Doing Business in New Zealand

Posted by Benefitz Admin on March 14 2014 in Publications

Shieff Angland provides specialist legal services in commercial, property and litigation. Based in the Auckland CBD we advise a broad spectrum of organisations and individuals throughout New Zealand and globally.

Shieff Angland is also a member of The Interlex Group, a worldwide association of leading law firms providing a range of legal and business services to clients on a global basis.

This guide has been prepared by Shieff Angland as an introduction to New Zealand business law.  It is intended to assist overseas people wishing to do business in New Zealand.  It is not intended to provide comprehensive information on all aspects of the relevant law.

We have made every effort to ensure the accuracy of this publication, however, it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

If you would like help with your business activities in New Zealand or have any questions in relation to the matters set out in this publication, please contact us.

John Kearns, Partner

0064 9 300 8752

Kellie Bright, Partner

0064 9 300 8753

Updated 19 March 2014

A Snapshot of New Zealand’s Business Landscape


New Zealand is a parliamentary democracy with general elections held every three years.  It is a fully independent nation, but has retained the British Queen as Queen of New Zealand.  She is represented in New Zealand by a Governor General who is appointed on the advice of the New Zealand ministers.

The New Zealand parliament consists of a single house, the House of Representatives.  This is composed of members elected on a “mixed member proportional” (MMP) electoral system, similar to the system adopted in Germany.

All legislation relating to the conduct of business and the operation of companies in NZ is enacted by NZ’s Parliament and administered by government agencies.

Legal System

NZ’s legal system is based on the English common law system. Its law is a combination of statutes passed by Act of Parliament and judge made law established by the New Zealand Courts.  It also draws on Court decisions from other common law countries such as England, Australia and Canada.

The court system is hierarchical, with the courts of first instance being the District Court and the High Court.  There are rights of appeal from the District Court to the High Court, and the High Court to the Court of Appeal.  The Supreme Court is NZ’s final appeal court.  There are also a number of specialist courts and tribunals, including the Environment Court, the Employment Court and the Employment Tribunal.

Business Environment

New Zealand has a deregulated economy.  Following extensive reforms to free up the economy much greater reliance is placed on the operation of market forces to determine results than on state influence or support. Direct Government intervention has been greatly reduced or eliminated in many areas affecting business.

There is now a “user pays” philosophy which means that in many areas it is left mainly to the individual or business concerned to enforce their rights within the legal framework provided, but this is often balanced by laws requiring higher performance standards for businesses.

The principal tool used to control economic growth is the Reserve Bank of New Zealand Act 1989, under which the Director of the Reserve Bank is required through monetary policy to keep inflation within a narrow range (currently 1% to 3%) as measured by the Consumers Price Index (CPI).  The CPI is calculated by Statistics New Zealand.  Treasury acts as the New Zealand government’s principal adviser on financial and economic issues.

Foreign Exchange Regulations

There are no restrictions on the flow of capital, profits, dividends, royalties or interest into or from New Zealand.

Money laundering

Money laundering is illegal in New Zealand. The anti-money laundering regime in New Zealand imposes a number of counter money laundering and anti-terrorism measures (including customer due diligence, reporting and record-keeping, and surveillance and enforcement powers), and currently applies to financial institutions (broadly defined) and casinos.

Further reforms will be enacted before 2017 (and possibly as early as 2014). Under those reforms, the regime will extend to apply to certain other businesses and professions, such as accountants, lawyers, conveyancing practitioners, real estate agents, and businesses that deal in high-value goods (eg auctioneers and bullion dealers).

Foreign Trade

New Zealand is now one of the world’s most open economies in foreign trade terms.  Producer boards for the sale and export of primary products are increasingly a thing of the past.  While the sale and export of some primary products (eg. dairy, kiwifruit, apples) is controlled to a significant extent by grower-owned companies, most other products can be freely exported and imported.  Customs practice is in line with the World Trade Organisation Agreement.

“No fault” accident compensation system

New Zealand has a statutory no-fault accident compensation scheme providing cover for most individuals who suffer a personal injury by accident in New Zealand.  The scheme is set out in the Accident Compensation Act (ACC Act).  The ACC Act covers personal injuries suffered by any person in New Zealand, including visitors, and wherever they occur – whether at work or otherwise.

The ACC Act prohibits legal claims for compensation arising out of or relating to most types of personal injury suffered in New Zealand as a result of an accident.

Regulation of financial services industry

People in New Zealand who are in the business of providing a “financial service” must be registered on the Financial Service Providers Register.  Financial services include acting as an insurer, issuing securities to the public, providing credit under a credit contract, changing foreign currency, providing brokering services, lending or holding debt instruments, or providing financial guarantees and “financial adviser services”.

