Page 13 - English-DBINZ brochure-2019

Buddle Findlay 10

A New Zealand subsidiary is also required to either have a director that lives in New Zealand or have a
director that lives in an enforcement country (currently only Australia) and is a director of a company
registered in that enforcement country.
As a separate company from the overseas parent, the subsidiary is a separate legal entity from
its shareholder. Shareholders of companies incorporated in New Zealand obtain limited liability
automatically (unless an unlimited company is specifically created).
Large companies, in which at least 25% of the shareholder voting power is held by a subsidiary of
a company incorporated outside of New Zealand, a company incorporated outside of New Zealand
or a person not ordinarily resident in New Zealand, may be required to file financial statements with
the Registrar of Companies. These would relate only to their operations and the operations of any
subsidiaries if the company’s parent company does not already file audited group financial statements.

BRANCH OF AN OVERSEAS COMPANY

An overseas company conducting business in New Zealand must register under the Companies Act 1993
as an overseas company. Registration must occur within 10 working days of the overseas company
commencing business in New Zealand. Registration involves obtaining approval from the Registrar of
Companies for the use of the name of the overseas company and lodging the relevant administrative
documentation. Failure to register may attract liability for the company and each director for a fine of up
to NZ$10,000.
Unlike a subsidiary, a branch is not a separate legal entity to the overseas company. There is no
requirement that New Zealand directors sit on the board of an overseas company.
Each year certain overseas companies (eg most large overseas companies) must prepare annual reports
containing their financial statements and make those annual reports available to their shareholders.

ACQUISITION
In addition to commercial and tax issues, a company acquiring a New Zealand company must consider
the application of the Overseas Investment Act 2005, the Takeovers Code and the Commerce Act 1986.
This legislation is discussed in more detail on pages 15 - 18 and 34.

PARTNERSHIPS

New Zealand law recognises partnerships, which are defined in the Partnerships Act 1908 as the relation
that subsists between persons who carry on a business in common with a view to profit.

Whether any particular venture is a partnership is a question of fact irrespective of how the founding
documents are worded. The key feature of a partnership is that partners are personally liable for
partnership debts and losses.
A partnership should be established by a partnership agreement which sets out the rights and
obligations of the partners and the rules governing the operation of the partnership.

LIMITED PARTNERSHIPS
In 2008, the New Zealand Government introduced limited partnerships in the form of the Limited
Partnerships Act 2008. The purpose of this legislation was to establish a modern regime that provides
a flexible and internationally recognisable structure, similar to limited partnerships in use in other
jurisdictions, and to facilitate the development of the venture capital industry in New Zealand.