filed late). This failure is a breach of Section 214 of the Companies Act 1993. Every director of a company commits an offence in failing to comply with s. 214 and is liable on conviction to the penalty set out in section 374(2) of the Act (see below).
Let’s now examine how the law works in the case of Nigor Trading Ltd in a study of non-compliance and enforcement issues.
Online Companies Office records show that Gordon Roger Arcus updated his legal name (changed by deed poll) on the register to Paul Gordon Jones at 12:05:05 01 June 2014 12:05 and his residential address from 237 Cuba Street, Palmerston North, 4410, NZ to 106 Miller Street, Hastings, Hastings, 4122, NZ. Two and a half minutes later at 12:07:35 he changed his name and residential address to:
Paul JONES 237 Cuba Street, Palmerston North, Palmerston North, 4410, NZ.
[Note: These changes were made on company office records for Mirrormix Productions Ltd of which Gordon Roger Arcus (now Paul Jones) is a current director and shareholder. 227 Cuba Street, Palmerston North is not a residential address as required by the Companies Act 1993. It is an R18 shop.].
Section 214 Companies Act 1993: Annual return
(1) The board of a company must ensure that there is delivered to the Registrar each year, for registration, during the month allocated to the company for the purpose, an annual return in the prescribed form or in a form the use of which by the company has been approved by the Registrar pursuant to subsection (8), or as near to it as circumstances allow, and containing as much of the information specified in Schedule 4 as is prescribed.
(2) The annual return must be dated as at a day within the month during which the return is required to be delivered to the Registrar and the information required to be contained in it must be compiled as at that date.
(10) If the board of a company fails to comply with subsection (1) or subsection (2), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).
The Companies Office website’s latest Notice relating to Nigor Trading Ltd (Co. No. 1690091) states::
“This company is now overdue in its obligation to file an annual return. If the annual return is not filed immediately the Registrar will initiate action to remove the company from the register.”
“The Registrar of Companies has initiated action to remove the company from the register and public notice was given. The objection period has lapsed and the Registrar will continue with the removal process unless an objection has been received.”
On 22 January 2015 the Registrar of Companies Ms Mandy McDonald issued the following Notice re Nigor Trading Ltd:
“I intend to remove the following companies from the Register under section 318(1)(b) of the Companies Act 1993.
“I am satisfied that these companies have ceased to carry on business and there is no other reason for these companies to continue in existence or that no liquidator is acting.”
Since the Notice was issued it appears that the Inland Revenue Department has lodged an objection to the removal of this company, pending resolution of outstanding tax matters.
Nigor Trading Ltd was incorporated on 6 September 2005 with two founding directors Gordon Roger Arcus and Nicholas Ronald Seja. Its current registered office and service address is 56 Rangitikei Street, Palmerston North, 5301 , New Zealand. It is described on one business website as a “Distributor/Wholesaler” dealing with “adult sex toys, herbal erection pills , sexy lingerie”. Based on media reports and written submissions company officials have made to city councils, it has owned R18 retail outlets in Napier and Palmerston North that are licensed to sell psychoactive substances (“legal highs”) to the public. Reports from the Film and Video Labelling Body (2009 and 2011) show that the company has been importing hardcore pornography for the purpose of distribution in New Zealand (see references below).
The company currently has two directors with their respective residential addresses listed on the Companies Office website:
Residential address: 104 Karamu Road, Hastings, Hastings, 4122 , New Zealand
Residential address: 9a Coronation Street, Feilding, Feilding, 4702 , New Zealand
He currently owns 50% of the 100 company shares and Seja and Paul Jones [Gordon Roger Arcus] jointly own the remaining 50.
Gordon Roger Arcus was appointed director of Nigor Trading Ltd on 6 September 2005 and signed a Consent of Director on that date. He recorded his residential address at that time as 243a Cuba Street, Palmerston North. On 18 December 2009 Nicholas Ronald Seja filed an online notice of the resignation of Gordon Roger Arcus on 12 June 2009. Mr Seja and Mr Arcus breached the Companies Act 1993 in failing to file this notice with the Registrar of companies within 20 working days of the resignation.
At 15:37:53 on 18 March 2010 Gordon Roger Arcus, who was neither director or shareholder in the company, used ‘his’ company access key to record that he had acquired 50 of the shares held by director Nicholas Seja. An hour later at 16:36:50 Gordon Roger Arcus appointed himself as director filing a second Consent of Director form, recording his residential address as 237 Cuba Street, Palmerston North. It appears that the consent form was faxed by Mr Arcus to the Registrar from Edmonton, Canada.
The latest annual return filed for Nigor Trading Ltd is dated 3 December 2013 and it records “Gordon Arcus” as sole director of Nigor Trading Ltd. He provides his residential address as 237 Cuba Street, Palmerston North. He is recorded as the sole shareholder and he provides his residential address as 56 Rangitikei Street, Palmerston North, 5301 , New Zealand, which is identical to the company’s current registered office. This is clearly a breach of the Companies Act 1993 as a director can only reside at one valid residential address.
On 1 January 2014 Gordon Arcus updated his residential address from 237 Cuba Street, Palmerston North to 104 Karamu Road, Hastings, 4122, NZ. As noted this is a breach of the Companies Act as this is not a residential address].
On 16 May 2014 at 13:25:37 Gordon Roger Arcus as “presenter” (recorded residential address: 237 Cuba Street, Cbd, Palmerston North 5301, New Zealand) recorded that his name and residential address had changed from
A general observation.
When a company is insolvent and has a considerable tax liability some company directors get their legal names changed by deed poll to try and avoid public scrutiny of their financial dealings (e.g. shareholdings). They often leave the country long term so they cannot be contacted by the IRD.
It is common practice for company directors with a history of numerous failed companies (especially those put into liquidation by order of the Court following a petition from a creditor such as the IRD), and who have been disqualified to act as company directors in the past; to deliberately choose not to submit an annual return. By not doing this, an action which is contrary to the Companies Act 1993, they force the hand of the Companies Office to remove their company from the register. Directors do so in order to try and avoid the costs involved in winding up their company, a process that can involve disclosing the company’s state of affairs to the IRD. Directors who fail to file annual returns often do so deliberately to give themselves time to hide company assets prior to a liquidator(s) being appointed or even when the liquidation process is underway. Assets are promptly transferred by such unscrupulous directors to the parent company in which they have beneficial interests, and/or the assets are sold ‘down’ at discount prices to their related companies so that the liquidator is deprived of the funding sources he/she is entitled to use in an attempt to realise assets so that creditors can be paid.