All providers of “financial adviser services” and “brokers” are regulated by a financial advisers’ regime.  A provider of a “financial adviser service” is someone who gives “financial advice” to a client, provides “discretionary investment management service” to a client, or provides an “investment planning service” to a client.

Contract law

There is relatively little regulation of contracting in New Zealand.  Parties are generally free to contract on their own terms.

Contract law in New Zealand is largely made up of common law principles, subject to certain statutory parameters.  For example:

  • Certain statutory consumer protection measures will apply irrespective of the terms of the contract
  • Contracts with minors are subject to the Minors Contracts Act 1969
  • Credit contracts with consumers are regulated by the Credit Contracts and Consumer Finance Act 2003
  • Certain contracts must be in writing (including those involving interests in land, employment and mortgages)
  • The Contractual Remedies Act 1979 allows parties to cancel a contract for misrepresentation (in certain circumstances, and provided that the terms of the contract do not provide for their own cancellation regime), and gives the courts power to grant a wide variety of relief
  • The Contractual Mistakes act 1977 allows the courts to grant relief in limited circumstances if a party can establish that it entered a contract due to a genuine mistake.

Overseas Investment Regime

New Zealand has generally welcomed and encouraged foreign investment from all countries.  This has been part of the strategy to maintain strong international linkages and to reduce barriers to international capital flows.  However there are certain rules in place designed to ensure that sensitive New Zealand assets (land in particular) are protected.

Certain transactions by overseas persons require the consent of the Overseas Investment Office.

An overseas person includes a company which is a 25% or more subsidiary of a body corporate incorporated outside New Zealand.
The Act applies to investments in:

  • Significant business assets
  • “Sensitive” and “special” New Zealand land
  • Farm land
  • Fishing quota

The Overseas Investment Regulations exempt certain specific transactions from the requirement for OIO consent.  It is also possible to apply for an exemption in certain circumstances.

Transactions involving Sensitive Land

“Sensitive land” is:

  • Non-urban land areas greater than 5 hectares
  • Land on certain specified islands
  • Other parcels of land that are classified as “sensitive” due to their inclusion of, or proximity to waterways, parks, conservation areas or areas of historical significance.

An acquisition of “sensitive land” will include an investment in a business that owns or leases sensitive land.  An acquisition of rights or securities of a person that controls “sensitive land” in circumstances that cause that person to become an “overseas person” will also trigger the need for consent, even if that acquisition is immaterial.

Transactions involving Significant Business Assets

A consent may be required for business actions where:

  • If establishing a new business, the total expenditure involved exceeds NZ$100m (or, in  the case of an investment by an “Australian non-government investor”, NZ$477m)
  • If buying an existing business through an assets deal, the price paid exceeds NZ$100m (or, in  the case of an investment by an “Australian non-government investor”, NZ$477m)
  • If buying an existing business through a share deal, either the amount paid for the shares, or the gross value of the New Zealand target company(including 25% or more subsidiaries), exceeds NZ$100m (or, in  the case of an investment by an “Australian non-government investor”, NZ$477m)

The New Zealand and Australian Governments signed an Investment Protocol in February 2011 that came into effect on 1 March 2013.  The threshold for Australians investing in New Zealand business assets increased from NZ$100m to NZ$477m.

Seeking Consent

Certain transactions by overseas persons require the consent of the Overseas Investment Office.

In considering an application under the regulations the Overseas Investment Office will consider matters which include:

  • The creation of new job opportunities in New Zealand
  • The introduction of new technology or business skills
  • The introduction into New Zealand of additional investment for development purposes
  • The development of new export markets or increased export market access for New Zealand exporters
  • Whether an individual investor intends to reside permanently in New Zealand
  • The environmental impact, as well as the effect on New Zealand ownership of natural resources.


New Zealand operates an immigration policy in an attempt to achieve social and economic goals through the temporary and permanent movement of people and skills.  A range of visa options are available depending on whether a person wishes to work, study, invest or simply enjoy a visit.

Living and Working in New Zealand

There are a number of visas which allow a person to work either temporarily or permanently.

The most common resident visas, which allow a person to live and work in New Zealand indefinitely are:

  • Skilled Migrant Category – a points system based on factors such as age, work experience, qualifications, and an offer of skilled employment.
  • Residence from Work – if a person has held a Work to Residence visa for at least 24 months he or she can use this category to apply for resident status.

The most common temporary visas which allow a person to live and work in New Zealand for a set period of time are:

  • Work visas – for people that work in a profession that is experiencing skill shortages or have a job offer from an accredited employer.
  • Working holiday visa – designed for young people, usually aged 18-30, this option lets a person travel and work in New Zealand for up to 12 months, or 23 months if he or she is from the UK.

