[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 348
6. Step 1 – Reserve the company name. This is completed online through the Companies Office website. 7. Step 2 – Submit application for incorporation, which includes: (a) Providing addresses and shareholder and director information (b) Providing consent forms signed by each shareholder and director
(c) Pay the minimal registration fee You can choose to register the company for tax at the time of incorporation and basic tax elections made. If so, New Zealand IRD numbers need to be provided for each New Zealand resident director and shareholder. IRD and tax matters are discussed in more detail below. Notable advantages and disadvantages of companies are as follows:
Advantages
Disadvantages
Ongoing statutory administrative obligations, including: • Filing annual returns – failing which, the company will be removed from the Companies Office register; • Maintaining a share register; • Keeping minutes of meetings; • In some cases, preparing and/or auditing financial statements; financial reporting obligations. Mandatory provisions in the Companies Act cannot be contracted out of, by a constitution or otherwise. From the board’s perspective – whilst the company has limited liability, directors can be held personally liable when there is a breach of duties. Certain details must be registered with the Companies Office, and are thus publically available and viewable, including: • Company’s name; • Directors – name and address; • Shareholders – name and address; • Company’s registered office and address for service; and
Separate legal identity •
Company itself can hold assets and incur obligations and liabilities.
Limited liability •
Shareholders liable only to the value of their investment; no liability for directors (except when breach of duties).
Perpetual succession •
Continues to exist unless removed from the Companies Office register (despite changes in control/ownership/management).
A constitution and/or shareholders agreement can be implemented to cater to the specifics of the company (except to vary mandatory provisions in the Companies Act). Suited to passive investors, reasons include: • Board handles management and day to day operations; • Board has strict duties to
company/shareholders – both under the Companies Act and under common law – must act in the best interests of the company; avoid conflict of interest; disclose personal interests;
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator