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Incorporation

Setting up a company in New Zealand

When setting up a company you may want to consider these factors:

  1. Business Factors

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor, since separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional Language

    English is one of New Zealand’s two official languages, and is universally spoken. The other official language is Maori (Te Reo), which is spoken mainly by the indigenous population.

  4. Visas

    Visitors from many countries do not require a visa for visits to New Zealand of less than three months. Generally, visitors are not allowed to work here. However, visas or work permits are available under various categories for people wishing to work in New Zealand either on a temporary or permanent basis.

Your Options

New Zealand has a relatively deregulated and open economy. It is consistently ranked as one of the easiest countries in which to do business, one of the least corrupt, and having one of the highest levels of economic freedom.

Major industries include agriculture, forestry, fishing, horticulture, manufactured goods and food processing.

Major imports include mineral fuels, mechanical and electrical machinery, vehicles, pharmaceuticals, textiles, and plastics. Major exports include dairy products, meat, wood, mineral fuels, machinery, fruit and nuts, wine, fish, wool, horticultural produce, manufactured goods and tourism.

Due to New Zealand being a small economy they welcome new companies from around the world to help with their isolation. They make it easy for foreign companies to come and do business. They were one of the first economies to increase interest rates after the GFC (Global Financial Crisis), which demonstrates the resilience of the New Zealand economy. Its major trading partner is Australia and both countries have a special economical relationship, allowing both nationalities to move and work without the need for visas.

New Zealand encourages foreign investment; nevertheless, consent is required for certain categories of investment in New Zealand by overseas persons. This process is administered by the Overseas Investment Office (OIO) on behalf of the government. The general categories for which OIO consent is required are investment in:

• ‘Sensitive’ land
• Business assets worth more than $100 million
• Fishing quota
.
For these purposes, overseas persons comprise individuals who are not New Zealand citizens and are not ordinarily resident in New Zealand, and companies that are either incorporated outside New Zealand or have 25% or more foreign ownership.

Branch Office

A branch means the New Zealand operations of an overseas company. It is not a separate legal entity. The company incorporation is still held under another country’s jurisdiction, but the New Zealand operations are governed by New Zealand law.

Part XVIII of the Companies Act 1993 (sections 332 to 337) allows overseas companies to establish and register a branch operation in New Zealand on the overseas register.

Australian companies wishing to register a branch in New Zealand benefit from an information sharing arrangement between the Companies Office and ASIC. Registration is cheaper (if done online) than for companies from other countries, and you are only required to provide in your application the company’s Australian Company Number (ACN), together with the following New Zealand-specific details:

  • An active email address
  • The name reserved for the company with the Companies Office (this must be identical to the company’s name as it is registered with ASIC)
  • Physical addresses of the company’s principal place of business in New Zealand and person(s) authorised to accept service in New Zealand, and
  • An address (postal or physical) for communications (with the Registrar).

Australian overseas companies also benefit on an ongoing basis from reduced compliance requirements. For example, they need only file a simplified annual return, with ASIC supplying the Companies Office on request with the relevant information filed by the company in Australia.

Liability

A New Zealand branch (being legally the overseas company) bears directly any liabilities that it may incur under New Zealand law. There is no sheltering of liability behind a different legal persona. Establishing a special purpose company as the branch may help ring-fence this liability. In practice, however, limited liability may be illusory, unless the subsidiary is of substance in its own right, any significant commercial dealings may need to be guaranteed by the overseas parent.

Tax

A New Zealand branch of an overseas company will generally be considered non-resident for taxation purposes.

Annual accounts

A New Zealand branch of an overseas company must file two separate sets of audited financial statements, one for its worldwide operations and one for its New Zealand business.

The Process of Registration

An overseas company wishing to register a branch in New Zealand must reserve its name with the Registrar of Companies and file a registration application within ten working days from the start of business.

The application must include:

  • The names and current residential addresses of the directors of the overseas company
  • The address of the overseas company’s main place of business in New Zealand
  • Evidence of the overseas company’s incorporation and a copy of the instrument constituting or
  • Defining its constitution (in English), and
  • The name and address of at least one person in New Zealand who is authorised to accept service of documents on the company’s behalf.

Check and Reserve Company Name

The first step is to reserve the company’s name. This is an online process undertaken via ONECheck or RealMe on the Companies Office website. It is a relatively simple, speedy and low cost procedure.