Living and Investing in New Zealand

It is possible for a person to settle, or at least spend considerable time in New Zealand, while investing in New Zealand.

If a person wishes to invest funds in New Zealand he or she can apply for residence under the Investor/Investor Plus categories.

If a person wishes to purchase or establish a business in New Zealand he or she can apply for a work visa under the Long Term Business Visa Category and then apply for residence under the Entrepreneur/Entrepreneur Plus categories.

Undertaking a Business in New Zealand
Getting the right business structure when setting up a business in New Zealand is important.  Legal, accounting and taxation considerations will drive which business structure you may use.

Overseas persons commonly use business ownership structures such as limited liability companies, incorporated and unincorporated joint ventures and branches to undertake business in New Zealand.

Limited Liability Company

The Companies Act 1993 governs the incorporation, management and liquidation of companies.  The Financial Reporting Act 1993 sets out the reporting requirements of certain forms of company.

The main characteristics of a limited liability company in New Zealand are as follows:

  • A subsidiary company incorporated in New Zealand may have non-resident shareholders and directors, although a pending law change will require at least one director to be resident in New Zealand or an enforcement country, which includes Australia.
  • There is no statutory requirement to appoint a company secretary.
  • There is no restriction on the size of a company’s share capital.  Companies are not permitted to have a par or nominal value attached to their shares.  Instead, company directors are required to determine the consideration for the issue of shares, and to resolve that the consideration and terms of issue are fair and reasonable to the company and all existing shareholders.
  • There is no statutory requirement for a company to have a constitution however it may be desirable to have one as the Companies Act 1993 is a one size fits all” legislation and it may be desirable for a company to have a set of rules tailored to its specific needs.  Commonly constitutions will:
  • Provide pre-emptive rights for share transfers (there is otherwise no requirement to first offer shares to existing shareholders before third parties);
  • Provide requirements for appointment and removal of directors (the default requirement of an ordinary resolution is often inadequate and/or inappropriate);
  • Allow deeds to be signed by only one director (whose signature must be witnessed) and specify how other documents are to be signed
  • Provide differing classes of shares and set out the rights attaching to share classes
  • Permit dealings which are unauthorised unless the constitution specifically permits them
  • Allow the company to pay for directors’ and employees’ indemnity insurance.

There is no central register for business names in New Zealand.

Joint Venture

An overseas person may wish to utilise a joint venture structure to carry on business in New Zealand.  The term “joint venture” in New Zealand means an arrangement between two or more parties who combine together to invest capital or resources in a particular project.  A joint venture could be carried out via a limited liability company, a partnership or a limited partnership (involving general and limited partners) or by an unincorporated contractual joint venture.


It is possible for an overseas corporate to set up a branch in New Zealand to carry on its business in New Zealand. If an overseas corporate was to carry on business in New Zealand in such manner, that corporate would be required to register as an “overseas company” on the Overseas Company Register in New Zealand.

Reporting obligations

The decision whether to establish a limited liability company or a branch will be influenced by legal, tax and commercial decisions.  However the following issues may be relevant:

  • A New Zealand branch of an overseas company must file two separate sets of audited financial statements, one for its worldwide operations and one for its New Zealand business.
  • A subsidiary company is required to file audited financial statements relating to its New Zealand business only.
  • Every company must file an annual return at the New Zealand Companies Office.
  • A New Zealand branch (being legally the overseas company) bears directly any liabilities that it may incur under New Zealand law.  There is no sheltering behind a different legal persona.  Establishing a special purpose vehicle may ring-fence this liability.  In practice, however, limited liability may be illusory as, unless the subsidiary is of substance in its own right, any significant commercial dealings may need to be guaranteed by the overseas parent.
  • A New Zealand branch of any overseas company will generally be considered non-resident for taxation purposes.

Securities and Takeovers

NZX Limited (NZX) operates New Zealand’s only registered securities exchange:

  • New Zealand Stock Market (NZSX), the premier equities market
  • New Zealand Alternative Market (NZAX), for smaller and growing companies
  • New Zealand Debt Market (NZDX), for corporate and government bonds and fixed-income securities.

There are three ways by which a company can list on one of the NZX markets:

  • A “primary listing” is designed for companies which are listed on one of the NZX markets only.
  • A “dual primary listing” enables companies to have a full listing on an NZX market as well as an overseas exchange.
  • An “overseas listing” allows companies with a full listing on an overseas exchange (which is their home exchange) to list on an NZX market – but does not require the company to comply with the majority of the NZX Listing Rules (and for this reason is different to a dual primary listing).

