How to form a company
Is a limited liability company the best option for me?
You need to decide whether a limited-liability company is the best legal form for your business. The alternatives are a partnership (see related articles How to enter into a business partnership agreement) and How to structure your business). A business may change its legal form at any time. Each form provides a different legal framework for your business activities, including your liabilities. A company has a legal identity of its own, separate from its owners.
What are the essential elements of a company?
Before it can be registered and incorporated, a company must have the following elements:
- a name reserved by the Companies Office
- at least one share
- at least one shareholder
- at least one director
- a registered office
- an address for service
Selecting a name for the company
You will need to select a suitable name for your company. The Companies Office provides a website (www.companies.govt.nz) where you can check whether your proposed name is already in use. You can search for company details on this website by company name, directors, shareholders and addresses.
It is also a good idea to check that your proposed company name does not infringe on anyone else's trademark name. You can do at the website of the Intellectual Property Office of New Zealand (www.iponz.govt.nz).
Be aware that information obtained at the Companies Office website is no guarantee of a complete search.
Reserving a name for the company
Before you can apply to register your proposed company you must first reserve a name for it with the Companies Office. Your application must be sent to its Auckland Office, together with the prescribed fee.
When the Companies Office has reserved your proposed name, it will send you a notice of reservation. This notice is valid for 20 working days after it is issued, which means that if you wish to register the company under that name you must apply within those 20 days.
If your name reservation is declined the Companies Office will notify you and ask you to select another. There is no additional fee for this.
Applying to register your proposed company
If your desired name has been reserved, one or two people authorised by the company may then apply for the company to be registered. You must file an application for registration on the standard form, along with the following documents:
- a written consent and certificate from every director that he or she consents to be a director and is not disqualified from acting as one
- a written consent from every shareholder (or his or her agent) to take the class and number of shares specified (if the consent is from an agent, you must also include the written authority given to the agent by the shareholder)
- the notice from the Companies Office that the name has been reserved
- a copy of the company's constitution (if there is one) certified by you, the applicant
- the prescribed fee
Where can I get the necessary forms?
You can get all the necessary forms from the Companies Office (these are also available on-line at their website: www.companies.govt.nz) and from some large stationery shops.
Certificate of incorporation
When the Companies Office is satisfied that your application complies with all the requirements, including payment of the required fee, it will register the company and issue you with a certificate of incorporation for the company. The company is then incorporated under the COMPANIES ACT 1993 from the date stated in the certificate.
Do I have to draw up a constitution for the company?
The constitution is a document that sets out the rules for running the company. You are able to have a company without a constitution and to rely instead on the constitution in the first three schedules of the COMPANIES ACT 1993, which will then automatically apply to your company. This would be acceptable for a husband and wife company, but it is advisable to have a specially designed constitution in any other situation. See How to draft a company constitution .
Buying "off-the-shelf" companies
You may also buy an off-the-shelf company that has already been registered, and then apply for a name change with the Companies Office. Most lawyers or accountants will offer this service.
- It is essential to note that you have 20 working days from the date the name is reserved to apply for registration. Don't delay: make sure that you have all the necessary documents that are to accompany your application so that your application will be accepted in the specified time period.
- Ensure that you include the details of your company's registered office and address for service in your application for registration. These need not be the same location as the place of business, but note that PO Box numbers will not be accepted.
- Forming a company will place important liabilities and obligations on the people involved. Each shareholder and director of the proposed company must consent formally to these.
- Usually when a company is formed a person's livelihood and large amounts of money will be involved. In order to ensure that both of these are protected in the best possible way it is highly recommended that you seek professional and legal advice.
- One step often forgotten when forming a company is to check that the company's name is available as an Internet domain name. You can check this at www.domainz.co.nz.