Doing business in New Zealand - Grant Thornton

Business entities
Summary
• Foreign investors may operate in
New Zealand through whatever
entity they choose
• The most common entities used
by foreign investors are locally
incorporated companies or a branch
of the foreign entity
Subsidiary company
Formation
Incorporating a company is an online
process undertaken via the New
Zealand Companies Office website. It is
a relatively simple, speedy and low cost
procedure. Grant Thornton can arrange
this for you.
The first step in incorporating a
company is to reserve the company’s
name. Once this is done, an
incorporation application is filed
containing particulars of company
addresses, shares, shareholders and
directors. The final step is the lodging of
signed director and shareholder consent
forms. It is not mandatory to lodge
a formal constitution. In the absence
of a formal constitution, a company
is regulated by the constitutional
provisions of the Companies Act 1993.
A formal constitution may add to or
vary those Companies Act provisions
and accordingly, that option should
be considered having regard to the
company’s particular circumstances.
Management and officers
A company incorporated in New
Zealand must have at least one
shareholder and one director. A director
must be an actual person and may also
be the sole shareholder. There is no
requirement to have a New Zealand
resident director or shareholder, nor
is there a requirement to appoint a
company secretary.
Minimum capital/capital maintenance
There is no restriction on the size
of a company’s capital. The shares
of companies incorporated in New
Zealand do not have a par value. At
the time of any issue of shares, the
director(s) must be satisfied that the
consideration for and terms of issue of
the shares are fair, and pass a resolution
and sign a certificate to that effect.
Filing requirements
The Registrar of Companies maintains
a file for each company registered in
New Zealand. This records addresses,
shareholders, directors and certain
other information in relation to the
company. This information must be
updated annually, is available publicly
and can be accessed online.
A “large” company incorporated
in New Zealand that is 25% or more
controlled by non-residents must
file audited financial statements with
the Registrar of Companies. There is
no requirement to file the financial
statements of an overseas parent
company unless there is a branch of
that overseas company operating in
New Zealand. Generally, the financial
statements must be filed within six
months of the company’s balance
date. This may be extended in limited
circumstances.
Dissolution and insolvency
A solvent company may be removed
from the company register by a process
known as a “members voluntary
liquidation”. This requires the
shareholders to appoint a liquidator,
generally a suitably qualified
accountant, who takes control of the
company, discharges its liabilities and
distributes the surplus to shareholders.
A strike-off mechanism is available
whereby the directors or shareholders
may simply request the Registrar of
Companies to remove the company
from the company register. However,
such a mechanism should only be
employed after obtaining appropriate
professional advice due to the issues
that arise, including residual exposure
to creditors.
A company is not allowed to trade
while it is insolvent (liabilities exceed
assets). The directors of an insolvent
company should seek advice from an
insolvency practitioner or a lawyer
regarding their options. These include:
• Receivership
• Creditors compromise, being a
legally binding agreement entered
into by all of the company’s creditors
• Voluntary administration
• Liquidation
Doing business in New Zealand 10