Starting a business involves more than registering a company and getting underway. Key legal and structural decisions made early can have lasting consequences. From ownership arrangements and shareholder rights to contracts, guarantees, and employment obligations, taking the time to get the foundations right can help avoid costly issues later and support long-term success.
1. Forming a company
Most likely you will be forming a company, you as a director and as a shareholder. The Companies Office website has all the information you need for this: https://companies-register.companiesoffice.govt.nz/online-services/
Remember that a company name gives you no exclusive rights to that brand: you may want to consider registering a trade mark: https://www.iponz.govt.nz/
2. Do you need a constitution?
The Companies Act 1993 is a default option particularly for sole directors/shareholders. However, if you have a co-shareholder they can transfer their shares to anyone unless you have a constitution with pre-emptive rights requiring them to be offered back to you first. Some company powers must be in a constitution. Directors’ and officers’ insurance is an example.
3. Will you have a co-shareholder?
If you have a co-shareholder you need a constitution and a shareholders agreement. They should deal with how the business is run and funded and unwound on death, disability or disagreement.
4. Borrowing from a bank? Leasing premises?
You will be giving a personal guarantee. As a general comment you should try and limit them.
5. Supplier terms and conditions
Some supplier trading terms and conditions try to impose personal guarantees. Be aware of the fine print and read them.
6. Your terms and conditions of trade
Going the other way, you will need your own terms and conditions.
They are an opportunity to set out what you are providing and not providing in your business with appropriate limitations of liability and rules as to product or services price, delivery and payment. Don’t download something from the internet. Look carefully at what is appropriate for your business as this document is one of its foundations.
7. Employees and contractors
You will probably be employing or contracting staff. For employees there is a helpful employment agreement builder provided by Business New Zealand: https://www.business.govt.nz/ For contractors, remember that they are not employees and have different rights and obligations.
Talk to Wynyard Wood about setting up your business correctly. We can help ensure your structure, agreements and documents are fit for purpose from the outset.
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