The key regulators of New Zealand’s capital markets are the Financial Markets Authority (FMA), NZX and the Takeovers Panel.

  • The FMA enforces securities, financial reporting, and company law as they apply to financial services and securities markets.  It also regulates securities exchanges, financial advisers and brokers, trustees and issuers – including issuers of KiwiSaver and superannuation schemes.
  • NZX operates and is co-regulator (with FMA) of New Zealand’s registered securities exchange, comprising both equity and debt markets (NZSX, NZAX, and NZDX respectively). Listed companies are required to comply with the applicable listing rules.
  • The Takeovers Panel administers the conduct of takeover activity in relation to “code companies” in accordance with the Takeovers Code (issued under the Takeovers Act 1993) (Takeovers Code).

Issuing securities in New Zealand

New Zealand’s securities laws are in the process of being substantially reformed by the Financial Markets Conduct Act 2013.  The FMCA and its associated regulations, will replace the Securities Act 1978, Securities Markets Act 1988, and other legislation relating to the financial markets.  It will be phased in with a two stage implementation process, with the first phase of operating provisions proposed to come into force in April 2014 and the second phase in December 2014.

The FMCA completely overhauls how primary offers of financial products are regulated.  It introduces a new regime incorporating major changes to almost every aspect of how offers of securities are regulated.

Currently, as a general rule, securities may only be offered to members of the public in New Zealand if the issuer of the securities has a registered prospectus and investment statement (concerning those securities) complying with the requirements of the Securities Act and related regulations.  If securities are offered and allotted to a member of the public in breach of the Securities Act, the allotment can be void and the issuer required to repay subscription money, with interest. There is also potential criminal liability for breaches of the Securities Act.

The Securities Act provides two broad categories of exception or “safe harbour, being:

  • offers which are made to persons who are deemed not to be members of the public (for example close relatives)
  • offers made to limited types of members of the public who are deemed able to look after themselves and, therefore, do not need the protection of the Securities Act disclosure regime (for example “wealthy” persons or persons “experienced in investing money”)

Under the new legislation, investment statements and prospectuses will be replaced by a Product Disclosure Statement (PDS). The PDS will have to follow prescribed disclosure requirements so investors have clear, concise, and effective information to help them understand the risks involved and make informed investment decisions.

Further the new legislation will provide, as at 1 April 2014, exclusions to the disclosure regime with respect to crowd funding, peer to peer lending and employee share schemes.


The Takeovers Code applies to:

  • companies which are, or in the previous 12 months have been, listed by NZX Limited
  • unlisted companies with more than 50 shareholders.

The Takeovers Code seeks to ensure that shareholders of code companies are treated equally and, after proper disclosure, are able to make informed decisions on whether to accept or reject a takeover offer.

The core of the Takeovers Code is the “fundamental rule” that a shareholding of greater than 20 percent cannot be acquired, and a person already having such a shareholding cannot increase that shareholding, except under an offer made in accordance with the Takeovers Code, or as permitted in other limited circumstances set out in the Takeovers Code. This rule covers the acquisition of indirect shareholdings, and transactions involving transfers, and issues, of shares.

A person may become the holder or controller of an increased percentage of the voting rights in a code company:

  • Under:
  • offers for all of the shares of a code company; and
  • offers for less than all of the shares of a Code company,

but if the bidder does not already hold or control more than a 50 percent shareholding, the offer must be conditional on acceptance as to a sufficient number of shares to take the bidder across that threshold (or a lesser threshold approved by shareholders of the target company);

  • Where shareholder approval is obtained;
  • Where a person with more than a 50 percent, and less than a 90 percent, shareholding acquires less than 5 percent in any 12 month period; or
  • If the person already holds or controls a 90 percent shareholding.

A Brief Look at Tax

The principal means of taxation in New Zealand are income tax (including withholding tax) and goods and services tax.  There is no general capital gains tax and there are no gift, stamp or estate duties.

Income Tax

Individual New Zealand residents, New Zealand resident settlors of trusts, and resident companies are taxed on all income not otherwise exempt from taxation.  Non-residents (whether they are individuals, companies or trusts) will be subject to New Zealand tax on all income sourced in or “derived from” New Zealand.

The rate at which income tax is payable will however be affected by the type of income and any Double Taxation Agreements existing between New Zealand and the overseas taxpayer’s country of residence.  In general, all income is taxable, and deductions are allowed for losses and business expenses.

Currently, income tax on personal income applies on a progressive marginal tax rate basis, with rates of 10.5% up to a threshold of $14,000, 17.5% up to a threshold of $48,000, at 30% on the excess up to a threshold of $70,000, and at 33% on the excess over this threshold.

