Business Law FAQ NZ 2026 | Your Questions Answered

Q: What business structure should I choose in NZ?

The four main business structures in New Zealand are: Sole Trader (simplest, you are the business), Partnership (two or more people sharing profits/losses), Limited Liability Company (separate legal entity protecting personal assets), and Trust. Most businesses with growth ambitions choose a company structure for liability protection and tax flexibility. Companies pay 28% tax, while sole traders pay personal income tax rates up to 39%.

Q: How do I register a company in New Zealand?

Register through the Companies Office website (companies.govt.nz). You'll need: a unique company name, at least one director who is a NZ resident, one or more shareholders, a registered office address in NZ, and a physical address for service of documents. Online registration costs $115.86 and typically takes 1-3 working days. Paper applications cost more and take longer.

Q: What is a shareholder agreement and do I need one?

A shareholder agreement is a private contract between shareholders that governs their relationship and how the company operates. While not legally required, it's strongly recommended for any company with multiple shareholders. It covers: decision-making procedures, dividend policies, what happens if a shareholder wants to sell, dispute resolution, and exit strategies. Without one, disputes can be costly and relationship-destroying.

Q: How much does it cost to set up a company in NZ?

Basic DIY company registration costs $115.86 online through the Companies Office. However, a properly set up company with legal documents typically costs: $500-1,500 for basic registration with standard constitution, $1,500-3,000 including shareholder agreement, $3,000-5,000+ for complex structures with multiple shareholders or trusts. Annual ongoing costs include Companies Office annual return ($53.53) and potential accounting fees.

Q: What are director duties and liabilities in NZ?

Under the Companies Act 1993, directors must: act in good faith and in the best interests of the company, exercise care, diligence and skill, not trade recklessly or while insolvent, maintain proper company records, and file annual returns. Personal liability can include fines up to $200,000, being banned from directing companies, and personal liability for company debts if trading while insolvent.

Q: What is the difference between sole trader and company?

Sole Trader: You ARE the business, no separation between personal and business assets, simple tax (personal tax rate), unlimited personal liability for business debts. Company: Separate legal entity, limited liability (personal assets generally protected), 28% company tax rate, more compliance requirements, can have multiple shareholders. Companies cost more to run but offer significant protection and credibility.

Q: Do I need a lawyer to start a business in NZ?

Not legally required, but highly recommended in these situations: multiple founders or shareholders, significant investment involved, complex business structure needed, you're buying an existing business, you need commercial leases or contracts. A business lawyer can prevent costly mistakes, ensure proper documentation, and save money long-term. Initial consultations are often free.

Q: What contracts does my business need?

Essential contracts for most NZ businesses include: Terms and Conditions (customer contracts), Employment Agreements (legally required for employees), Shareholder Agreement (if multiple owners), Partnership Agreement (for partnerships), Commercial Lease, Supplier Agreements, Confidentiality/NDA agreements, and Contractor Agreements. Industry-specific contracts may also be needed. Template contracts can work for simple situations, but customised legal documents are safer.

Q: How do I protect my business name or trademark in NZ?

Registering a company name doesn't protect it as a trademark. For full protection: 1) Register your trademark with IPONZ (Intellectual Property Office of NZ) - costs $100 online per class of goods/services. 2) Consider registering your domain names (.co.nz, .nz, .com). 3) Register your company name with Companies Office. Trademark registration takes 5-6 months and lasts 10 years (renewable). A trademark lawyer can help with searches and applications.

Business Structures

What business structure should I choose in NZ?

The four main business structures in New Zealand are:

Sole Trader: Simplest structure - you are the business, no legal separation
Partnership: Two or more people sharing profits and losses
Limited Liability Company: Separate legal entity that protects personal assets
Trust: Assets held by trustees for beneficiaries

Key consideration: Companies pay 28% tax, while sole traders pay personal income tax rates up to 39%. Most businesses with growth ambitions choose a company structure for liability protection and tax flexibility.

What is the difference between sole trader and company?

Feature	Sole Trader	Company
Legal status	You ARE the business	Separate legal entity
Personal liability	Unlimited	Limited (protected)
Tax rate	10.5% - 39%	28% flat rate
Setup cost	Free	$115.86+
Compliance	Minimal	Higher (annual returns, records)
Best for	Low-risk, small scale	Growth, multiple owners

Do I need a lawyer to start a business in NZ?

Not legally required, but highly recommended in these situations:

Multiple founders or shareholders involved
Significant investment or funding
Complex business structure needed
You're buying an existing business
You need commercial leases or major contracts

A business lawyer can prevent costly mistakes and ensure proper documentation. Initial consultations are often free. Learn more about how to choose a business lawyer.

Company Registration & Costs

How do I register a company in New Zealand?

A unique company name (check availability on the Companies Office name search)
At least one director who is a New Zealand resident
One or more shareholders (can be the same as directors)
A registered office address in NZ
A physical address for service of documents

Timeline: Online registration costs $115.86 and typically takes 1-3 working days. Paper applications cost more and take longer.

See our guide on how long business setup takes in NZ for detailed timelines.

How much does it cost to set up a company in NZ?

Costs vary depending on complexity:

Companies Office registration (online)	$115.86
Basic setup with standard constitution	$500 - $1,500
Including shareholder agreement	$1,500 - $3,000
Complex structures (trusts, multiple shareholders)	$3,000 - $5,000+
Annual return (ongoing)	$53.53

For a full breakdown, see our business lawyer cost guide.

What are director duties and liabilities in NZ?

