[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 360
disclose personal interests;
address for service; and
Under the Companies Act shareholders maintain certain powers – including appointment/removal of directors and the approval of “major transactions” which require a 75% shareholder resolution; The Companies Act provides some limited protection for minority shareholders, including “minority buy - out rights” in certain circumstances.
Constitution.
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Dividends/distributions can only be paid if the company meets the solvency test. The solvency test essentially requires that the company can pay its debts as they fall due and has assets that exceed its liabilities.
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Flexibility to introduce/raise new capital. The Board may delegate responsibilities.
Tax : Company income is taxed at a flat rate of 28%. Losses can be carried forward (subject to 49% shareholder continuity). Imputation credits can be applied to shareholder dividends (however limits apply). Overseas companies An overseas company is defined in the Companies Act as “a body corporate incorporated outside NZ”. If you already operate an overseas company (with exceptions for Australian companies), that overseas company can then operate in New Zealand in any one of the following three ways: 1. Setting up a subsidiary (i.e., incorporating a company in New Zealand, with the shareholding held entirely by the parent company); or 2. Becoming a New Zealand company (i.e., transferring incorporation to New Zealand); or 3. Registering a branch in New Zealand.
Tax : Dividends are subject to a RWT taxed at a flat rate of 33%.
The process for registering a branch in New Zealand is a two-part online process, completed through the Companies Office website, and again is relatively fast and simple. The process is as follows: 1. Step 1 - Reserve the overseas company’s name – only then can the overseas company commence carrying on business in New Zealand; and 2. Step 2 – Submit an application for registration within 10 working days of commencing business in New Zealand. Financial reporting obligations There are specific reporting obligations for certain companies. This includes companies deemed to be “large” public companies, large overseas companies and companies with 10 or more shareholders. Those reporting obligations are statutory financial
ILN Corporate Group – Establishing a Business Entity Series
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