Company Tax

The company tax rate in New Zealand is currently 28%.

Companies, both resident in New Zealand and non-resident but deriving income through a fixed establishment in New Zealand, or otherwise subject to annual assessment in respect of income sourced in New Zealand, are subject to company income tax at the standard rate.  Standard OECD withholding taxes apply on interest, royalty (including know-how) and dividend income.  Withholding taxes will also apply to non-residents performing contracts in New Zealand, but may under certain circumstances be avoided by application to the New Zealand Inland Revenue Department.

The intricacies of the imputation system are too complex to consider adequately in this overview but potential investors should be aware of its existence and should seek specific advice on it and its related Foreign Investor Tax Credit system.

International tax measures have been implemented which limit opportunities for tax avoidance through the attribution of unearned offshore income.  These should be considered in detail in appropriate circumstances and include the Controlled Foreign Company regime; the Foreign Investment Fund regime; and the Settlor Trust regime.


A New Zealand resident who settles assets on a foreign trust is generally attributed with the income of the foreign trust and is required to pay tax as agent for the foreign trustee at 33%.

Current year income derived by trustees and allocated to New Zealand residents (beneficiary income) is subject to normal income tax based on the beneficiary’s personal tax rates as noted above, but with a minimum of 33% for most minor (ie under 16 years) beneficiaries.  Income derived by resident trustees which is not allocated as beneficiary income (accumulated income) is taxed at a flat rate of 33%.  Subsequent distributions to beneficiaries of accumulated income and some capital gains are taxed as follows:

  • New Zealand resident trusts are generally exempt
  • Foreign trusts with no New Zealand resident settlor at the personal tax rates of the beneficiary
  • Foreign trusts with a New Zealand resident settlor at 45% penal tax rate.

The term “settlor” is broadly defined in this context to include anyone who either directly or indirectly transfers value to a trust.

Payment of Tax

Tax payable by employees is deducted by employers throughout the financial year, with employees receiving a net after tax wage or salary (referred to as Pay As You Earn or PAYE).

Self employed individuals, trustees and corporates pay tax on a self assessed basis, with a comprehensive provisional (or advance) tax regime which requires tax to be paid in 3 instalments during the year, based on expected income.  An end of year top-up, or refund of any overpaid provisional tax, is determined upon the filing of self employed and corporate taxpayers’ income tax returns.

Resident Withholding Tax / Income Tax Withholding Payments

Certain categories of payments made between New Zealand residents, are required to have tax withheld at source by the payer, who accounts to the Inland Revenue Department for the tax on a monthly basis, to be credited against the recipient’s ultimate tax liability.  Rates of withholding tax will vary depending upon the nature of the payment and the recipient’s expected level of income.

Non Resident Withholding Tax

Where certain categories of payments having a New Zealand source, are made to non-residents, tax must be deducted by the payer at the appropriate non-resident withholding tax rates.

Depending upon specific circumstances of the payer and/or the payee non-resident withholding tax rates may be reduced under Double Taxation Agreements and may be either a final tax or an amount on account of a final tax liability, to be determined upon the payee’s filing of an annual tax return.

Foreign Investments

The New Zealand tax legislation contains detailed and comprehensive provisions requiring New Zealand tax resident investors to pay income tax on income derived from investment in foreign entities.  Care should be taken in selecting and structuring offshore investments as tax can be payable in some instances where no real economic gain has been realised.

Goods & Services Tax (GST)

GST is charged at 15% on the supply of most goods and services in New Zealand.  Those making supplies in New Zealand are required to register for GST if they carry on a taxable activity (which is similar to the concept of a business, but wider in scope).

Capital Gains Tax

There is no general capital gains tax in New Zealand, although certain gains made on capital assets can be brought within the income tax net.  This is generally where the assets form part of an income generating activity, such as subdivision of land or assets acquired with an intention of resale at a profit.

Accident Compensation

New Zealand operates a no-fault compensation scheme whereby persons suffering from accidental injuries need no prove fault before receiving compensation.  The scheme is funded by various sources including levies paid by all employers for work related accidents.

Transfer Pricing and Thin Capitalisation

New Zealand’s transfer pricing regime seeks to protect the tax base by ensuring that cross-border transactions are priced (at least for tax purposes) on an arm’s length basis.
New Zealand also has thin capitalisation rules which, broadly speaking, disallow certain interest deductions for a foreign controlled New Zealand group (depending on its debt to equity ratio).