Under the Companies Act 1993, directors must:

Act in good faith and in the best interests of the company
Exercise care, diligence and skill
Not trade recklessly or while insolvent
Maintain proper company records
File annual returns on time
Disclose conflicts of interest

Warning: Personal liability can include fines up to $200,000, being banned from directing companies, and personal liability for company debts if trading while insolvent.

Shareholders & Partners

What is a shareholder agreement and do I need one?

A shareholder agreement is a private contract between shareholders that governs their relationship and how the company operates. While not legally required, it's strongly recommended for any company with multiple shareholders.

Key matters covered include:

Decision-making procedures and voting rights
Dividend policies
What happens if a shareholder wants to sell (pre-emptive rights)
Dispute resolution mechanisms
Exit strategies and buyout provisions
Restrictions on share transfers

Without a shareholder agreement: Disputes can be costly and relationship-destroying. The company constitution provides some basic rules, but rarely covers the situations that cause the biggest problems.

What is a partnership agreement?

A partnership agreement is a legal contract between business partners that outlines:

Profit and loss sharing ratios
Capital contributions from each partner
Decision-making authority
Roles and responsibilities
Dispute resolution procedures
What happens if a partner leaves, retires, or dies

Important: Without a partnership agreement, the Partnership Act 1908 applies by default, which may not suit your situation. Partners have unlimited personal liability for partnership debts, making agreements critical.

What happens if my business partner wants out?

This depends on your partnership or shareholder agreement. Typically the process involves:

The departing partner must offer shares/interest to remaining partners first (right of first refusal)
Valuation method should be pre-agreed (market value, formula-based, or independent valuation)
Payment terms are negotiated (lump sum vs instalments)
Non-compete clauses may restrict what the departing partner can do
Handover and transition arrangements

Without an agreement: Disputes can be expensive and may require court involvement or dissolution of the entire business. Prevention through proper agreements is much cheaper than cure.

Contracts & IP Protection

What contracts does my business need?

Essential contracts for most NZ businesses include:

Terms and Conditions: Customer contracts for goods/services
Employment Agreements: Legally required for all employees
Shareholder Agreement: If multiple owners
Partnership Agreement: For partnerships
Commercial Lease: For business premises
Supplier Agreements: Key supplier relationships
Confidentiality/NDA: Protecting sensitive information
Contractor Agreements: For independent contractors

Template contracts can work for simple situations, but customised legal documents provide better protection for your specific business.

How do I protect my business name or trademark in NZ?

Important: Registering a company name with the Companies Office does NOT protect it as a trademark. For full protection:

Register your trademark with IPONZ (Intellectual Property Office of NZ) - costs $100 online per class of goods/services
Register domain names (.co.nz, .nz, .com)
Register your company name with Companies Office (prevents identical names only)

Trademark registration fee	$100 per class (online)
Processing time	5-6 months
Protection duration	10 years (renewable)
Lawyer assistance	$500 - $1,500

A trademark lawyer can help with searches to ensure your mark is registrable and defend against objections.

Buying & Selling a Business

How do I buy or sell a business in NZ?

Buying or selling a business involves several key steps:

Due diligence: Financial, legal, and operational review of the business
Negotiating terms: Assets vs shares purchase, price, warranties, conditions
Sale and Purchase Agreement: The main legal contract
Transfer of assets: Equipment, inventory, intellectual property
Transfer of contracts: Leases, supplier agreements, customer contracts
Employee transfers: Rights protected under Employment Relations Act
Settlement and handover: Final payments and transition

Simple business sale (legal fees)	$3,000 - $5,000
Medium complexity	$5,000 - $15,000
Complex transactions	$15,000 - $30,000+

Critical advice: Always get independent legal advice when buying or selling a business. The cost of good advice is far less than the cost of a bad deal.

Employment & Commercial Leases

What are my obligations as an employer in NZ?

New Zealand employers must comply with extensive employment law requirements:

Provide written employment agreements before work starts (legally required)
Pay at least minimum wage ($23.15/hour in 2026)
Provide minimum 4 weeks paid annual leave
Provide 10 days sick leave after 6 months employment
Maintain health and safety under the Health and Safety at Work Act
Pay KiwiSaver contributions (3% minimum)
Comply with the Holidays Act for public holidays and leave
Follow fair dismissal procedures
Keep accurate time and wage records

Penalties: Non-compliance can result in significant penalties from the Employment Relations Authority, including fines up to $20,000 for individuals and $40,000 for companies per breach.

What is the difference between commercial lease and residential lease?

Commercial leases differ significantly from residential tenancies:

Feature	Commercial	Residential
Protection	Minimal statutory protection	Residential Tenancies Act
Lease terms	Fully negotiable (3-6+ years typical)	Periodic or fixed term
Outgoings	Tenant often pays rates, insurance, maintenance	Landlord pays most
Rent reviews	Can increase significantly	Limited increases
Make good	Often required to restore premises	Fair wear and tear accepted
Guarantees	Personal director guarantees common	Bond only

Essential advice: Commercial leases should always be reviewed by a lawyer before signing. Terms are heavily negotiable and mistakes can be very costly.

When should I get a business lawyer?

Get a business lawyer when:

Setting up a company with partners or investors
Before signing significant contracts or commercial leases
When buying or selling a business
If facing employment disputes or personal grievances
For intellectual property protection (trademarks, patents)
During funding rounds or bringing in investors
When expanding overseas
If you receive legal claims, threats, or disputes
For restructuring or exit planning

The golden rule: Prevention is cheaper than cure. A good business lawyer saves money long-term by preventing problems before they occur. Most offer free initial consultations.

Business Law FAQ NZ 2026: Your Questions Answered