Persons engaged in business have a choice as to how they will establish their business. Options include carrying on business as a sole trader, in partnership or as a company. A company is essentially a mechanism to create a separate legal entity to carry on business.
Every company has certain basic elements:
· a name which has been reserved by the Registrar of Companies
· at least one share, one shareholder and one director
· addresses for the registered office and for service (the Registrar also requests an address for communications)
A company may have limited (most common) or unlimited liability. A company comes into existence after it is incorporated under the Companies Act. Once incorporated it is recognised in law as an independent legal entity (a Body Corporate). This means it is treated as being a separate “person” from its directors and shareholders. It can therefore do many of the same things as a natural person – e.g. hold property in its own name, enter contracts, sue and be sued, etc.
The Registrar of Companies is responsible for the approval and reservation of company names.
A New Zealand company or an overseas company intending to carry on business in New Zealand cannot be registered under a name unless that name has been approved and reserved by the Registrar (sections 20 & 333(1) Companies Act).
A company may choose to change its name. It must first apply to the Registrar of Companies to reserve the name it has chosen. After the company has been notified that the new name has been reserved, the director(s) must pass a resolution to change the name and then notify the Registrar of the change.
Registration of a company name only provides limited name protection – that is, it will prevent another company being incorporated under an identical or almost identical name.