Other Taxes

Other taxes relevant for doing business in New Zealand include:

  • Local body rates
  • Customs duties
  • Fringe benefit tax (payable by the employer but tax deductible as an expense).
  • Specified superannuation contribution withholding tax payable on employer contributions to superannuation funds.

Trade Practices

New Zealand’s trade practices regime is principally provided for in the following three statutes:

  • Commerce Act 1986
  • Fair Trading Act 1986
  • Consumer Guarantees Act 1993

Consumer protection is principally regulated through the Fair Trading Act and the Consumer Guarantees Act.  These Acts, together with the Commerce Act, attempt to ensure that business in New Zealand is fair and competitive, and make remedies available to consumers prejudiced by unfair business practices.  This legislation also applies to dealings between businesses.

Commerce Act

Business competition is regulated, in the interests of market place efficiency and the long term benefit of consumers, by the Commerce Act, which is administered by the Commerce Commission.

The following restrictive trade practices are prohibited:

  • contracts, arrangements, or understandings which have the purpose, effect, or likely effect of “substantially lessening competition” in a relevant market;
  • price fixing arrangements or understandings between competitors (certain joint ventures or joint buying arrangements may be exempt from this);
  • taking advantage of a substantial degree of power in a market for an anti-competitive purpose; and
  • resale price maintenance (when a supplier controls retail pricing).

The Commerce (Cartels and Other Matters) Amendment Bill is currently before Parliament. The Bill redefines what amounts to cartel conduct and criminalises “hard core” cartel activity; individuals convicted of cartel offences would face up to seven years imprisonment. The Bill is likely to come into force in the first half of 2014.

Franchise Agreements are not exempt from the Commerce Act and must be carefully drafted so as to avoid breaching the Commerce Act.

Fair Trading Act

The Fair Trading Act applies generally in New Zealand. This Act:

  • seeks to ensure that consumers receive fair and accurate information about what they purchase, to enable purchasers to take advantage of the competitive market encouraged by the Commerce Act
  • prohibits people in trade from making false representations or from engaging in conduct that is misleading or deceptive (whether intentional or not), or which amounts to an unfair trade practice
  • provides standards for consumer information and product or service safety
  • provides remedies for breaches of the Act which are available to both consumers and to competing traders

There are some generally stated prohibitions against misleading and deceptive conduct and false or misleading misrepresentations. Whether the conduct in question was deliberate or accidental is largely irrelevant to any question of breach.

There are also specific rules concerning:

  • employment advertising;
  • pyramid selling schemes;
  • bait advertising;
  • offering gifts and prizes; and
  • referral selling.

The Commerce Commission is responsible for administering the Fair Trading Act. It actively monitors business conduct in New Zealand to check compliance, and has the power to bring proceedings for breach in its own right. Breach carries civil and criminal liability.

Consumer Guarantees Act

The Consumer Guarantees Act sets out a series of guarantees which apply to all sales to consumers of goods or services in New Zealand of a type ordinarily acquired for personal or household use.

The guarantees create a minimum standard of quality which businesses selling such goods or services must meet, including:

  • being of acceptable quality;
  • being fit for a particular purpose (when the consumer has informed the supplier about that purpose);
  • matching a description;
  • ensuring spare parts are available; and
  • complying with a sample or demonstration model (where relevant).

A consumer may seek redress from either the supplier or manufacturer of goods or services that do not meet the statutory guarantees.

Suppliers of goods or services cannot contract out of the Consumer Guarantees Act unless goods or services are being sold for business purposes.

Consumer Law Reform Bill

The Consumer Law Reform Bill passed its third reading in Parliament in December 2013. The Bill makes a number of amendments and additions to both the Fair Trading Act and the Consumer Guarantees Act.

A number of the changes will have a significant impact on businesses, particularly the three-fold increase in Fair Trading Act penalties,  the provision on unfair contract terms in standard form contracts (which will not take effect until 15 months after the Bill is passed), and the new regime requiring businesses to substantiate representations they make to consumers.

One of the objectives of the Bill is to revise and update consumer law so that it achieves alignment with the Australian Consumer Law.  The inclusion of unfair contract terms and imposition of bigger fines for breach of the Fair Trading Act are two changes which bring the Bill closer to the Australian legislation.  However there is a wait and see approach to including protections against unconscionable conduct – it was noted that the unconscionable conduct provisions recently introduced into Australian law has encountered technical problems and have not yet bedded in. This has led to a conclusion to wait and have the position reviewed, once those provisions have been tested in Australian courts.

Intellectual Property Rights

New Zealand has a well-developed system of intellectual property rights, which are governed by statute, case law, and international agreements.

