When you want to start your business, there are many business structures to choose from. In New Zealand, you can establish a sole trader, partnership, or company (include look-through company). Some people make a choice of setting up a trust to manage their assets. Different business structure relates to how to operate your business better. The following talks about company type.
The company can be divided into three types: the limited liability companies, co-operative companies, and unlimited companies.
The limited company is looked as a separate legal body and take responsibility independently for the company’s debt. The liability of shareholders is limited according to money owing on their shares.
Co-operative companies usually aim at mutual support from member, specific purpose, or social benefit.
Establishing co-ops must meet three requirements:
- A co-op must have transacting shareholders. At least 60% of shareholders must be supplier, purchaser, or have commercial transactions with the company.
- A co-op must have a constitution to regulate the co-op’s activities.
- The co-op companies must distribute the profits to shareholder.
The shareholder of an unlimited companies must take ultimate liability to the company’s creditor. This means that not only money owing on their shares, but also their private property will be used to repay company debts.
In addition, some companies involve holding company or shareholders from other countries. This type of company is overseas company. Overseas company can be registered in New Zealand by setting up a subsidiary, a branch, or transferring from another country.