Singapore-based consultant sets up New Zealand Trust
Our Client, Richard, is a successful English consultant based in Singapore. When Richard approached us in late 2005 he was in the process of starting up a new business venture with a partner in Australia, and wanted to find a way of protecting his assets against this new business risk. Richard owned a property in Singapore and had also purchased two properties in Australia in mid-2005 for investment purposes. Richard had also inherited an estate from his late mother, which he wished to protect.
Richard approached Healy Consultants’ Singapore office to seek advice on the most appropriate ways to protect his assets. Having made his requirements clear, it was apparent that an offshore trust would be the most appropriate, and tax-efficient way, for Richard to fulfill his objectives. Thus, during an introductory telephone call Aidan Healy, managing director of Healy Consultants, explained to Richard the benefits and disadvantages of offshore trust setup, and the accounting, legal and regulatory implications of doing so. It was decided at this point that a New Zealand trust would be the optimum solution for Richard.
A New Zealand trust is legitimately exempt from New Zealand tax provided it is managed by a New Zealand-resident Trustee, that the source of income for the trust is outside of New Zealand and the beneficiaries are not resident in New Zealand. Assets held in a New Zealand trust are also protected from courts, making them an effective way for a Settlor to protect assets from circumstances such as bankruptcy and creditor claims.
With these requirements clarified, Aidan sent Richard an e-mail detailing costs and time-frame for the New Zealand trust setup process. By return, Richard signed and returned to our standard Client Engagement Letter, along with the required due diligence and settled the fees for the Trust setup.
An important aspect establishing a trust is close cooperation and communication between Settlors and Trustee. With Healy Consultants acting on behalf of the New Zealand-resident Trustee, and Richard as the Settlor, it was important that we keep a channel of communication open during the initial stages of the engagement, when the goals of the Trust are set out and put into the Trust Deed document. With this in mind, the first concrete step in the engagement was for Richard and Healy Consultants to come up with clear goals for the Trust. During a morning meeting in our Singapore office, both parties outlined the expected rules of the Trust, following which our staff prepared a draft Letter of Wishes, which spells out the duties expected of a Trustee in the management and distribution of the Trust assets. This document also included laws covering trusts and Trustees’ responsibilities, and at this stage we passed the draft document to our New Zealand resident Trustee for comments and amendments, once she had run the document through a New Zealand lawyer.
With these comments on board, Healy Consultants finalised the Letter of Wishes, which was e-mailed to Richard for his approval and signature. It was now possible to draft a detailed Trust Agreement, based on the guidelines and principles of the Letter of Wishes. Healy Consultants was also officially appointed as bank signatory to the Trust’s corporate account. Again, the Trust Agreement was e-mailed to New Zealand for comments and amendments (on this occasion there were none), and once the document had been finalised, it was again ready for Richard’s signature.
Richard was at this time planning his new business venture, and was traveling extensively between Singapore and Australia, so we arranged to e-mail the Trust Agreement to him in Australia, and he printed it out, signed it and arranged for it to be couriered to our Singapore office within one week. With this step complete, Healy Consultants couriered a complete Trust pack to our New Zealand Trustee, and upon acceptance of this the Trust setup was complete.
The next phase of the engagement was to open a corporate bank account for the Trust, with Healy Consultants as bank signatory. It was decided that the bank account should be opened in Hong Kong to ensure it is a legitimately tax-exempt structure, and so Healy Consultants’ Banking Team in Hong Kong prepared an account opening application pack, while our Singapore-based Marketing and Media Team prepared a Business Plan highlighting the Trust’s goals and objectives, as well as information on the Settlor and Beneficiary. The Business Plan and bank account application form were then e-mailed to the New Zealand Trustee for her signature and return to us. Once received, our Banking Team visited the Hong Kong bank, submitting the application and signed Business Plan.
Within one week, Healy Consultants received account opening approval, and advised Richard of the same on the same day. Over the following two weeks we received PINs for Internet banking and ATM cards, followed by the cards themselves, which were then couriered directly to New Zealand for safekeeping by the Trustee.
