Disclaimer: This content is not legal advice. It is general commentary designed to help founders get their heads around key legal concepts, decisions and risks - but it doesn’t account for your specific circumstances.
Every startup is different, and the right approach will depend on your unique situation. If you’re making important legal decisions or signing anything binding that you are unsure about, talk to a lawyer.
You’ve got the idea. You’ve started building. Now it’s time to make it real.
It’s the moment your idea becomes a real, investable business — with structure, ownership, and a clear foundation for growth. This guide walks you through what incorporating actually means, why it matters, how to do it right, and what to get sorted early so you don’t trip over it later.
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1. Setting Up a Company - Why, When and Where
Starting a startup? One of your first big steps is incorporating your company. This section explains what that means, why it matters, and how to do it.
Why incorporate?
Incorporating creates a new legal entity, your company (e.g. Next Unicorn Limited). Just like a person, a company can:
- Own property
- Hire staff
- Open a bank account
- Enter contracts and take on obligations
Here’s why startups use companies:
- Limited liability – shareholders (the owners) aren’t personally liable for company debts. Your personal assets stay separate.
- Shared ownership – easy to have multiple co-founders or investors.
- Long life – a company can keep going, even if a founder moves on.
- Credibility – investors, customers, and banks usually expect a company structure.
When should I incorporate?
Where to incorporate? NZ or overseas?
How To Work with a Lawyer (and Get Value)
If you haven’t worked with a lawyer before, here are a few tips:
Pick one who works with startups. Get them to talk you through who they have worked with and how often they work with startups. You don’t want someone reinventing the wheel, you need someone with experience and laser-focussed skills who gets early-stage businesses, knows you’re tight on money, and can right-size the legal output for where you're at.
Ask for a quick intro call. Most startup lawyers are happy to jump on a free 30-minute Teams chat. You might get what you need from that call alone, and it’s a good chance to test their experience and vibe.
Don’t be shy about asking what it’ll cost. A good lawyer will be upfront and they understand the scope. You’re running a business, so you need to know what you’re signing up for.
How to Incorporate a NZ Company?
Incorporating a company in New Zealand is simple, fast, and affordable. You can usually get it done in a day for under $150.
Step 1: Gather the Information Required
1 | Pick a company name | Your company name must end in “Limited” (e.g. Next Unicorn Limited).
Use ONECheck to see if the name is available — it also checks domain names and trade marks: https://www.business.govt.nz/onecheck
Tip: Registering a company name does not give you trademark protection. That’s a separate step. |
2 | Directors | Your company needs at least one director who:
• Is 18+ years old; and
• Lives in NZ, or lives in Australia and is a director of an Australian company
For each director, you’ll need:
• Full legal name
• Residential address
• Place and date of birth
• IRD number (if you're applying for an IRD number for the company at the same time)
Most startups appoint all co-founders as directors to begin with. |
3 | Shareholder | You’ll need at least one shareholder (this can be the same person as the director).
For each shareholder, you’ll need:
• Full legal name
• Residential address
• IRD number (if applying for a company IRD number too) |
4 | Shares | You can start with any number of shares.
If there are multiple shareholders, we suggest issuing 1,000 shares and splitting them based on your agreed ownership split.
Tip: See our guidance below on founder equity. It can be beneficial for co-founders to first agree how they wish to split share ownership so the company is incorporated with this agreed shareholding on day 1. |
5 | Addresses | You’ll need to provide:
• A registered office address (where legal documents can be delivered)
• A communication address (can be the same)
If you don’t have an office yet, use one of the directors’ home addresses (with their consent). |
6 | Annual return month | Pick any month - this is just the month when you’ll file your annual return (a simple online update confirming your company’s details are still correct).
Tip: Make sure you file your annual return when its due. If you leave it overdue it may result in the company being struck off / removed. |
7 | Constitution | You don’t need one to incorporate, but if you have multiple shareholders, we recommend adopting one (see guidance below).
If you have more than one shareholder, see our guidance below on the basic constitution we suggest you adopt. |
Once you’ve got all the above ready:
Step 2: Apply via the Companies Office website
1 | Reserve your company name | Reserve here
You’ll get an email once it’s approved. This happens during normal NZ business hours and may take a couple of hours to get a response. |
2 | Apply for incorporation: | The email will include a link to "Apply for incorporation now." Follow the prompts and fill in the online form with the info you collected above. |
3 | Choose add-ons (optional):
| You can also apply for an IRD number and/or GST registration at this stage, or do it separately later via Inland Revenue. |
4 | Sign and upload the forms: | Once the info is submitted, the system will generate forms for directors and shareholders to sign (which can be done electronically via platforms like DocuSign). |
Done! The NZ Companies Office process is one of the best digital government services in NZ - it’s fast, efficient, and very DIY-friendly.
