New Zealand Entity Setup

There are three main types of company entities in New Zealand, these being:

• Limited Liability companies – the most common type which can be easily identified with the appendix Limited, Ltd or Tapui (Limited).
• Co-operative Companies – often known as co-ops, these are limited liability companies that provide goods or services to their shareholders who own and control the business.
• Unlimited Companies – Very rare since they don’t limit the liability of a shareholder for company debts.

The best company structure for you depends on your plans for the future and how you want to run your company. It is vital that you select the correct entity type for your business to avoid non-compliance.

If your company does not have a physical presence in New Zealand, for instance, if you are working with contractors based there but are not actively conducting business within the country, a legal entity will not be required.

The type of subsidiary you require will determine how you apply. To register a subsidiary in New Zealand, you’ll need to register the company’s name with the Companies Register and file the necessary documents. These documents include, but are not limited to:

• The parent company’s statutory documents and Certificate of Registration
• The subsidiary’s incorporation documents
• A resolution from the parent company’s shareholders to establish the subsidiary
• A trade name reservation
• A bank receipt showing the share capital deposit
• A lease agreement for the subsidiary’s registered address
• Information about the foreign company’s representative in New Zealand

You may also be required to lodge director and shareholder consent forms, register for employment tax and welfare, obtain a business industry code and open a bank account.

This is not a definitive guide for setting up a legal entity in New Zealand, with many more steps being required depending on your company and any discrepancies in your paperwork. It is therefore vital to seek expert advice when establishing your business. 

In addition to ensuring the correct business entity is established, companies must also comply with New Zealand laws on taxes, company accounts and social insurance. Meanwhile, annual business accounts must be submitted to the New Zealand Chamber of Commerce and Industry.

As you can see, compliance with New Zealand entity laws is an ongoing process. From initial registration to annual accounts, New Zealand entity laws require a vast amount of resources and time for expanding businesses. Meanwhile, non-compliance with foreign entity laws can cause an abundance of risk for your business, from delaying your startup, to fines and penalties.

Establishing a business presence in New Zealand is governed by the Companies Act 1993. Businesses looking to expand have several options, including forming a subsidiary, acquiring an existing company, or creating a partnership, such as a limited partnership. Australian businesses benefit from simplified procedures thanks to information-sharing arrangements between New Zealand and Australian regulatory bodies, however, the rest of the world isn’t as fortunate.

Setting up a subsidiary in New Zealand requires incorporating a company under the previously mentioned Companies Act 1993. This process includes appointing at least one director who resides in New Zealand or an enforcement country (currently only Australia). Shareholders face no residency restrictions, providing plenty of flexibility for foreign investors. Companies can also adopt a constitution to enable specific powers, such as securing directors’ and officers’ liability insurance. Compliance is monitored tightly, and requirements include maintaining detailed records, conducting solvency tests for share buybacks or financial assistance, and ensuring directors meet their duties under the Act. This tough but fair approach ensures businesses can confidently establish and operate in New Zealand’s dynamic market.

Setting up a legal entity in New Zealand is not only risky, but it’s costly too. From initial paperwork to the processing of taxes and accounts repeatedly, companies have to be able to dedicate resources, budgets and time to setting up an entity.

Outsourcing your New Zealand business expansion to a PEO or EOR allows you to tap into the country’s thriving business network without the hassle and expense of establishing a legal entity. This approach offers greater flexibility for growing businesses while saving valuable time and resources.

Choosing a PEO over setting up a legal entity won’t diminish your business’s credibility in New Zealand. Instead, it enables you to focus on driving growth, knowing that critical tasks such as tax compliance, employee onboarding, work permits, and employment contracts are managed seamlessly and in full compliance with New Zealand legislation.

Leap29’s PEO team have in-depth knowledge and first-hand experience of the New Zealand business market, meaning they can be fully relied upon to navigate your expansion into New Zealand, taking into account relevant employment and subsidiary laws.

If you want to find out more about how our PEO Services in New Zealand can support your global expansion, call our experts today at +44 (0) 20 8129 6860 or email expansion@leap29.com.