Choosing a type of company for your business
The different structures of companies in New Zealand
Before you register a company on the Companies Register, you need to choose the type of company that best suits the way you want to operate your business.
Types of companies
There are 3 types of New Zealand companies:
- limited liability companies — these are the most common type which you can often recognise because they have Limited, Ltd or Tapui (Limited) at the end of their name
- co-operative companies — sometimes called co-ops, these are limited liability companies that are owned and controlled by the members
- unlimited companies — these are quite rare, as they don't limit a shareholder’s liability for company debts.
Limited liability companies
A limited liability company has full responsibility for all of its legal and financial obligations. It’s the liability of the shareholders that’s limited.
Shareholders are only liable for:
- money owing on their shares
- personal guarantees they have given to lenders or creditors, such as banks or suppliers.
Limited liability companies are incorporated under the Companies Act 1993.
Co-operative companies
The main purpose of co-ops is mutual support for members, or the promotion of a specific purpose or social benefit. Examples include some taxi businesses, dairy companies, or Māori community services and developments. They often have the word 'co-operative' in their company name.
All co-ops must:
- have transacting shareholders — this means at least 60 per cent of shareholders must:
- supply goods or services to the company
- buy its goods or services, or
- enter into commercial transactions with the company
- have a constitution that includes a description of the co-op's activities — this must be filed with us
- return their profits to shareholders as rebates or as shares instead of rebates.
Registering a co-op
Co-op companies incorporate as a company in the same way as other limited liability companies. At the same time or afterwards, they can register as a co-operative company under the Co-operative Companies Act 1996.
Unlimited companies
The shareholders of an unlimited company have ultimate liability meaning they must pay any debts the company can’t pay. This liability is included in the company’s constitution.
Unlimited companies are used to meet very particular, often foreign, legal requirements.
Overseas companies registered in New Zealand
There are 3 ways an overseas company can operate in New Zealand. It can:
- set up a New Zealand subsidiary — the overseas company owns 100 per cent of the shares and the subsidiary is registered on the Companies Register
- establish a business, for example a branch, for its NZ operations — the business is not a separate legal entity, but is governed by New Zealand law
- become a New Zealand company — the overseas company leaves its country of incorporation and transfers its incorporation to New Zealand.
Incorporating your company
When you’ve decided on the type of company you want to set up and other details about how it will operate, apply online on the Companies Register to incorporate it.