Company ownership from overseas

[rob_gourdie]

Background: We are ex-pats in the UK and want to set up a (NZ?)company to manage our rental properties. We eventually plan to come back to NZ.

Setting up a 'foreign-owned' NZ company (we are non-resident in NZ) means we are subject to an annual audit = adding an few extra thousand in costs.

Is it possible to have a NZ company owned by a NZ family trust (with us as Trustees and us & our children as Beneficiaries) and avoid the label of being 'foreign-owned'.

Any other suggestions on how to best structure ourselves would be most welcome.

Cheers
Rob

[Marc]

Hi Rob,

Welcome to PT !

My wife and I live in Melbourne but are kiwis. We have a trust in NZ with the sole trustee being a NZ company - we are directors of the company. The company owns our assets and distributes the profit from those assets to the trusts beneficiaries before tax.

Now I need to find out for you via our trust lawyer if the company and trust is considered NZ owned or overseas owned. A very interesting question. I will get back to you (this post) when I have an answer. Can anyone else help?

Please also read the articles our trust lawyer published (link below) ->
http://www.propertytalk.co.nz/module...tegories&cid=3

Best Regards

Marc

[RodC]

Hi there,

If you're setting up a NZ trust with a corporate trustee, it should be possible for the shares in the trustee company to be held on your behalf by your solicitors trust company. This then makes the company NZ owned and avoids the audit requirement.

Rod.

[donna]

Not sure I understand that Rod....

I have been told that if there is more than 25% shareholding by non-residents - the company is a 'foreign company' - and this has been confirmed by our Trust lawyers.

Would love to get around this if its possible - tell more.

Cheers,

Donna

[RodC]

Hi Donna,

Sorry I didn't explain myself very well.
The company is NZ owned by my solicitors trustee company (they hold 100% of the shares).
The director of the company is myself.
The company is the trustee of my family trust.

This way the audit requirement doesn't apply as the company is NZ owned.

Rod.

[beama]

under 25%

Do you have a contact in NZ who can be majority shareholder, perhaps family members? And you could own under 25% ie. No Audit

Beama

[RodC]

Hi beama,

That would work as well, but as I mentioned before often your solicitor will hold the shares to achieve the same result.

Rod

[donna]

Umm - I'm doing a Dip Fin. Svs (conveyancing) at the moment and the common law cases we're looking at relating to fraudulent activity by Professionals eg Lawyers are scary to say the least!

I suppose that's what puts me off the 100% shareholding held by the Law Firm. What stops them from from collecitng dividends? I guess I am missing an important rule that prevents this situation from happening. Is it something to do with the shareholder needing to be a Director to aurthorise the release of dividends?

What's your thoughts?

Cheers

Donna

[RodC]

Hi Donna,

The law firm can't collect any dividends because there aren't any. The only function of the company is to act as trustee of the trust. Even if there were dividends, the director of the company (myself) decides the dividend distribution policy.

If somehow the shareholders "rebelled" and sacked me as director of the trustee company, I would still have the power (as settlor/appointer of the trust) to appoint a different trustee.

Rod.

[donna]

Thanks Rod.

I thought with an accumulation of rental income each year there would be a pot of $$ growing in the company of which some may be distributed as dividends. I understand the appointer status for the Trust and I suppose $$ in the co would be distributed to the beneficiaries b4 tax time to reduce the amount of tax paid by the company?

Still need to learn more about the difference between distributing income to 'employees' in the company structure and making distributions to 'beneficiaries' of the trust etc.

Cheers,

Donna

[RodC]

That's right Donna, the pot of $$$ doesn't belong to the company it belongs to the trust. The trustee distributes the income to the beneficiaries who then pay tax on their share. The trust is liable for tax on any undistributed income.

Rod.

[Motivstorm]

hi RodC,

could you please tell me which lawyer do you use and how are their services? How much does it cost to engage a lawyer in NZ? I'm in Melbourne, but thinking of starting a company ( with the solicitor as owining 100% share ) and me the appointor n director like what u've outlined.. to start my IP investments in NZ

[donna]

Hi Motivstorm,

On this site there is a list of Professionals so you could have a look at that for a lawyer. I personally have a couple I use.

Fortune Manning Law Partnership - Auckland - I use most frequently and their details are on this site. They have also contributed articles on Trusts on this site too.

Hope this helps.

Regards,

Donna

[RodC]

Hi Motivstorm,

I used Fortune Manning as well. I've found them to be excellent.

regards,

Rod.

[Souljah]

Hi people

I have a number of clients based offshore who have trusts and LAQCs in NZ. I am able to give to the details of a very good solicitor based in Queensyoen who deals with this all the time.

PM me if you want her details.