Company Formation: Standard Companies Home Page

INFORMATION ABOUT COMPANIES

The following information is provided mainly to help you complete the order form. It is brief; If you have further questions you should take advice from your accountant or solicitor, or email us at richard@companies.co.nz. We can give advice relating to companies in general, and company administration, but we can not give legal or accounting advice.

When the company is registered we will send you a set of Company Registers which will also contain information about company administration.

NO GST PAYABLE

At present Standard Companies Ltd and its owner both live overseas, although they will be returning to New Zealand in a year or two. So Standard Companies Ltd can not add GST to its bills, and you can not claim a GST refund. The transaction is completely gst-free.

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THE COMPANY’S EMAIL ADDRESS

Once a year your company will have to file an “Annual Return”. It is easy, and free, but if you forget to do it, your company might be de-registered. The Ministry of Economic Development will email you a reminder when the Annual Return is due, and this is why we ask for an email address.

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THE COMPANY’S NAME

You can call the company whatever you like, except that:

it must end with the word “limited” or the abbreviation “ltd”
it can’t be offensive
it can’t be identical or almost identical to an existing company name

We will apply for your name and will find out almost immediately whether it will be approved. If it is not approved we will email you and ask for another name.

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REGISTERED OFFICE and POSTAL ADDRESS

Every company must have a “Registered Office” in New Zealand. This can be a private house, or an office or factory – any physical address. But it can not be a PO Box or document exchange address. If it is an accountant or lawyer’s office you should say so, and if it is a high rise building, include all the details. For example:

Avian Necropolis & Co Ltd
Chartered Accountants
Suite 13
84th Floor
260 Queen Street
Auckland.
The postal address: Is the registered office also the company’s postal address? If not, add the postal address.

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DIRECTORS

Directors do not need to be resident in New Zealand.

Directors run the company. They make the decisions. The company must have at least one director and may have as many more as you want.
On the order form we need:

FULL names (initials are not OK)
FULL residential address (Just a PO Box or RD number are not OK – we need street addresses)
And if you want us to get the company’s IRD number, we need the directors’ own personal IRD numbers.

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ELECTION OF DIRECTORS

Whenever a new director is to be appointed, or an existing director is to be dismissed, it will be done by a vote of the shareholders. (With our standard constitution each share they hold gives them one vote). There are two different ways that shareholders can vote. An ordinary resolution needs to be passed by a majority of votes - more than 50%. A special resolution must be passed by 75% of votes.

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TOTAL NUMBER OF SHARES

Every company must have at least one share, and it can have as many shares as you like. For the purposes of this explanation, we presume that all the shares in your company are going to be ordinary (ord.).
A “share” is a token that you own part of the company. If the company has 100 shares and you own 50 of them, then you own 50% of the company. If you own 100 of them, you own the whole company. If you want to sell your friend 20% of the company, then you will sell him 20 shares. You will see that these transactions are easier to work out if there are 100 shares, and for that reason only we suggest that you start your company with 100 shares. You are free to have only one share, or a billion – but scroll down to SHAREHOLDERS’ LIABILITY –

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ISSUE PRICE OF SHARES

As soon as the company is registered, the shares will be “issued” to the shareholders. They can be issued to the shareholders for no price (“nil consideration” in the jargon), or for $1.00 each, or any price that the company and the shareholder agree on. Unless you have a particular reason not to, we suggest that you issue the shares for “nil”.

Sometimes the company issues shares for a high issue price, in order to collect money off the shareholders. For example if the company is going to buy a million dollar property it might issue 1,000,000 shares for $1.00 each. If you are considering this sort of transaction you should talk to your accountant about it. And also scroll down and read “SHAREHOLDERS’ LIABILITY”.

But usually the company will issue shares just to indicate who owns the company, and in what proportions. So we go back to the suggestion that you have 100 shares, and that they are issued for “nil” each.

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SHAREHOLDERS’ LIABILITY

One of the advantages of a company is that shareholders have no liability for the company’s debts. This would be very handy in the unlikely event that the company failed, owing a lot of money. The shareholders would lose the money they had in the company, but they would not lose anything else. (Unless in a separate transaction you had personally guaranteed the company’s debts. Banks often ask you to do this).
The issue price of the shares is a real debt which the shareholder owes to the company. If you take 50,000 shares in the company and they are issued to you at $1.00 each, then you actually owe the company $50,000. If the company failed and you still owed this debt, the company’s creditors would call on you to pay up. So here is another reason to form your company with 100 shares, issued for “nil” consideration.

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HAS THE ISSUE PRICE BEEN PAID

If you are going to issue your shares for “nil” then you can click the “not applicable” button, because there is no money to pay, now or later. If you are issuing shares for a small total amount of money, have you already paid this money into the company? For example, you may already have bought a computer, or a shovel, and if the purchase price of those items is about the same as the issue price of your shares, then you can tick the “yes” button. If the issue price is high, and you don’t intend to pay it now, then click “no” – AND READ “SHAREHOLDERS’ LIABILITY” above.

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We expect that all the shares in your company will be ordinary. That means (if there are 100 shares altogether) each share entitles the shareholder to one hundredth of the profit and one hundredth of the assets if the company is wound up.
At meetings, there will be 100 votes, one for each share. Most decisions are made by ordinary majority vote, so if you own 51 shares you can pass resolutions even if nobody else votes with you.
If you want your company’s shares to be different, put the details in the box on the order form.

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SHAREHOLDERS

Shareholders do not need to be resident in New Zealand.
On the order form we need:

FULL names (initials are not OK)
FULL residential address (Just a PO Box or RD number are not OK – we need street addresses)
And if you want us to get the company’s IRD number, we need the shareholders’ own personal IRD numbers.

Anyone can be a shareholder, even infants. But each shareholder has to sign a consent to be a shareholder – so if your infant can’t hold a pen you are in difficulty. You can’t sign on his behalf unless he has already signed a form appointing you as his agent.

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