It’s vital for your business to understand the implications of shareholding changes in New Zealand.
Life can throw you curve balls and sometimes you can make changes to your company ownership structure without thinking through (or knowing about) the implications of changes to who owns your company.
For example, there can be marital changes, shareholders spitting the dummy and walking out, taking on an amazing new person or even death.
What should you watch out for with shareholding model changes in 2019?
- If the shareholding changes by more than 50%, you lose your tax losses. This can be a major issue and needs careful consideration.
- If the shareholding changes by more than 34%, you can loss imputation credits – put simply this means that any tax paid by the company can be forfeited and you have to pay again when it’s transferred out to shareholders.
- If more than 20% of your company is owned by an overseas person, you will need an audit. This can be a significant and largely useless cost on a business.
- If a company has more than 10 shareholders then you will need to prepare accounts under IFRS – let me tell you, you do not want this to happen in a small privately owned company as it costs a minimum of $5,000 extra so beware when taking on new investors.