Frequently Asked Questions

Here are some commonly asked questions and answers:

Why do I need a New Zealand Foreign Trust?

It is an ideal asset protection and tax minimization vehicle established in a reputable country.
a. If you have assets that you may want to protect against any future personal liability, you may want to gift those assets to a trust where it become free and clear from claims made against you personally.
b. Trusts are not subject to tax in New Zealand, apart from income earned in New Zealand. Distributions to non-resident beneficiaries are not subject to tax either, provided the income does not have its source in New Zealand.
c. New Zealand Trust is recognised by other jurisdictions and makes use of New Zealand’s 35 double tax agreements.

Can a New Zealand Foreign Trust be a shareholder of an offshore company?

It can and this then facilitates the trust to be involved in any legal business activity; which can in turn create wealth for the trust and its beneficiaries.

Can a New Zealand Foreign Trust commence business and international trading?

There is no law in New Zealand which restricts or prohibits trusts to trade and carry out all standard kind of business activities. The initial concept of the trust though is to protect interests of the beneficiaries. Therefore, normally we would recommend to employ a trust for holding and/or investment purposes. For international trading, you can consider a New Zealand Look-through company and make use of its special tax regime.

Is the New Zealand Foreign Trust recognized by international law?

New Zealand Foreign Trusts are recognized by the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition.

Can a company be a Settlor or Beneficiary of a New Zealand Foreign Trust?

It is not usual practice but it certainly can.

What is the procedure of a New Zealand Foreign Trust’s registration?

Trusts in New Zealand are confidential and are not publicly registered.

Can a non New Zealand resident set up a Charitable trust in New Zealand?

Yes he can. Charitable trusts are established exclusively or principally for charitable purposes and regulated by the Charitable Trusts Act 1957. A Charitable purpose means every purpose that in accordance with the law in New Zealand is charitable. Charitable purposes may include: the relief of poverty, education, religious instruction, promotion of athletic sports or recreation.

What is an LLC?

LLC, or Limited Liability Company is the most common type of corporate entity in New Zealand. Limited liability means limited liability to the members (shareholders). There is no personal liability and therefore personal assets are protected against law suits, etc.

What are the differences between Look-though company, Limited Liability Company and Limited Partnership?
A Look-through company must be owned by individuals or a trust, and if the shareholder(s) are non-NZ residents then no income tax is paid in New Zealand (as long as the company does not derive income from New Zealand). The same applies for a Limited Partnership except that the partners can be corporations which, apparently, can also bring certain tax planning benefits. A simple LLC pays tax on its world wide income.   

Can a foreign (non New Zealand) company be a shareholder of LTC?

In most cases a foreign company can’t be a shareholder of LTC. As standard rule, only individuals and trustee can be shareholders of a New Zealand Look-Through Company. If a company is appointed as a trustee of a trust (regardless if it is a New Zealand Foreign trust or other offshore trust) then yes, it can be a shareholder of LTC on behalf of a trust.

Do I need to have a board of directors, a company secretary and/or a treasure for New Zealand company?

No, New Zealand corporate law only requires at least one director. You do not need to appoint a secretary but may do so if you wish.

How many Directors do I need for a NZ LLC or LTC? Do they need to be NZ Residents?

A Company must have at least one Director, who has to be a natural person (i.e. not a body corporate) but don't need to be a New Zealand Resident yet. There is no restriction on the total numbers of directors, and directors need not to be shareholders.

How many shareholders do I need for LLC or LTC?

A Company must have at least one shareholder, which can be an individual or a company. Trusts are not recognised as being a shareholder because shareholders have certain liabilities under New Zealand Company law. Number of shareholders for LTC is limited to five.

What is the minimum or standard share capital requirement in New Zealand?

The share capital of a company is properly known as the authorized share capital. This share capital is a statutory requirement which sets out the total value of the shares that may be sold and distributed for cash or kind.
In New Zealand there is no minimum authorized capital requirement at the time of company registration. The number of shares may vary depending on your circumstances, normally it is from one hundred shares to up to one thousand shares.

What are the requirements for a company's address in New Zealand?

Every company must have a registered office in New Zealand. Every company must have a Registered Office and Address for Service in New Zealand.
The registered office and address for service need not be at the company’s place of business, nor in the same place. However they must be at a physical location not a postal address or document exchange or a 'virtual office' (that is a mail or message collection point).

Is it necessary for a New Zealand company to have a constitution?

New Zealand Companies Law does not require companies to adopt a constitution. A company can be regulated by the rules of the Companies Act 1993. The company may also adopt a written constitution, which outlines the rules by which a company must operate. The provisions of the Companies Act 1993 apply except to the extent that they may be legally varied by a constitution.

Can a company not incorporated in New Zealand, transfer its incorporation to New Zealand?

Yes, an overseas company can be re-domiciled (transfer its incorporation from the country in which it is registered) and become a New Zealand registered company under the Companies Act 1993.

Do New Zealand Companies need to be audited?

An auditor must be appointed, if a company is controlled by foreign interests, that is, where body corporate incorporated outside New Zealand or their subsidiaries, or persons not ordinarily resident in New Zealand control more than 25% of the votes.
Other companies can unanimously resolve not to appoint an auditor.
New Zealand Foreign Trusts are not subject to audit.

Does New Zealand have foundation?

New Zealand does not have a separate entity called foundation. We assume that usually by foundation people from other jurisdictions mean a type of entity that is a cross-breed between a trust and a company. Foundations are not adopted by Anglo-Saxon law (Common law) and New Zealand is a part of this legal system. On the other hand New Zealand can provide a similar legal structure where NZ trust holds shares of another NZ company, either LTC or LLC. This combination allows you to utilize the same advantages of foundation in a reputable and not “black-listed” country.

How long does it take to incorporate a company or set up a trust?

Once we have received the payment and all the required information and documents, the time it takes to get a standard limited liability company incorporated is 2-3 business days after which we can forward you a copy of the Certificate of Incorporation. Sometimes due to complexity of the case it can take much longer than the normal time to complete the incorporation process. As for trust, we can send all the trust documents within 2-3 working days once we have received the payment and all the required information and documents.

What is the income tax rate in New Zealand?

The rate for income tax for companies in New Zealand is 28%; the trustee income is taxed at 33% rate (ie New Zealand sourced income that the trust earns and does not distribute to its beneficiaries). Top marginal rate of individual income tax is 33%.

Is it necessary for a New Zealand Foreign Trust or a New Zealand Company (partnership) to open up a New Zealand bank account?

No, while New Zealand posses a developed banking system on par with other OECD nations, there is no legal requirement for a bank account to be opened in New Zealand

What is the difference between a notarized document and an apostille document?

A notarized document is a copy of the document which is certified to be a true copy of the original and signed (notarized) by one who is a registered Notary Public. This notary public is usually an attorney, a lawyer or a justice of the peace.
An apostille to a document is the authentication, by a specially appointed government official, of a copy of a public document which has been notarized as a true copy by a notary public. The apostille is internationally accepted under The Hague convention. Not all countries of the world are members of The Hague but the majority of English speaking and European countries are members.
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