2. Basic Terminology
Just so we are on the same page, here are the key terms to know regarding companies:
Board | The board of directors (or just "the board") is the group of people appointed to govern the company |
Business | Your business is the thing your company actually does — the product or service you’re building, selling, or scaling. |
Cap Table | A table describing the capitalisation of a company. The cap table should describe the number, type and percentage of shares (and convertible securities) owned by each shareholder / investor. |
Constitution | The constitution is like the rulebook for your company. It adds to or replaces the default rules in the Companies Act. |
Director | A person validity appointed to govern and oversee a company on behalf of its shareholders |
Shareholders | Those individuals or entities who own the shares |
Shares | Shares represent ownership in the company. Think of ownership like a pie, and the shares are the slices. Shares can come in different types, but we will get into that later. |
For a comprehensive guide to terms commonly used in the NZ high-growth and investment space, check out this excellent glossary from the Angel Association of New Zealand: https://www.angelassociation.co.nz/resources/glossary/
3. Do I Need a Constitution?
I got asked to upload a constitution as part of the company incorporation process – do I need one? The law (mainly the Companies Act 1993 for the geeks out there) sets out the “default” rules of the game on how a company is run and governed, but some of these rules can be modified by the constitution.
We think it is helpful to modify some of these default rules (especially if you’ve got two or more shareholders) so we’ve prepared a template constitution you can use:
Simple Constitution Template
Here’s the effect of adopting the template constitution:
1. Share sales | The default rule: Shares can be sold to anyone.
Why it matters: You want a tight crew of shareholders and some control over who ends up on your cap table. A constitution can give existing shareholders first rights to buy before external sales.
Tip: Any share sale right may be subject to founder vesting (see discussion in the section below). |
2. Board appointment rights | The default rule: The board is elected by majority vote of shareholders.
Why it matters: You may want each founder to have the right to appoint themselves to the board. |
3. Remove minority buyout rights for share issues | The default rule: If you want to issue shares to an investor, but an existing shareholder votes against that new share issue, they can force the company to buy their shares at fair value.
Why it matters: This can derail a capital raise (as investor do not want their investment being used to buy out departing shareholders). The constitution can turn this off this buy out right. |
4. Insurance | The default rule: Directors can’t be covered for breaches of duty unless the constitution allows it.
Why it matters: As your company grows, you may take out Directors & Officers (D&O) insurance. You’ll need your constitution to permit this. |
5. Tag along | The default rule: There are no tag-along rights.
Why it matters: Tag-along rights let minority shareholders sell their shares if a major shareholder sells theirs — so no one gets left behind in an exit. |
6. Drag along | The default rule: Minority shareholders can block a full sale.
Why it matters: A drag-along clause allows a majority to force all shareholders to sell if a buyer wants 100% of the company. This avoids holdouts and is essential in an exit. |
7. Signing documents | The default rule: Most deeds require two directors to sign.
Why it matters: The constitution can allow a single director to sign with a witness, which is useful for lean teams |
4. Put Your IP Into the Company
When you’re building a startup, you’re probably inventing something new, cutting code, designing a product, creating branding, or building a database. These are all forms of intellectual property (IP).
But here's the trap: unless you've formally assigned (i.e. transferred) that IP to the company, it still legally belongs to the individual who created it - even if you’re a founder, director, or major shareholder.
This creates a major risk for multi-founder teams.
If a founder leaves without assigning their IP, the company may no longer have the right to use its own product. You could be forced to rebuild from scratch or pay to license what you thought the company already owned.
That’s a deal-breaker for investors. They won’t invest if the company doesn’t clearly own the thing that makes it valuable.
Why assign IP early?
What can go wrong if I don’t?
If you or your co-founders (including any ex-co-founders) need to assign IP to the company, you can use the What Founders Want template document:
Tip: Founders often make the mistake of assigning “all IP” to the company, when what they really mean is the IP relating to the product or solution they’re building. Instead we recommend:
- Clearly describing the product or solution the IP relates to
- Listing any IP that’s not being assigned (e.g. if a co-founder is working on other unrelated projects)
- Getting a sense check from someone you trust before signing – a quick review can save major headaches later.
5. Early Relationship Between a Founder and the Company
In the early days, most founders don’t take a salary. That’s normal. But it’s important to be clear about how you’re working for the company, especially if you’re not getting paid yet.
Some founders assume they should sign an employment or contractor agreement and just defer their pay until the company has funds. But that can create more problems than it solves.
Why Formal Employment Too Early Can Backfire
If you sign an employment agreement and start accruing unpaid wages, the company may be creating a legal obligation to pay you – even if there’s no cash to do it.
That can lead to:
- Unpaid salary becomes a liability on the company’s balance sheet, which can make the company look insolvent (it's incurring a debt it can’t afford to pay)
- Red flags for future investors who normally expect clean accounts, and want their investment used to grow the company, not to repay founders for time already spent
- Tax issues as, while this isn’t tax advice, the general view is that salary becomes taxable when it’s earned or becomes legally payable, not just when it’s paid. So even if you never receive the money, you might still be personally taxed on it, and the company might still owe PAYE.
A Cleaner Approach for NZ Startups
Instead of a formal employment arrangement, consider:
- Treating your time as a founder contribution, not a debt (i.e. as a founder contributing time and effort to make their company more valuable)
- Putting in place an IP assignment and confidentiality deed, rather than a full employment agreement (see the template here: [link])
- Preparing a short letter / email between the directors and each co-founder to confirm the contributions and that no salary is being accrued, and compensation will be reviewed and reconsidered when funding allows.
This keeps your books clean and makes life easier when it’s time for the company to raise capital.
6. Bonus: Simple Constitution Template for New Zealand Startup Founders (Downloadable)
Simple Constitution Template
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