Doing business in New Zealand - Grant Thornton

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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
Branch in New Zealand Registration An overseas company must register with the Registrar of Companies within 10 working days of commencing to carry on business in New Zealand. This process, which is undertaken online, involves reserving the company’s name and then filing a registration application containing: • particulars of its directors and principal place of business in New Zealand • evidence of its incorporation and a copy of its constitution • details of the person in New Zealand authorised to accept service of documents on its behalf. For Australian companies, most of this information is automatically provided due to information sharing between the New Zealand Companies Office and The Australian Securities and Investment Commission. Filing requirements An overseas company that operates a New Zealand branch must file separate audited financial statements for both the entity itself and the New Zealand branch operations within six months of balance date. Other New Zealand trading alternatives Other means of carrying on business in New Zealand include: • Individual (sole trader) • Trust • Partnership or joint venture, although in the case of partners or joint venture parties that are companies incorporated overseas, this would ordinarily require registration in the manner previously described • Limited partnership • Look-through company (LTC) - (see Look-through companies, p24) Doing business in New Zealand 11
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Doing business in New Zealand - Grant Thornton

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