The Government will tighten the rules for registering companies and directors, and give the Registrar of Companies greater powers.
The new measures are designed to stop New Zealand shell companies being involved in criminal activities overseas.
The main change will require all companies to have either one New Zealand-resident director or a local agent.
That director and agent will be responsible for ensuring companies provide accurate information to the Registrar of Companies, while they'll also be liable if firms breach their filing requirements under the Companies Act.
SP Trading case sparked review
Commerce Minister Simon Power asked officials to review the rules after a shell company, SP Trading, was alleged to have links to international arms trading. None of the directors were based in New Zealand.
At the time, the Ministry of Economic Development, which oversees the Registrar of Companies, defended its system, following criticism that it was open to money laundering of terrorist activities.
Under the changes, the registrar's powers will be expanded, allowing it to take action when it suspects information about a company or director is not accurate.
Companies under investigation will also be flagged on the Companies Office website.
A bill setting out the changes will be introduced to Parliament next year.