Set your business up for success. “If you like a person, you say 'let's go into business together.' Man is a social animal after all, but such partnerships are fraught with danger." – Brian Tracy

If you are setting up a business, going into partnership or considering an initial shareholding, you will want to talk to McVeagh Fleming about the most appropriate corporate structure to ensure you are protected and are best positioned to meet your objectives.

Sole Traders

As a sole trader, you operate a small or micro business under your own name as a single individual. You may be self-employed or have some limited support, giving you total control over the business. A sole trader business is easy to setup, but you also have unlimited personal liability because you and the business are one and the same.

Partnerships

Partnerships are great for when two or more people or businesses come together to share assets and liabilities towards a common objective – benefits include building scale and pooling resources like money and people. A limited partnership is also possible. Each partner will have rights and responsibilities, and where there is no written agreement, the partnership is governed by the Partnership Act. Individuals are responsible for their obligations as a partner to the partnership. However, people being people means disputes may arise and the partnership may go bad.

Limited Liability Company

This is the favourite vehicle for most small and medium businesses in New Zealand. As a separate legal entity from shareholders and directors, most of the liabilities incurred by the company remain the responsibility of the company (shareholders' and directors’ personal assets are protected). Limited liability companies are more heavily regulated, and directors have specific responsibilities under law.

Joint Ventures

A joint venture (JV) is usually a strategic alliance between different parties for a specific purpose, and may involve the pooling of services, capital and/or labour towards a common goal. Like partnerships, things can go bad with a JV. Talk to McVeagh Fleming about an agreement that covers the purpose, dispute resolution and responsibilities of parties in a JV.

Trading Trusts

A Trading Trust is where a company, rather than an individual or individuals, acts as the trustee (which is its sole purpose) usually for tax purposes and may offer some protection of limitation of liability for the company shareholder.

Public Companies

With public companies, the shares in the company may be bought and sold and all financial information is publicly available. Public companies are listed on the New Zealand Stock Exchange (NZX). The ability to sell a part (or all) of the company through shares (usually beginning with an initial public offering), enables the company to raise capital for growth and innovation. Disadvantages include less control, greater regulatory oversight, increased liability and loss of equity in the business.

Recent Insights

October 2023

Family Business & Succession Wars!

Succession, once a straightforward process, is now akin to navigating a minefield. With children seeking to cash in on their beneficial interests or shareholdings to fuel their own ventures, the need for careful consideration and expert advice has never been greater.
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October 2022

Mergers and Acquisitions can give your company a competitive advantage, but when is it the right move?

Mergers and acquisitions ("M&A") are often used as critical methods for expansion. Some companies may plan successful M&A strategies such as using good economic times to strengthen their finances (paying down debt and accumulating cash reserves), and when a recession or slowdown comes, buying at low valuations.
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September 2022

Changes to the Incorporated Societies Regime - it's time to review your constitution

The new Incorporated Societies Act 2022 ("Act") received Royal Assent on 5 April 2022, in replacement of the Incorporated Societies Act 1908 ("old Act") and is coming into force in stages. The Act significantly changes governance and accountability obligations for incorporated societies. Re-registration under the new Act is required for all existing incorporated societies to continue to exist.
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