INFORMATION ABOUT
COMPANIES
The information on this page is brief. If
you have further questions you should take advice
from an accountant or lawyer, or e-mail us at richard@companies.co.nz
TOPICS:
Company's name:
The Ministry of Economic Affairs will allow you
to use any name which is not the same as, or nearly
the same as an existing company's name
Control of the
company:
The director(s) run the company. The shareholders
can not interfere in the day to day management, but
they can appoint or dismiss the directors.
Directors:
Your company must have at least one director.
The directors attend to the day to day running of
the company. They are appointed (and dismissed) by
the shareholders.
Shareholders:
Your company must have at least one shareholder,
and can have as many as you want. The shareholders
own the company in the same proportion as they own
the shares. For example if you own 25 shares in a
company which has 100 shares, then you own 25% of
the company.
Shares:
Number of shares:
Your company must have at least one share, and may
have as many more as you wish. However, unless you
have a particular reason for a particular number,
it is convenient to start your company with 100 shares.
Issue Price of
Shares: When the company is formed, the shares
are issued to the owners (the shareholders). We provide
you with the appropriate document. You can issue the
shares for any price, but the usual price is $1.00
each.
Shareholders'
liability: One of the main advantages of forming
a company is that the shareholders have no liability
for the company's debts. But if a shareholder has
not paid the issue price for his shares, and the company
goes into liquidation, a creditor could ask him to
pay for his shares at that stage. If you start your
company with 100 shares, issued for $1.00 each, then
the maximum amount that the shareholders could be
liable for would be $100.00.
Registered Office
and postal address:
Every company must have a registered office in
New Zealand. This must be a street address. It could
be your own home, or your work, or your accountant's
office. If the Registered Office is an accountant's
or Lawyer's office, please add that information to
the order form. Is your registered office also to
be your postal address? If not, please also add your
postal address to the address box on the order form.
Constitution:
A constitution is a set of rules which (with the
Companies Act) regulates the company. We use a standard
constitution with all of our companies, and here is
a list of some if its main points:
Directors:
1. Directors are appointed or removed by special
resolution of the shareholders
2. A quorum at a Directors' meeting is a majority
of the Directors
3. The minimum number of Directors is one, no maximum
number is set
4. Directors need not hold shares in the Company
5. A Director who has a special interest in a transaction
of the Company may nevertheless vote on matters relating
to he transactions
6. The Board may indemnify and/or insure Directors
to the extend allowed by the Act.
Shareholders:
1. A quorum is present at a shareholders' meeting
if shareholders or their proxies are present (or have
cast postal votes) who are between them able to exercise
a majority of the votes which could be cast on the
business to be transacted.
2. Special Resolutions must be passed by a 75% majority.
Shares:
1. Ordinary Shares carry the right to:
I. one vote per share
II. equal share in dividends
III. equal share in distribution of assets
2. With the approval of the shareholders by special
resolution, the Board may issue more shares
3. The Board may issue different classes of shares
4. The Company may acquire its own shares
5. New issues must be offered to existing shareholders
pro rata
6. The Company may give financial assistance to people
to acquire shares in the Company
7. Pre-emption: Shareholders' rights to sell shares
are restricted. Shareholders must first offer
their shares for sale to remaining shareholders.
8. The Board may (with the consent of the shareholders
involved) issue bonus shares in lieu of dividends.
Management:
1. No restrictions are placed on the Company's
capacity, or on its rights powers and privileges.
2. The Board of Directors manages the Company. (The
drafters of the Constitution suggest that if powers
of management are to be given to any shareholders
then those shareholders should be made directors).
3.Shareholders may pass resolutions relating to the
management of the Company but such resolutions are
not binding on the Board.
4. There is no provision for a Governing Director,
because some provisions in the new Act give shareholders
rights which are inconsistent with the role of Governing
Director. If one person is to have the maximum possible
control of the Company, that person could be made
the sole director and sole voting shareholder.
5. The Board may indemnify and/or insure individual
Directors to the extend allowed by the Act.
6. The Company may employ a Secretary of it wishes.
7. The Company will not have a common seal.
We can make small changes to these rules. For example
we could change the way that directors are appointed,
or we could provide that some shares had voting rights
and some did not.
If you want changes made to the constitution, please
contact us by email at richard@companies.co.nz
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