A New Zealand Limited Liability Company (LLC) is a separate legal entity from its shareholders. It is more of a corporation rather than a partnership. Foreigners can own 100% of the shares. As a typical limited liability company, its shareholders cannot be held liable for the liabilities and debts of the LLC and their liability is only the contributions to the company’s capital.
The New Zealand Companies Act of 1993 regulates LLC’s. The Articles of Incorporation (or Association) are called the “Constitution”.
Background
New Zealand is a Pacific Ocean island country located near Fiji and Australia. A former British colony, New Zealand became a United Kingdom Dominion in 1907. Its political system is a unitary parliamentary constitutional monarch with an elected parliament.
New Zealand Limited Liability Company (LLC) Benefits
A New Zealand Limited Liability Company (LLC) has the following benefits:
• 100% Foreign Ownership: Foreigners can own all of the shares in a New Zealand LLC.
• Limited Liability: A shareholder’s liability is limited to the capital investment.
• Easiest Country to Start a Business: According to the World Bank survey of 2015.
• One Shareholder: The minimum number of shareholders is one to form a LLC in New Zealand.
• One Director: The LLC can be managed by only one director.
• No Minimum Share Capital: No minimum share capital is required.
• English: As a British Dominion, English is its official language.
New Zealand LLC Company Name
A limited liability company must select a name different from all other company names in New Zealand. The government has a website for people to research what names are available and reserving a company name before applying.
Every LLC must include the abbreviation “Ltd” at the end of their company name.
Registration
LLC’s are formed by delivering the required application form with written consent from the directors and shareholders along with payment of the filing fee with the Companies Office. Currently, the registration fee is only $150 NZ.
Limited Liability
Shareholders are only liable up to the amount they agreed to pay for their shares in the company. However, these limits will not apply if company directors gave personal guarantees for the company’s debts or the LLC continued trading while insolvent or acted in a reckless manner.
Shareholders
The LLC can have a minimum of one shareholder.
Directors
LLC’s must be managed by at least one director. Directors must be natural persons as legal entities such as a corporation are not permitted. Directors must perform their duties properly as prescribed in the Act and in the company’s Constitution.
Accounting and Auditors
A LLC is not required to file annual financial documents or reports with the Companies Registrar unless it:
• Is an offshore company incorporated in another country conducting business in New Zealand; or
• Issued securities to the public including raising funds from the public, soliciting public investments, or soliciting public participation in projects, all with a registered prospectus; or
• Is a subsidiary of a legal entity formed outside the country; or
• Is a large enough company where 25% to 50% of its shares are controlled or held by:
(a) A natural person (or persons) not residents of New Zealand; or
(b) A corporation or company formed outside of the country or is a subsidiary of such a corporation or company.
However, as soon as the LLC begins conducting business it must keep financial records (asset records, income, depreciation, profits and losses, etc.). Failure to maintain these records will result in a fine of up to $10,000 NZ.
Registered Office and Agent
Every LLC must maintain an office address in New Zealand which must be a physical address and not a document exchange service or a post office box.
A licensed local registered agent is also required.
Minimum Share Capital
No minimum share capital is required when registering.
General Meetings
General Shareholders Meetings are required. However, the first meeting can occur within 18 months of registration.
Taxes
LLC’s can be taxed on global income. However, tax registration is not required if the LLC will not engage in trading or commercial activities.
Tax registration is required upon formation including obtaining a taxpayer IRD number. The company must also register for a GST (Goods & Services Tax, similar to a VAT) if during the past 12 months accumulated more than $60,000 NZ in sales and income, or that minimum amount is expected in the next 12 months.
The Corporate Tax rate is 28% and the GST rate is 15%. However, shareholders have the option to not take their profits and let the LLC pay the 28% corporate tax or to receive their share of the profits and be taxed as individuals as a personal income tax.
Global income may be taxable by New Zealand which depends on the income source and existing Double Tax Agreements (if applicable) with the countries where the income was generated.
The accounting year begins April 1st ending the next March 31st. Every New Zealand company must file an annual return with the Companies Office which verifies the LLC is still an active company. Failure to file an annual return risks removal from the national Companies Register.
Note, U.S. citizens and taxpayers from countries taxing global income must report all income to their tax agency.
Public Records
All records filed with the Companies Office are available for public inspection.
Registration Time
It is estimated that registering a New Zealand LLC can take up to two business days for approval.
Shelf Companies
Shelf companies are available for purchase in New Zealand to quicken the registration process.
Conclusion
A New Zealand Limited Liability Company (LLC) has these benefits: 100% foreign ownership, limited liability, one of the easiest countries to start a business, only one shareholder to form the LLC, only one director to manage the LLC, no required minimum share capital, and English is the official language.
