Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Definitions and related matters - Measurement of company ownership

YC 19: Legislative conversion of foreign company of proprietors

You could also call this:

“Converting a foreign company to a limited liability company”

This section talks about what happens when a foreign company changes into a different type of company. It applies when a company that was set up by a law outside of New Zealand becomes a limited liability company because of another law.

If you owned part of the original company (called a company of proprietors) and you get shares or interests in the new limited liability company just because you were an owner before, some special rules apply to you.

From the day you get your new shares or interests, the law will treat the old company as if it had always been a company with shareholders, even before it changed. It will also treat you as if you had owned your new shares or interests the whole time, even before the change happened.

There’s one exception to this rule, which is explained in section YC 10. You should check that section to see if it affects your situation.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1523126.

Topics:
Business > Starting a business
Business > Industry rules
Previous

YC 18C: Railways restructure not affecting Crown economic ownership, or

“Crown remains economic owner despite railway restructure”

Next

YC 19B: Treatment when certain trusts terminated, or

“How the law handles the ending of trusts set up for governments”

Part Y Definitions and related matters
Measurement of company ownership

YC 19Legislative conversion of foreign company of proprietors

  1. This section applies if—

  2. a company of proprietors is established by a statute of a legislature outside New Zealand; and
    1. the company of proprietors becomes a limited liability company as a result of another statute.

      1. Subsection (3) applies if—

      2. a person acquires a voting interest or a market value interest in a company on the conversion of a company of proprietors; and
        1. immediately before the conversion, the person was a proprietor of the company of proprietors and the person acquired the interest solely as a result of being a proprietor.

          1. With effect from the date of acquisition but subject to section YC 10,—

          2. the company of proprietors is treated as having been a company with shareholders at all times before the conversion; and
            1. the person is treated as having held the voting interest or market value interest at all times before the conversion.

              Compare