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New Zealand
Company formation in brief
The Companies Act of New Zealand provides for the establishing of companies of various organizational and legal forms, including those which may be interesting for a potential foreign investor, such as:
• Limited Partnership
• Limited Liability Company
• Public Company
• Overseas Company
The Limited Partnership Act of New Zealand provides for a favourable tax treatment for foreign investors, and a duly structured partnership enables to legally minimise taxes to non-resident partners of New Zealand provided that the partnership has not rolled out its business in New Zealand or generates no income at sources in New Zealand.
Partnership has at least two partners – a general partner and a limited partner. They may be both physical and legal persons from any jurisdiction.
General partner must be a resident of New Zealand and is liable for business administration (his status is comparable to that of a typical company director) and for the partnership’s obligations and debts in full volume. Given this very important provision, as a rule, general partner is either a professional managing company or a special purpose vehicle set up for managing a partnership in New Zealand.
A limited partner may be a non-resident of New Zealand and is liable for the partnership’s debts only within his participation interest, and, as a rule, acts as a passive investor without any obligations for managing and administering the partnership’s business activities. If a limited partner signs contracts or tax reports, his position is actually that of a general partner and, as a result, the limited partner's liability for the partnership's obligations ceases being only limited.
A limited partner is protected by the New Zealand Privacy Act. The limited partners’ data in New Zealand is not provided in the Companies Public Register.
Partnership may include any number of partners, and its foundation agreement may provide for introducing new limited partners.
Partnership may be established for a limited period of time which may be subsequently extended (thereby its liquidation, if needed, is simplified), and for an unlimited period.
Partnership, as a legal entity, is tax exempt in New Zealand. Only partners are subject to taxation. Therefore, if a New Zealand limited partnership’s income is not generated in New Zealand, the partners in the partnership are subject to income tax in the country of their residence rather than in New Zealand.
A typical Limited Liability Company may be established by one non-resident shareholder (maximum shareholders number is 25) and managed by one director (at least one director must be a resident of New Zealand).
No capital is required to be paid up for establishing a company. The company is sometimes referred to as Registered Company or Incorporated Company because this form of business is subject to registration with the New Zealand Ministry of Economic Development, and the company name may not be used by third parties in their own interests after registration. At the same time, the company may be registered under one name and operate under another name, if its forms, business cards and other business attributes reflect the second name as well.
The company must have an actual registered address (no mailbox is allowed). All business documents of the company must be kept on file at the company’s registered office.
If more than 20% of the company's shareholders or a majority of the company's directors are non-residents of New Zealand, the company is required to file the annual audit report along with the annual return. The annual return is signed by the company’ directors and has information about current directors and shareholders.
A Public Company, unlike a Limited Liability Company, is established by at least seven shareholders (maximum number of shareholders is unlimited) and managed by the Board of Directors.
All public companies are subject to income tax at a rate of 33%.
Foreign shareholders’ dividends are subject to withholding tax in New Zealand at a rate of 15% unless otherwise provided by double taxation agreements.
No capital gains tax is charged in New Zealand.
Foreign companies may establish their branches in New Zealand through registration of the so-called Overseas Company. In fact, the Overseas Company differs little from a limited liability company but foreign companies’ branches are subject to profit tax at a rate of 38%.
New Zealand is not a tax heaven or offshore jurisdiction, and a concept of New Zealand tax exempt company (and/or New Zealand international business company (IBC), offshore company, trust, foundation etc. registration) does not exist in New Zealand as such. A company formation in New Zealand could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in New Zealand. To set up a company in New Zealand is possible by correspondence, but to open a bank account in New Zealand will, most probably, require a personal visit.
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