Doing business is easy on new website

BY LANCE WIGGS

Starting a business in New Zealand is easy - the World Bank tells us we are the best around in their Doing Business rankings, and the facts on the ground match our second-best in the world ranking, after Singapore.

It's really rather simple to start a company, get an IRD number and even to open a business account with a bank. The last time I did this the combined time I spent on all three tasks was about 30 minutes, with the majority of that time spent sitting next to a banker watching her type.

As good as we are, there is still plenty of opportunity to lift our overall performance. We may never conquer our low ranking for trading across borders, as we will always have that extra distance from markets, and concerns for the bio-security of imports.

We are doing our best at this though, signing a series of free trade agreements, including one with Malaysia that comes with a relatively simple level of paperwork compliance.

If you want to start or buy a business, the recently revamped Business.govt.nz website is a good place to start for general advice and for ways to get help from the various government services, such as the Inland Revenue Department and New Zealand Trade and Enterprise.

There is some excellent advice on that business site, which now incorporates the new business.govt.nz/companies website, where you can easily form a company.

The new Companies Office site is orders of magnitude better than the previous one, which was a case study in poor usability.

But while forming a company is easy on the Companies Office site, there is much more that founders should do, including signing a company constitution, signing a shareholders agreement and understanding directors' obligations and how they perform governance.

The Companies Office website points to two external sources, both paid, for form-driven template constitutions, but says little about shareholder agreements.

There is some information about holding a register of shareholders, but little about what the responsibilities of directors are and how to conduct a board meeting.

The Institute of Directors, of which I am a member, writes plenty on governance, but it is generally aimed at much larger companies, not tiny start-ups.

I'd like to see three new things on the Companies Office website: standard documents, official shareholder registers and basic governance tools.

Arguably, most small firms lack the key founding legal documents, so why not provide the basics free so small companies can start off with appropriate documentation and structure?

The website could provide a large range of copyright free sample constitutions and shareholders agreements, so that company founders can browse through them by business type or company structure, pick one that is most relevant, and edit the result.

The resulting agreements may not be the best in the realm, but at least they will exist, and at least the shareholders and directors will have thought about the salient points. Smart law firms would put up template contracts as a way of marketing their services, and founders could fill in templates and then send them to law firms for tightening up.

The next suggested change is keeping the shareholder register, and is one which surely catches a lot of companies out, as it did with one I am involved with. The official shareholder register is actually not the Companies Office website, but the register kept by the company itself.

This seems a little backwards, and is certainly confusing. Why not provide the option of maintaining the official shareholder register on the Companies Office website, adding in the functionality that is required to explain each share transaction? Companies could choose not to use this service, but if simple enough then I can see it would be popular.

Most of the detail behind the transactions would be hidden from the public, but this would remove some paperwork and ensure that share transactions are done in a proper manner. But why stop there? Why not give the ability for company directors and shareholders to do basic governance tasks on the website as well?

Directors and, where required, shareholders could formally grant approval for not only shareholder transactions, but also for other governance tasks. The Companies Office could provide templates for board minutes, nudging directors to tick the right boxes - holding regular meetings and asking the right questions.

None of this would be made public, unless desired, but it would certainly help smaller firms ensure that they are not only complying but are also governing in an appropriate manner.

These are small steps, but ones that will help solve a lot of early stage problems for companies, and ones that could help increase the per centage of companies that go beyond a name and bank account to become genuine concerns.

Lance Wiggs is founder of PowerKiwi, retailer of Flowerpower and other products on Powershop.