Establishment of Enterprises in New Zealand - Registering and Overseas Company

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ESTABLISHMENT OF ENTERPRISES

Overseas corporates can establish their presence in New Zealand by:

registering a branch of the overseas company in New Zealand;

incorporating a local subsidiary in New Zealand; or

acquiring a New Zealand registered company, which then becomes

a subsidiary of the overseas company.

Registering an overseas company in New Zealand
An overseas company which seeks registration of a branch in New Zealand must first reserve its name with the Registrar of Companies.

It must then file an application for registration within ten working days of starting to carry on business in New Zealand, stating the name of the overseas company, its country of incorporation, the full names and residential addresses of the directors of the overseas company, the address of the place of business in New Zealand of the overseas company, the full name and physical address of at least one person resident or incorporated in New Zealand who is authorised to accept service of documents in New Zealand on behalf of the overseas company and providing evidence of incorporation of the overseas company. Such application for registration must be accompanied by a copy of any constitutional documents of the company.

Incorporating a subsidiary
A subsidiary company incorporated in New Zealand must have at least one shareholder and one director. It is not necessary that the directors be resident in New Zealand, although the subsidiary must have an address for service and a registered office, both being physical addresses in New Zealand.

As with a branch, an application must commence with a name reservation request at the Registrar of Companies. Once name approval has been obtained, the following incorporation documents must be filed:

a consent to act as a director for each director;

a consent to being a shareholder for each shareholder;

a copy of the constitution of the company if it is proposed to have one (bearing in

mind that the provisions of the Companies Act 1993 will otherwise prevail in the

absence of a constitution);

details of the address for service of documents and the registered office (both of

which must be physical addresses situated in New Zealand) and details of the postal

address to which communications from the Registrar of Companies may be sent; and

details of the names and addresses of shareholders and directors.

Registration of an overseas company in New Zealand
or incorporation/acquisition of subsidiary
The decision as to whether to establish a branch office of an overseas company by registering an overseas company in New Zealand or to incorporate or acquire a New Zealand subsidiary company will depend on matters such as legal structure, taxation consequences (both in New Zealand and overseas) and other commercial considerations. The following should also be considered:

Under the Financial Reporting Act 1993, it is an annual requirement that branches

of foreign companies file a copy of their financial statements, together with a separate

set of financial statements that relate to the operations of the branch in New Zealand,

with the Registrar of Companies. The latter financial statements must be certified by

a person qualified for appointment as an auditor in accordance with the Companies

Act 1993 and must comply generally with the provisions of the Financial Reporting

Act 1993. A subsidiary that is owned 25 percent or more by an overseas corporate

or individual must file a copy of its audited financial statements and any group

financial statements in relation to any group of which that subsidiary is part with

the Registrar of Companies.

There is more administrative work involved for a subsidiary as opposed to a branch

because of the necessity to keep a minute book and statutory registers in New Zealand,

and to file annual returns that are more detailed than the annual returns required to be

filed by the branch of an overseas company. Compliance is also required with New

Zealand's principal company laws as detailed in the Companies Act 1993.

Significantly, a subsidiary will have limited liability in respect of its New Zealand

operations. A branch does not because it does not have a separate legal identity

from the overseas company.

We can assist you with your decision on which method of entry best suits your

circumstances, and then action that decision on your behalf.

Consents
Unless New Zealand's overseas investment thresholds are triggered (as detailed in section 3 below), generally the only consent of a governmental nature that is required is consent from the Registrar of Companies for the use of the company name (both in the case of a subsidiary and a branch). Name approval will generally be readily available unless there is already an identical, or almost identical name on the register.

While there are very few restrictions imposed on foreign companies as to the type of business operations permitted in New Zealand, foreign investment is controlled in New Zealand by the Overseas Investment Act 2005 (OI Act) and the Overseas Investment Regulations 2005 made pursuant to the OI Act (OI Regulations). In essence, they regulate investment in New Zealand by overseas persons. The OI Act replaced the Overseas Investment Act 1973 and came into force on 25 August 2005.

The definition of an "overseas person" is set out in full in section 7 of the OI Act, but examples include any:

person not a New Zealand citizen and not ordinarily resident in New Zealand;
body corporate incorporated outside New Zealand or any New Zealand subsidiary
owned 25% or more by any such body corporate;
body corporate of which 25% or more of any class of shares is held by an overseas person;
body corporate of which the power to control the composition of 25% or more of
the governing body of the body corporate is held by an overseas person; and
body corporate of which the right to exercise or control the exercise of 25% or more
of the voting power at any meeting of the body corporate is held or owned 25% or more
by an overseas person.

Some business transactions, such as commercial fishing or the purchase of certain sensitive real estate, will always require consent. Otherwise, consent is only required by an overseas person if a threshold of $NZ100 million is exceeded. A more detailed discussion is set out in section 3 below.

For more information, please contact us »

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New Zealand

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