New Zealand is consistently ranked as one of the best countries in the world to do business. Its pro-foreign business and foreign investment government actively advertises the country as a worthy choice for expanding foreign commercial operations. With long-standing positive economic growth, New Zealand offers a secure and supportive environment for foreign businesses.
We outline the steps and information you need to form a New Zealand company.
What’s involved in the company formation process?
There are 5 key steps to carry out a New Zealand company incorporation:
- Decide on your business structure
- Grant Power of Attorney to your legal representative
- Establish your company’s constitution
- Register your business
- Open a corporate bank account.
New Zealand offers a streamlined online process for company formation and tax requirements.
1. Decide on your business structure
Decide what kind of business you want to start. There are several different types of legal entities to choose from:
- Limited Liability Company: This is a corporate structure whereby the owners are not personally liable for the company’s debts or liabilities.
- Public Limited Company: This is the legal designation of a limited liability company that has offered shares to the general public and has limited liability.
- Limited Partnership: This is a limited partnership in which some of the partners contribute only financially and are liable only to the extent of the amount of money that they have invested.
- Foreign Trust: This is a trust structure in which legal title to property is transferred from the owner to another party who will then administer the property for the benefit of a third party.
- Branch Office: This is a location other than the main office where business is conducted. Most branch offices are comprised of smaller divisions.
- Representative Office: This is an office established by a company or a legal entity to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted.
The best-suited business structure will depend on your needs. Most companies opt for the Limited Liability Company (LLC) structure, as this minimizes personal liability
2. Grant Power of Attorney (POA) to your legal representative
A Power of Attorney (POA) has the authority to act for an individual or business on all legal and financial matters.
Draft a document granting your legal representative authority to take appropriate action to incorporate a company in New Zealand.
Your POA can then represent you or your foreign company in New Zealand and take the necessary steps to form the company in a lawful manner.
3. Establish your company’s constitution
Company constitutions outline how your company will be governed. The constitutions set out the rights, powers and duties of the company, board, directors and shareholders.
In New Zealand, your company doesn’t need it’s own constitution (also known as bylaws). If you choose not to prepare your own constitution, your company will automatically be governed by the Companies Act 1993.
Alternatively, you can buy a constitution from a third party to implement in your company and include in your business registration application.
4. Register your business
Registering your business in New Zealand is made simple with an online registration process.
RealMe is an online service individuals and businesses use to identify themselves to several New Zealand departments at any given time. This includes the Ministry of Business, Innovation and Employment, and the Companies Office.
Create your RealMe login first. Following this, you’ll need to check your company name is available, and reserve it with the Companies Office. Then you can complete the registration of your company.
Information you’ll need for the application process includes:
- Your company contact details: including email address and physical address for your registered office(s) and if different, mail address
- Details about all of your company’s directors. Your company’s directors must be able to sign and return a consent form, agreeing to be a director, within 20 working days
- Details about your shares and shareholders. The same as above applies – your shareholders must sign and return a consent form within 20 working days.
- Tax registration: in this process you can register for an Inland Revenue number which identifies you to tax authorities. You can register for GST and as an employer.
- If your company is an Ultimate Holding Company (UHC): you must declare what type of company the UHC is, and provide the name, country of registration, registration number or code, if any, and registered office address.
This online application will automatically generate a New Zealand Business Number (NZBN). This is used to identify your business is registered and credible to stakeholders.
In the registration process, you’ll be told when your annual returns are due. Annual returns are an update of information about your company that is publicly available.
Login to RealMe with the Companies Office or click on the link included in the email sent to you confirming your company name.
Select My Unfinished business, and go to My tasks. Once there, find the Complete Coy Application task.
Each of the screens will prompt you for the information specified above. You’ll need to pay NZ$105 (around US$68) plus GST to process your application.
5. Open a corporate bank account
Opening a corporate bank account in New Zealand can take up to 90 days.
Where possible, you can reduce the application time, requirements and costs by opening an account with a bank you already have an account within another country. Global banks in New Zealand include Citibank, HSBC, Bank of China, and Deutsche.
Due to recent changes in Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT) legislation, due diligence processes for opening a business bank account in New Zealand are complex. We recommend seeking assistance from a local expert to complete this process.
Make sure you have personal and ‘due diligence’ information ready for your application, including:
- Details and documents outlining your company’s activities (this can include brochures, websites, invoice and contract examples)
- Information about customers and suppliers of the company
- Information about the company’s shareholders and directors.
Costs of this application process vary across banks.
Important: Keep accurate and complete records
Note that once you’re set up and operational, you’re required by law to keep comprehensive company records for seven years. This includes banking information, proof of income (including cash revenue), expenses and cashbooks.
Contact the experts for help
These are the initial steps that you will need to follow if you are thinking about incorporating your business in New Zealand. In order to get up and running as soon as possible, it’s wise to partner with a local company to ensure you remain compliant every step of the way,
Biz Latin Hub offers customized business solutions in a number of market-entry and back-office services. This includes company formation and financial services. Our New Zealand team offers expert support to ensure a smooth process for you and your business.
Contact us here at Biz Latin Hub and we’ll help you design a strategy to capitalize on your commercial opportunities.