New Zealand is a signatory to a number of intellectual property treaties and conventions, including the Paris Convention, the Patent Co-operation Treaty, the Berne Convention, and TRIPS (Trade-Related Aspects of Intellectual Property Rights).  New Zealand has also adopted the Madrid Protocol, which allows entities in Madrid Protocol countries to file international trade mark registrations designating any Madrid Protocol country as a country to which trade mark protection would extend.

Trade marks, patents, designs, and plant variety rights can be registered at the Intellectual Property Office of New Zealand, which maintains a register of these rights and interests.

The long-awaited Patents Bill was finally passed into law in September 2013. It is expected to come into force in September 2014, once regulations have been passed. The legislation updates New Zealand’s patent law and brings it into line with international trends.

New Zealand copyright law protects original works from being copied. The period of protection for literary, dramatic, musical, and artistic works under New Zealand law is the life of the author plus 50 years. Other works, such as sound recordings, films, communication works, and computer-generated works, generally are protected for 50 years from the end of the year in which the work was made or made available to the public. For industrially applied works, protection lasts for 16 years (or 25 years in some cases), depending on the nature of the work. There is no form of registration of copyright in New Zealand.

The common law tort of “passing off” and provisions of the Fair Trading Act also provide general protection against misleading conduct in the course of trade. The misleading use of trade marks and get-up which cause damage to another trader’s reputation or goodwill may accordingly give rise to liability.

Information Technology

New Zealand has experienced a high uptake of information technology and enjoys an international reputation in creative digital content including film, animation and web design.  New Zealand’s open, transparent regulatory environment, low cost base and government policies supporting the knowledge economy have all contributed to this.  Doing business on-line is supported by the Electronic Transactions Act 2002.  The Crimes Amendment Act 2003 implemented hacking offences which enable the Police to prosecute perpetrators of electronic crime more easily.  There are proposals to amend the Copyright Act 1994 to take into account recent developments in information technology, and to implement anti-spam legislation.


The Employment Relations Act 2000 (ERA) is the key statute regulating employment law in New Zealand. It governs the employment relationship for all persons employed within New Zealand. It aims to promote good faith in the employment relationship and the right of workers to bargain collectively.

Employment agreements must be in writing, and may be individual or collective.


Union membership is not compulsory.  However if an employee wants to be involved in a collective agreement and to bargain collectively, he/she must be a member of a union.  Unions are entitled to represent their members in relation to any matter involving their collective interests, including negotiating a collective employment agreement and representing their members’ individual rights (eg at mediation and in court actions).

Duty of good faith

Under the ERA there is a duty of good faith which requires the parties to:

  • not mislead or deceive each other;
  • be active and constructive; and
  • be responsive and communicative in their employment relationship.

Further, an employer proposing to make a decision that will, or may, have an “adverse effect” on their employees (such as a restructure or sale of the business) must, subject to confidentiality exceptions, provide each affected employee information about the relevant proposal, and an opportunity for that employee to comment on the proposal before any decision is made.

Term of Employment

Most individual agreements are indefinite, however it is also possible to have casual and fixed term arrangements. An employee can end his or her employment by giving a specified notice period.

As a general rule, employment may only be terminated for cause in New Zealand. There is no concept of termination “at will”. Cause for terminating employment includes poor performance, repeated misconduct, serious misconduct, redundancy, medical incapacity, incompatibility, and frustration of contract.

It is possible for both parties to agree a 90 day trial period at the commencement of employment.

Redundancy compensation

There is no compulsory redundancy compensation regime in New Zealand. It is a matter of contract between the employee and employer as to whether an employer is required to pay compensation if the employee is made redundant.


Participation in superannuation schemes is not compulsory in New Zealand. Employees are eligible to participate in KiwiSaver – a voluntary, work-based retirement savings initiative (governed by the KiwiSaver Act 2006). Participants in KiwiSaver must contribute a minimum of 2% of their gross salary or wages to a superannuation scheme of their choice, and employers must make a contribution of 2% on behalf of all participating employees.

Accident compensation

New Zealand has no workers’ compensation scheme. Workplace accidents are instead covered by the ACC Act. Personal injury costs are met by the ACC and not the employer.
Both employers and employees contribute towards the costs of the accident compensation scheme through levies.

Workplace Health and Safety

Recently there has been an increased focus on workplace health and safety laws in New Zealand. The workplace health and safety system is currently being reformed.
The Government is proposing to replace the current Health and Safety in Employment Act 1992 with a new law called the Health and Safety at Work Act (based on the Australian Model Health and Safety Law).

