Online marketplaces provide a digital community where users can come together and exchange their goods and services. The platform provides a place to manage transactions and find sellers or buyers to suit their needs. As an online marketplace operator, you can start such a platform and provide a meeting ground for users wishing to engage in the niche you provide. New Zealand law tries to restrict this commercial innovation as little as possible. However, some laws and regulations will apply to your new venture. Therefore, this article will provide some background on whether you need legal permits to start an online marketplace in New Zealand.
Do I Need Any Legal Permits?
In New Zealand, there are no specific legal permits dedicated to regulating the startup of an online marketplace. However, this does not mean that no laws or regulations apply to the process itself. To determine what these regulations may be, you need to consider:
- the structure of your marketplace itself;
- the nature of the service your online platform provides;
- the industry your users trade in;
- your role in transactions between sellers and buyers;
- how much control you have over these transactions; and
- how much responsibility you are willing to take on if something goes wrong.
When you consider these factors, you need to start your business in a way that protects your interests and complies with the law. You take on a lot of risk as an operator, so instead of relying on a legal permit, you must implement measures on your platform to comply with the law. In particular, you need to set up your online marketplace in a way that:
- spreads responsibility;
- minimises risk to your personal assets;
- reduces your potential liability; and
- protects your business.
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Using an Appropriate Business Structure
Structuring your business that manages the online marketplace as a company is one way that you can minimise risk and protect your interests. A company’s assets are separate from your own. Therefore, if something goes wrong, there is less of a chance of your personal assets being at risk.
The law has specific rules for companies, and you need to register with the New Zealand Companies Office if you wish to start one. Part of this process will include registering for a New Zealand Business Number (NZBN), which every business in New Zealand needs to have. Additionally, you will have specific tax and reporting obligations you need to comply with.
Outside of your initial set-up when deciding your business structure, other laws will apply to your online marketplace, as well as other measures you can take to protect yourself. The following paragraphs detail these.
Continue reading this article below the formImportant Documents
A key part of protecting yourself and complying with the law is drafting adequate legal documentation. There are three essential legal documents you need to set up for your online marketplace. These include:
- terms and conditions;
- website terms of use; and
- a privacy policy.
Your terms and conditions are a crucial document outlining how much responsibility you take on as the online marketplace operator. You need to establish that your users agree to this when they engage with your service, so seeking legal advice for drafting these documents is a good idea. That way, you can be sure you have adequately:
- complied with any disclosure or contractual laws that apply to you; and
- protected your business interests.
Industry Licences
On top of these general requirements, some industries require practitioners to have certified qualifications. Or, they may have industry standards that practitioners must comply with. As the platform operator that may facilitate such practitioners offering their services to others, you should ensure that your platform users have any required licences or certifications that they may need. Otherwise, if customers engage the services of someone on your website that is misleading them about the services they provide, you could face some legal liability yourself for that act. This scenario could engage potential penalties under the Fair Trading Act, as well as industry-specific regulation.
Therefore, it is crucial that you account for any industry-specific regulation that could apply to the people using your online marketplace.
Key Takeaways
In New Zealand, you do not need any particular legal permits to start an online marketplace. However, this means that there is more of a responsibility for you to actively comply with the laws that do apply. If you would like more information or help with starting your online marketplace, contact LegalVision’s eCommerce lawyers on 0800 005 570 or fill out the form on this page.
Frequently Asked Questions
An online marketplace is an online platform where users can engage with each other to buy or sell goods and services. As the online marketplace operator, you manage the website and business itself.
Some general laws that apply will include both consumer law and privacy law, particularly when it comes to how you engage with your users and how they engage with each other. However, you may also need to account for industry-specific regulation if you target a particular niche and you will need to look into how to protect your business with appropriate contracts.
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