{"id":216870,"date":"2022-08-11T12:23:19","date_gmt":"2022-08-10T23:23:19","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=216870"},"modified":"2025-09-24T17:53:54","modified_gmt":"2025-09-24T04:53:54","slug":"how-structure-startup","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/startups\/how-structure-startup\/","title":{"rendered":"How to Structure a Startup in New Zealand"},"content":{"rendered":"\n<p>Before your business expands, it is important to make sure that you establish the correct corporate structure for your startup. Having the right structure makes it easier for your business to grow without encountering obstacles further down the track. This article covers the possible structures available for your startup.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Put in Place a Company Structure for Your Startup<\/h2>\n\n\n\n<p>Although you can choose from many different <a href=\"https:\/\/legalvision.co.nz\/business-structures\/choosing-structure-new-zealand-business-sole-trader-partnership-or-company\/\">business structures<\/a> for your startup, putting a company structure in place is usually the preferred method. If your startup has plans to raise capital in the future, the ease of raising capital via a corporate structure (rather than, for example, a partnership or trust) is attractive to investors. This is because a company has the flexibility to issue and transfer shares, whereas trusts and partnership structures are more complex. They do not have this flexibility.<\/p>\n\n\n\n<p>The company structure also has the benefit of limited liability as it is deemed to be a separate legal person. This means that if your startup takes on business risks under contracts, creditors can only recover against the company&#8217;s assets rather than your personal assets. Other structures, such as a sole trader or trust, do not offer the same protection.&nbsp;<\/p>\n\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/10\/21140438\/NZ-Startup-Manual-251x360-2.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">NZ Startup Manual: A Legal Handbook For Founders<\/div>\n            <div class=\"body-text\">\n                <p>Essential reading for anyone building their startup. This free guide includes practical advice and seven real-life case studies.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/NZ-Startup-Manual.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Single Company or Dual Company Structure?&nbsp;<\/h2>\n\n\n\n<p>While having a single company structure is sufficient for many startups, using a dual company structure from the outset can allow for greater potential risk-taking and flexibility. Under this structure, you set up two companies:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>a holding company; and&nbsp;<\/li><li>an operating company.&nbsp;<\/li><\/ul>\n\n\n\n<p>The holding company owns 100% of the shares in the operating company and the startup\u2019s valuable assets, such as its intellectual property (IP) and cash. The operating company is the company that takes on the risks of the business, such as entering into contracts with:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>suppliers;&nbsp;<\/li><li>staff; and&nbsp;<\/li><li>clients.<\/li><\/ul>\n\n\n\n<p>This structure means that creditors can only make claims against the operating company, as the entity they have a contractual relationship with. At the same time, the holding company protects the startup\u2019s valuable assets and IP.&nbsp;<\/p>\n\n\n\n<p>Given that the business&#8217;s key assets are held in the holding company, if you raise capital, your investors will be investing at holding company level. This is the alternative to acquiring shares in your operating company.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--idea\">\n    <p>If you are looking to set up a dual company structure, we recommend seeking legal advice to make sure that resolutions and documents have been properly put in place for both companies.<\/p>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"599\" height=\"751\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2022\/08\/17124601\/Dual-company-picture.png\" alt=\"\" class=\"wp-image-216987\" srcset=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2022\/08\/17124601\/Dual-company-picture.png 599w, https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2022\/08\/17124601\/Dual-company-picture-239x300.png 239w\" sizes=\"auto, (max-width: 599px) 100vw, 599px\" \/><\/figure>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl 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It is much easier to incorporate additional subsidiary companies in the future having started with a dual company structure. This is the alternative to restructuring from a single company to a dual company structure further down the track. Your holding company will be considered the <a href=\"https:\/\/legalvision.co.nz\/business-structures\/ultimate-holding-company-structure\/#:~:text=An%20ultimate%20holding%20company%20structure%20is%20a%20corporate%20organisational%20structure,corporate%20structure%20as%20a%20whole.\">Ultimate Holding Company<\/a>, with each subsidiary operating a specific part of the business. As a result, you can ring-fence the risks of that part of the business to the relevant subsidiary company.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Other Documents Will I Need for My Startup Company?<\/h2>\n\n\n\n<p>If you have more than one shareholder, you should draft a shareholders agreement. A shareholders agreement outlines various rules and processes of the company, such as how:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>the company issues new shares;&nbsp;<\/li><li>shares can be bought and sold; and&nbsp;<\/li><li>the company makes decisions (whether by shareholders or directors).&nbsp;<\/li><\/ul>\n\n\n\n<p>Furthermore, if the startup brings on investors or additional shareholders, they will need to sign a deed of accession. This document will bind them to the existing shareholders agreement.