ONECheck is an online search tool that combines a company name, domain and trademark search all in one place. It is designed for people who are looking at starting a new business, renaming their current business or just wanting to check their existing business name is secure. ONECheck packages all the relevant information in one place, so you don’t have to work from three different websites. ONECheck can do all the registering of your company name for a fee, or can be used just to check if the name is available (then use RealMe – see below – for registering a company name).

  • RealMe

To go via the Companies Office: you will need to get a RealMe username and password from this site.

This site is where to register all of the company’s forms.

Cost: 10.22 NZD

Time: 2 hours to get approved. Must use this name within 20 days after approval

File Company Information

Using the same username and password on RealMe from registering the company name add in the below information to register a Branch Office in New Zealand.

  • The names and current residential addresses of the directors of the overseas company
  • The address of the overseas company’s main place of business in New Zealand
  • Evidence of the overseas company’s incorporation and a copy of the instrument constituting or
  • Defining its constitution (in English), and
  • The name and address of at least one person in New Zealand who is authorised to accept service of documents on the company’s behalf.

Cost: $160.22 NZD

Time: 1 Hr to be registered on the overseas companies register.

Limited Partnership

From an investor’s perspective, a limited partnership provides the limited liability protection of a company and some of the flow through tax and confidentiality advantages of a partnership. The New Zealand limited partnership model is broadly comparable to limited partnerships in other jurisdictions, including Delaware, Australian states and the Channel Islands. The following issues may be relevant in deciding whether to establish a limited partnership.

Liability

Like a company, a limited partnership is a separate legal entity from its investors; which separation helps to protect those investors from losses and claims arising from the business activities of the limited partnership.

  • Limited partners are passive investors and their liability is typically limited to the capital they agree to contribute, provided they do not take part in the management of the limited partnership.
  • The general partner manages the business and is responsible for the debts and obligations of the limited partnership if the limited partnership itself cannot meet them. A general partner may be a company.

Register the Partnership

Registering a partnership is an online process undertaken via the Companies Office website. Apply to register a Limited Partnership by completing the prescribed form (Form LP1).

The application form requires the following information to be given:

  • The proposed name of the Limited Partnership
  • The certification from a general partner/agent that the partnership agreement complies with the Limited Partnerships Act
  • Details of its registered office, address for service, postal address and email address
  • Details of the General Partners
  • Details of the Limited Partners
  • Full name, postal address, email address, telephone number and facsimile of the presenter.

Note: Limited Partners details will not be made publicly available on the Limited Partnerships Register. Each application must also be accompanied by a prescribed form of consent signed by every General Partner or that person’s agent authorized to do so in writing, consenting to be a General Partner

The online system is called RealMe. You will need to access the site to register all companies’ forms by registering a RealMe username and password.

Overall it is a relatively simple, speedy and low cost procedure. Once the application is processed, an incorporation application is filed containing particulars of partners, including addresses, and the name of the partnership.

Cost: The filing fees for establishing a limited partnership electronically are $270.00 NZD.

Time: 1 Hr to be registered on the overseas companies register. Maybe longer time to find partner and sign agreement

Subsidiary Company

A subsidiary company is like a ‘child’ that is a wholly owned subsidiary of a ‘parent’ (overseas company). You can establish a wholly owned New Zealand subsidiary by registering a New Zealand company with 100% shareholding held by the overseas company.

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 using the RealMe username and password.

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. 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

Registration

All the steps can be done at the same time using RealMe, which saves time and effort as you receive all the documents to run your company in New Zealand. Note they are broken up into separate steps for reference.

The steps to register a subsidiary company are as follows.

Checking and Reserving Company Name

The first step is to reserve the company’s name. This is an online process undertaken via the Companies Office website. It is a relatively simple, speedy and low cost procedure. It can be done via the Companies Office (RealMe) or via ONEcheck. ONECheck can do all the registering your company name for a fee or can be used just to check if the name is available then use RealMe see below for registering a company name.

ONECheck

Using ONECheck is an online search tool that combines a company name, domain and trade mark search all in one place. It is designed for people who are looking at starting a new business, renaming their current business or just wanting to check their existing business name is secure. ONECheck packages all the relevant information in one place, so you don’t have to work from three different websites. This site can be used to check if a companies name is available in New Zealand before you use RealMe to register the name.

