NZ Startup Legal Documents Checklist: What Every New Company Needs

Legal Documents Every New NZ Company Should Have

Most new NZ companies register, open a bank account, and start trading without the legal documents that protect the business, its directors, and its customers. A single dispute without proper agreements can be expensive or fatal to the business. This checklist covers what you need and when.

Before You Start Trading

1. Shareholders Agreement

If your company has two or more shareholders, a shareholders agreement is essential. It governs what happens when shareholders disagree, want to exit, or in cases of death or incapacity. Without one, disputes are resolved by the model rules in the Companies Act 1993, which may not reflect what you intended. Key clauses: pre-emptive rights, drag-along and tag-along rights, buy-sell provisions, dividend policy, and dispute resolution.

2. Constitution (optional but recommended)

The Companies Act provides default "model rules" for companies without a constitution. These rules are sensible defaults but may not fit your business. Common reasons to adopt a custom constitution: issuing different share classes, changing quorum requirements, or modifying director appointment rules.

3. IP Assignment Agreement

If you created intellectual property (software, designs, content, trade secrets) before incorporating, it belongs to you personally, not the company. Assign it to the company with a formal IP assignment agreement. This matters when you seek investment, sell the business, or have a dispute with a co-founder.

When You Hire Staff

4. Individual Employment Agreements

Under the Employment Relations Act 2000, every employee must have a written individual employment agreement before starting work. It must include: the role description, pay and hours, leave entitlements, trial period clause (90-day for new employers), and a plain-language explanation of their rights. A standard template is available from Employment NZ but must be tailored to each employee.

5. Contractor Agreements

If engaging contractors rather than employees, use a contractor agreement that clearly establishes independent contractor status (no PAYE, no holiday pay, results-based). Ensure the IRD contractor or employee test is met or you risk penalties for misclassification.

When You Start Selling

6. Terms of Trade

Terms of trade (also called terms and conditions) govern your relationship with customers or clients. They define payment terms, ownership of goods until paid (Romalpa or retention of title), dispute resolution, liability limits, and what happens when customers do not pay. Register a PPSR (Personal Property Securities Register) security interest for goods-based businesses that extend credit.

7. Privacy Policy

Under the Privacy Act 2020, any business collecting personal information must have a clear privacy policy and be able to respond to information access requests within 20 working days. Add a privacy policy to your website and include it in client engagement letters.

8. Client Engagement Letter / Service Agreement

For professional services (accounting, law, consulting, IT), a formal engagement letter defines the scope of work, fees, deliverables, and limitation of liability. Without it, scope creep and non-payment disputes are hard to resolve.

Getting Documents Drafted or Reviewed

Template legal documents are available from government sources and law societies, but templates rarely fit your specific situation perfectly. For shareholders agreements, employment contracts, and terms of trade, a one-time review by a commercial solicitor costs NZ$500-2,000 and can save tens of thousands in dispute costs.

Looking for a commercial lawyer who works with new companies in your region? FreshFirms Connect can match you with local legal professionals.