(New Zealand) The taxpayer company was established in the Netherlands Antilles as the subsidiary of a New Zealand parent company. It was a vehicle company whose purpose was to raise borrowings on the Eurobond market and to lend the money on to the New Zealand parent for use in its business or in the businesses of the group. The Netherlands Antilles subsidiary of the ABN group was engaged to act as manager and bookkeeper of the company and subsequently was appointed a director of it. The ABN subsidiary provided a registered office, and ensured compliance with Netherlands Antilles laws and with the articles of association of the company. It also attended to the day to day management of the company. Proposals for bond issues originated with the parent company in New Zealand, but were actually carried into effect by the Netherlands Antilles subsidiary, which had a local board of directors. For some of the time one of the directors was a New Zealander who was also a director of the parent company.
Held: [‘the objector’ means the Netherlands Antilles subsidiary] ‘All the objector’s decisions in respect of issues were taken at meetings outside New Zealand. The issues could not proceed without those decisions. Plainly those decisions of policy in respect of the borrowing were first undertaken by those responsible for NZFP [the parent company], with the reasonable expectation that they would find favour with the directors of the objector, particularly when in the time of Mr Wylie he was a director of both boards and other Australasian directors were closely associated with NZFP.
It is also clear upon the evidence, however, that the decisions of the directors of the objector were those of the objectors [sic] independently. . .
Applying the De Beers test, it is clear the central management and control of the objector was at all times outside New Zealand. All decisions taken by its directors were taken outside New Zealand, as were its shareholders’ meetings and its essential management functions, which took place in Curacao. The Commissioner has argued that the true centre of management and control was Auckland and that the board of the objector merely rubber stamped NZFP decisions. As already indicated, that ignores both the legal and the factual position. . . The Commissioner’s position confuses NZFC’s policy and influence with its powers. . . [I]t was not in the interests of NZFP that the directors of the objector should act as pawns or rubber stamps in the way submitted by the Commissioner and they did not do so. . . The control and management of the objector was in the hands of its directors and, as already indicated, that was at no time exercised in New Zealand.’
Judges:
Doogue J
Citations:
(1995) 17 NZTC 12,073
Jurisdiction:
England and Wales
Cited by:
Cited – Unit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 04 May 2022; Ref: scu.224813