Advertising agency established in Wellington
Our Client, Peter, is a Singapore-based Australian entrepreneur with a background in product branding and marketing. He wanted to set up an advertising agency in New Zealand, offering niche corporate design and branding services to Clients in that country and Australia. Peter found Healy Consultants following a Google search in February 2006, and he made initial contact by e-mail through our website to explain his business objectives in New Zealand. Based in Singapore, Peter then visited Healy Consultants’ Bideford Road office to discuss the various aspects of incorporating a company in New Zealand, including the legal, tax and accounting implications of doing so.
During the meeting, Peter outlined his objectives in greater detail – he planned to relocate with his wife Marie to Wellington (New Zealand), where he would set up a company with himself as the sole shareholder and director. The company would need assistance with opening a corporate bank account, as well as help preparing financial statements and submitting tax returns going forward. Since he was an Australian citizen (and his wife a New Zealander), Peter did not require our assistance to obtain residence or employment visas for either of them. At the Singapore meeting, Peter signed our Client Engagement Letter and provided the personal due diligence which Healy Consultants uses for internal purposes as part of our ‘Know Your Client’ policy. Having also agreed engagement costs based on the engagement scope outlined by Peter, he arranged a telegraphic transfer to Healy Consultants’ bank account, therefore enabling our team to begin the engagement in earnest.
Although establishing a company in New Zealand is more simple than in many jurisdictions, Peter required our assistance because he was still under contract to his Singapore employer and was traveling heavily for them. It was therefore difficult for him to devote sufficient time to the administrative aspects of company setup. Healy Consultants’ first task was to conduct a company name search with the New Zealand Companies Office. Peter had indicated his three preferred company names, and we were able to reserve his top choice accordingly, allowing us to move to the next phase – registering the company with the corporate structure indicated by Peter in the Client Engagement Letter.
Peter wished to be the sole shareholder and director of the New Zealand company, a structure which is permitted under New Zealand company law. Healy Consultants therefore submitted Peter’s details to the New Zealand Registrar of Companies (ROC), which responded on the same day by e-mail with a consent form for Peter to sign. We arranged for Peter to sign this in Singapore, and once done it was then returned to us and forwarded to the ROC for processing. The ROC sent a Certificate of Incorporation for Peter’s new company by e-mail the same day it was received, and this was forwarded to Peter for his reference. In addition, Healy Consultants sent Peter a printout from the New Zealand Companies Register, indicating the details available to the public regarding the company and Peter as shareholder/director.
With the New Zealand company now a legal entity, the next step was to open a corporate bank account to enable it to trade. Again, since Peter was still tying up loose ends in Singapore, he was grateful that Healy Consultants was able to open a corporate bank account in New Zealand without his presence. To open the bank account, Healy Consultants completed a corporate bank account application form (certified at the bank’s local branch in Singapore), which Peter signed (as the sole signatory) in our Singapore office. We had also drafted a business plan to support the application, including details of the company’s activities (products, services and target Clients), a market analysis and brief financial projections. This was also signed by Peter in Singapore.
We then prepared a complete bank application pack, including the signed and certified documents above as well as the new company’s corporate documents, and these were then delivered to the New Zealand bank for processing. Within two weeks, Healy Consultants’ banking team had received approval of the corporate account, with the good news being passed onto Peter in Singapore.
Accounting and tax support
The next step was to register the company at the Inland Revenue Department (IRD) in Wellington, which issued an IRD number. Healy Consultants then registered the company for goods and services tax (GST), which is mandatory for companies whose annual turnover exceeds NZ$40,000 (US$30,500).
By this phase of the engagement, Peter had left his job in Singapore, and though he was busy arranging to ship his personal effects to New Zealand, he was also able to devote more time to getting the business up and running as a viable concern. He had used industry contacts to launch a marketing campaign in New Zealand, and his other priority was to establish a temporary physical presence in Wellington until he could find a suitable office premises. With this in mind, Peter agreed to use our full Virtual Office in Wellington, serving as a cost-effective, fully functioning office in the heart of the city for a short-term (three month) period. This would allow him to meet potential Clients, as well as use the services of a secretary who would field telephone calls and forward messages to Peter, wherever he was in the world.
Peter has maintained a close relationship with Healy Consultants since he first contacted us in early 2006. He is settling into life in New Zealand and his company is beginning to reap the benefits of Peter’s international marketing and branding expertise. Our work with Peter’s company continues, too, our latest task being to assist with completing an annual tax return and submitting it to the IRD at the end of the company’s financial year.