RealMe

To go via the Companies Office: you will need to get a RealMe username and password to register all companies forms.

Time: 2 hours to get approved, and must incorporate with this name within 20 days after approval

Cost: $10.22 NZD

Filing Company Documents

This is done on the same website with the same username and password through RealMe. It is a one-stop shop to register name and company details. RealMe is also used in the future to add any changes to the company so when creating RealMe password and username make sure it is retained for future use.

Cost: $160.22 NZD

Time: 1 hr receiving via email your documents of incorporation and New Zealand Business Number (NZBN).

Lodge Director and Shareholder Consent Forms

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.

Note:| Overseas companies are not required to file director or shareholder consent forms.

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 of 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.

Cost: N/A

Time: N/A

Tax Registration

To register for employment tax and welfare, you can apply for a company IRD number (unique identification number from the NZ Inland Revenue), this is done by registering as an employer and register for GST when you incorporate your company online with the Companies Office.

Once the incorporation process is complete, you will receive the company’s certificate of incorporation and your IRD/GST number at the same time. Your employer registration pack will be sent to you within ten working days of receiving your IRD number.

Note:   You are required to provide the IRD number of all New Zealand resident individual shareholders as well as the IRD number of each New Zealand resident director.

Time: 1 day (can be combined with previous steps?)

Cost: No charge

Business industry code (BIC)

The primary activity of a business is classified using a Business Industry Description and a corresponding Business Industry Code (BIC). Just start typing in a description that you think is right for your business. Then from the drop-down list choose the appropriate description and corresponding code.

The Business Industry Description classifies the main activity your business is involved in and for each Business Industry Description there is a corresponding Business Industry Code. This is the code that you supply to government departments.

The format of this Business Industry Code is seven characters, one alpha and six numeric digits.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in New Zealand, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in New Zealand they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in New Zealand
  • the company needs help with tax, employment, immigration and payroll compliance in New Zealand

The complexity of employment regulations in New Zealand makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in New Zealand allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in New Zealand.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into New Zealand. Read more about outsourced employment through Shield GEO.

Summary of Setup Steps

Subsidiary Company = (SC) Limited Liability

Branch Office = (BO) Branch Office of Overseas Company

Limited Partnership = (LP)

SC BO LP Time Cost (NZD)
Can non-residents be company members? Yes Yes Yes
Percentage of members who are required to be residents: 0% 0% 0%
Conduct business across all of New Zealand? Yes Yes Yes
Obtain Right / Register Business Name Check Yes Yes Yes 2Hr (time and cost same for all types of company) 10.22
Company Registration Yes160.22NZD Yes160.22NZD Yes270.00NZD 1 hr (online application)
Liability Company LimitedLiability Overseas Company has Liability Limited Liabilityfor partners
Business number Yes No Overseas number No
Tax Obligations New Zealand Tax File both Overseas financials and New Zealand Tax For overseas partners tax has to be evaluated due to partnership
Employing locals possible? Yes Yes Yes
 TOTALS CompanyTime: 3 hrsCost: 170.44 BranchTime: 3hrsCost: 170.44 Partner-shipTime: 3hrsCost: 280.22 

 

Conclusion

New Zealand has a relatively deregulated and open economy and is consistently ranked as one of the easiest countries in which to do business, one of the least corrupt, and having one of the highest levels of economic freedom. Due to New Zealand being a small economy they welcome new companies from around the world to help with their isolation by making it easy for foreign companies to come and do business. Its major trading partner is Australia and both countries have a special economical relationship, allowing both nationalities to move and work without the need for visas.

For foreign companies wishing to establish a presence and operations in New Zealand, the most common forms of incorporation are the branch office, through a limited partnership, or by incorporating a New Zealand company (which can nonetheless be 100% owned by foreign shareholders).

Most businesses require no government approval. Overseas companies carrying on business in New Zealand and ‘large’ New Zealand companies that have 25% or greater foreign ownership must register and file audited accounts with the Registrar of Companies. These accounts are filed on public record.

Further consent is required for certain categories of investment in New Zealand by overseas persons in categories such as ‘sensitive’ land, fishing quotas or business assets worth more than $100 million. This process is administered by the Overseas Investment Office (OIO) on behalf of the government.

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