Company Law

New Zealand has one of the most user friendly systems in the world for incorporation of a company.  There is more to incorporating a company than merely logging onto the Internet.  Matters to be considered include who will be the shareholders and directors of a company and the number and value of shares to be issued.  Consideration also needs to be given to the need for a company to be incorporated with or adopt a constitution and whether a shareholders agreement is required to govern the relationship between the shareholders of the company.

The Companies Act 1993 imposes duties and obligations on the shareholders and especially the directors of a company.  It is important for all of the parties to a company to understand their legal obligations and requirements imposed on them.

Like all things, companies are subject to change.  Shareholders dispose of and acquire shares in companies, companies acquire or enter into new business ventures, there may be a need for a change in the rights attached to shares issued in the capital of a company or a company may have a need to issue more shares to form part of its capital.  Companies are sometimes required to raise funding from sources other than its existing shareholders, including bank borrowing or borrowing from parties related to the company.  Two or more companies may sometimes decide to merge their activities and their ownership structures.

There are also a vast number of tax considerations to be taken into account in the formation and operation of a company.  Examples include the need for a company to be a qualifying company or a loss attributing qualifying company (meaning companies passing their capital gains without additional tax payments and their losses down to their shareholders) and associations between a company and its shareholders with unforeseen tax consequences for the shareholders.

Harris Tate has a wealth of knowledge in the law relating to companies to assist companies and their directors and shareholders.  In advising our clients, we always take the tax consequences of company structures and transactions into account to avoid our clients being subjected to unforeseen and unintended tax consequences.

Authors: Ross Harris, David Foster, Stephan Bosman, Katrina Hulsebosch