&nbsp;<\/p>\n\n\n\n<p>If you have a dual company structure, you will need to have an IP assignment and licence deed between your holding company and operating company (or companies). Do this to ensure that all IP that the operating company develops is transferred to, and owned by, the holding company. The holding company then licenses the IP back to the operating company. As a result, the operating company can use the IP to grow and scale the business.&nbsp;<\/p>\n\n\n\n<p>Notably, if a founder has developed IP in their own name, you must assign this to the relevant company as early as possible. This may be the case if they have developed IP while running their business before setting up the company. That way, disputes over ownership of IP do not arise in the future.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>This fact is true regardless of whether you are operating as a single or dual company structure.<\/p>\n<\/div>\n\n\n\n<p>If you are looking to raise capital from external investors, they may ask to see a copy of such assignment arrangements. They do so to ensure that the critical asset of your business is, in fact, owned by the company they are investing in.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Having the proper structure in place for your startup can maximise your flexibility for expanding your startup and minimising its risk. Typically a company structure is the most common choice. While a single company can be sufficient, having a dual company structure can offer greater protection and flexibility. It is easiest to put the proper system in place at the beginning stages of the startup. That way, there are fewer issues over decision-making and ownership of intellectual property further down the track.<\/p>\n\n\n\n<p>If you need help with becoming a company director, our <a href=\"https:\/\/legalvision.co.nz\/startup-lawyers-lp\">experienced startup lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1660173561142\"><strong class=\"schema-faq-question\">How can I start a company?<\/strong> <p class=\"schema-faq-answer\">To start a company, you need to register it with the Companies Office. You can complete this process online, and submit your application once you have provided the necessary information.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660173590756\"><strong class=\"schema-faq-question\">What organisational structure is best for a startup?<\/strong> <p class=\"schema-faq-answer\">A company structure is the usual choice for a startup. However, you can increase your protection and flexibility with a dual company structure.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"ed19fd34f0\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/216870\" \/>            <input value=\"https:\/\/legalvision.co.nz\/startups\/how-structure-startup\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How to Structure a Startup in New Zealand\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Before your business expands, it is important to make sure that you establish the correct corporate structure for your startup. Having the right structure makes it easier for your business to grow without encountering obstacles further down the track. This article covers the possible structures available for your startup. Put in Place a Company Structure<a href=\"https:\/\/legalvision.co.nz\/startups\/how-structure-startup\/\">Continue reading <span class=\"sr-only\">&#8220;How to Structure a Startup in New Zealand&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13343,"featured_media":201788,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"204631,202780,209911,209117,204528,216381","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[10],"tags":[24,30,51,1515,1516],"class_list":["post-216870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-startups","tag-startup","tag-company","tag-intellectual-property","tag-corporate-structure","tag-dual-company-structure"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How to Structure a Startup | LegalVision New Zealand<\/title>\n<meta name=\"description\" content=\"Are you wondering which corporate structure you should choose for your startup? 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He graduated from the University of Auckland where he obtained his Bachelor of Laws.","sameAs":["https:\/\/x.com\/teresa.nurdi@legalvision.com.au"],"url":"https:\/\/legalvision.co.nz\/author\/dankim\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/startups\/how-structure-startup\/#faq-question-1660173561142","name":"How can I start a company?","acceptedAnswer":{"@type":"Answer","text":"To start a company, you need to register it with the Companies Office. You can complete this process online, and submit your application once you have provided the necessary information.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/startups\/how-structure-startup\/#faq-question-1660173590756","name":"What organisational structure is best for a startup?","acceptedAnswer":{"@type":"Answer","text":"A company structure is the usual choice for a startup. However, you can increase your protection and flexibility with a dual company structure.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/216870","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13343"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=216870"}],"version-history":[{"count":6,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/216870\/revisions"}],"predecessor-version":[{"id":229465,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/216870\/revisions\/229465"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/201788"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=216870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=216870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=216870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}