Glossary
Company due diligence glossary
Plain-English definitions of the terms that come up when you check a New Zealand company. Each one leads with a short, quotable definition.
Identity
- NZBN (New Zealand Business Number)An NZBN is the unique New Zealand Business Number that identifies one business, so you can be sure you are dealing with the right entity even when names are similar.
- Companies RegisterThe Companies Register is the official public record of companies incorporated in New Zealand, holding details such as legal name, status, incorporation date and registered office.
- Company numberA company number is the identifier assigned to a company when it is incorporated, used alongside the legal name to pin down the exact entity.
- IncorporationIncorporation is the act of registering a company so it becomes a separate legal entity, and the incorporation date is when that happened.
- Registered officeA registered office is the official address recorded for a company, where formal documents can be served, which may differ from where it actually trades.
- Company constitutionA company constitution is an optional document that sets out rules for how a company is run, in addition to the default rules in company law.
- Annual returnAn annual return is a yearly confirmation a company files to keep its details current on the register; it is a filing, not a financial statement.
- Sole traderA sole trader is an individual carrying on business in their own name, with no separate company entity on the register, though they may hold an NZBN.
- Incorporated societyAn incorporated society is a membership-based group registered as its own legal entity on a separate register, distinct from a company.
People and ownership
- DirectorA director is a person appointed to manage a company, and current directors are part of the public record against the company.
- ShareholderA shareholder is a person or entity that owns shares in a company, and shareholders and their holdings are shown on the public record.
- Beneficial ownerA beneficial owner is the person who ultimately owns or controls a company, even where shares are held in someone else's or another entity's name.
- Ultimate holding companyAn ultimate holding company is the company at the very top of a group that ultimately controls the others beneath it.
- Director disqualificationA director disqualification or prohibition is a formal step that stops a person from being a director or managing a company for a set period.
Status
- Good standingGood standing generally means a company is currently registered, up to date, and not in liquidation, receivership, administration, strike-off or removal.
- SolvencySolvency is a company's ability to pay its debts as they fall due; insolvency is when it cannot, which often leads to a formal process.
- LiquidationLiquidation is when a liquidator is appointed to wind up a company, deal with its assets and pay creditors in a set order, and the company normally stops trading as usual.
- ReceivershipReceivership is when a receiver, usually appointed by a secured creditor, takes control of some or all of a company's assets; the company may still exist but control has shifted.
- Voluntary administrationVoluntary administration is a process where an independent administrator takes control of a struggling company to work out whether it can be saved or whether creditors would do better another way.
- Statutory demandA statutory demand is a formal demand for payment of a debt that, if not met or set aside, can be used as a step toward winding a company up.
- Strike-offStrike-off, or removal in progress, means a company is in the process of being taken off the register, often after it stopped filing or asked to be removed.
- Removal from the registerRemoval means a company is no longer listed as an active entity on the register and generally cannot trade.
- RestorationRestoration is the formal process of putting a removed company back onto the register so it can exist and trade again.
Reference
- PPSR (Personal Property Securities Register)The PPSR is New Zealand's public register of security interests over personal property such as vehicles, equipment and stock, separate from the Companies Register.
- Security interestA security interest is a registered claim over property that secures a debt, so the holder has rights over that property if the debt is not paid.
Process
- Due diligenceDue diligence is the checking you do before you commit to a deal, supplier, customer or partner, confirming the facts you rely on instead of taking them on trust.
- KYB (Know Your Business)KYB, or Know Your Business, is the process of verifying a business you deal with, including confirming the legal entity, its status and who stands behind it.
- CounterpartyA counterparty is the other party in a deal or agreement, and counterparty risk is the risk that they fail to do what they agreed.
- Adverse mediaAdverse media is negative coverage in public news and reports about a company or the people behind it, used as one input to a check rather than a verdict.
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