The Health and Safety Reform (Bill) is expected to be introduced to Parliament in December 2013. The Minister of Labour has indicated that the Bill will come into force in 2015, along with the first tranche of regulations. This first tranche will develop new regulations for general risk and workplace management, worker representation and participation, major hazard facilities, and hazardous substances, while also updating existing regulations for asbestos.  The second tranche is expected to follow within two years of the new Act coming into force. This second tranche will focus on hazardous work, plant and structures, geothermal operations, quarries, and any residual issues in relation to the management of hazardous substances in the workplace.

The proposed changes to health and safety in the workplace are significant and will impact all workplaces.

Other legislation

Other legislation regulates holidays, parental leave, minimum wage, health and safety, privacy, superannuation, minimum working conditions, and human rights.

Real Property and Resource Management

Purchasing land in New Zealand

There is no restriction on who can own land in New Zealand, subject to any requirement for OIO approval (discussed earlier). Foreign individuals and companies can purchase land without a local partner.

Land ownership based on registration

New Zealand uses the Torrens land registration system under which most parcels of land have their own titles showing dimensions and location, and recording ownership and other interests affecting the land. The Government guarantees the accuracy of titles, which can be searched by the public for a nominal fee.

The primary attraction of the Torrens system is that dealings can be conducted in reliance on a single title, rather than on a succession of title deeds. New Zealand has converted almost all titles, plans and instruments into an electronic format, allowing real-time searching and electronic registration of all land title and surveying transactions.

Under New Zealand law, buildings and other improvements permanently attached to the land form part of the land itself and pass with ownership of the land, unless the current owner and a purchaser agree otherwise.

Sale of land

Purchasing land in New Zealand is relatively straight-forward. Many agreements to sell land are recorded on standard form documentation.

The general law of contract applies once a sale and purchase agreement has been entered into between the parties. Once the parties enter into an agreement to sell and purchase land, the purchaser’s offer becomes legally binding between the parties. The seller cannot (without breaching the contract) then accept a higher offer from another purchaser following entry into this agreement. However, conditions for the benefit of either party can be included in an agreement.

No stamp duty is payable on the transfer of land in New Zealand.

Resource management overview

Use and development of resources, from an environmental perspective, is controlled by the Resource Management Act 1991. The RMA focuses on the sustainable management of New Zealand’s natural and physical resources, including land, water, coastal, and air resources.

Resource consents can take the form of land use consents, subdivision consents, water permits, coastal permits, and discharge permits, depending on the nature of the proposed activity. Consents are granted by the relevant local authority. The level of discretion that the local authority may exercise, and the stringency of the tests an applicant must meet in order to obtain consent, depend on the nature of the consent sought. The local authority also has wide powers to impose conditions on any resource consent it grants.

Security over Personal Property

The regime for creating and enforcing security interests over personal property is set out in the Personal Property Securities Act 1999 (PPSA). This regime is similar to that operating in North America and Australia.

The PPSA impacts financing and corporate insolvency in New Zealand and anyone who deals with personal property in New Zealand.

Application of the PPSA

The PPSA applies to all “security interests” in “personal property”.
A security interest under the PPSA is an interest created or provided for by a transaction that in substance secures payment or performance of an obligation, regardless of the form of the transaction and who has title to the property.

Personal property

Personal property is virtually all property other than land (and several other specific exceptions) and includes:

  • chattel paper (eg hire purchase agreement);
  • documents of title (eg bill of lading);
  • goods (eg consumer goods, inventory and equipment);
  • intangibles (eg trademarks, copyright and patents);
  • investment securities (eg shares);
  • money; and
  • negotiable instruments (eg cheques).

Security interests

The PPSA also deems the following transactions to be security interests:

  • leases of goods for a term of more than one year;
  • transfers of accounts receivable or chattel paper; and
  • commercial consignments that do not secure payment or performance of an obligation.

Priority under the PPSA

To protect a secured party’s priority to personal property in New Zealand against claims from other parties, a security interest must “attach” to the personal property and a secured party must “perfect” its security interest in the personal property.
In order for a security interest to attach to personal property, the security interest must be in the form of a valid security agreement. A valid security agreement must:

  • be signed or agreed to in writing by the debtor;
  • contain a description of the personal property to be secured so that it is reasonably capable of identification; and
  • contain appropriate language creating the security interest.

Perfection of a security interest is generally achieved by registering a financing statement on the online Personal Property Securities Register. Priority between competing securities is determined by order of perfection. There are a number of specific priority rules under the PPSA which modify this general rule.


The PPSA provides remedies to a secured party who has priority over all other parties to personal property. Security agreements can modify and negate some of the enforcement provisions under the PPSA, and can provide for remedies in addition to those provided for under the PPSA.

Doing Business in New Zealand

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.