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5. incorporate as limited company with charitable status

Date: 2025-05-19

Status

Accepted

Context

StartMeUp.nz is evolving into a formalised organisation that offers low and no-cost technology solutions, infrastructure, and consulting to support other organisations—especially those at an early stage or working for public benefit. We aim to sustain our operations through a combination of service revenue, public funding, and private donations. Importantly, we intend to reinvest all profits into the organisation's mission, including contributions to Free and Open Source Software (FOSS) projects.

We considered several legal structures for incorporation in New Zealand, including Charitable Trusts and Incorporated Societies. However, these structures would limit our operational flexibility, particularly our capacity to enter commercial contracts, hire staff, and operate as a service provider.

A Limited Liability Company (LTD) structure provides the operational and financial flexibility we require, while registration with Charities Services ensures we are legally recognised as a non-profit and eligible for tax exemptions. This dual structure enables us to balance agility and purpose, while maintaining regulatory compliance.

Decision

We will incorporate StartMeUp.nz as a Limited Liability Company with charitable status in New Zealand.

  • The company will be registered with the Companies Office via the New Zealand Companies Register.
  • A custom constitution will be drafted to meet the requirements for charitable registration, including:
  • Prohibiting distribution of profits to shareholders
  • Clearly defined charitable purposes
  • A winding-up clause transferring assets to another registered charity
  • Following company registration, we will apply for recognition as a charity with Charities Services.
  • We will also apply for an IRD number and Donee Organisation status to enable tax-deductible donations.
  • The board of directors will act in accordance with the Charities Act 2005 and ensure all private benefit is incidental and reasonable.

Consequences

Positive outcomes: - We gain the flexibility of a company structure (contracts, staff, IP, bank account, etc.). - Charitable status provides access to funding opportunities and tax exemptions. - Being a registered charity enhances public trust and donor confidence. - The structure supports sustainable growth while aligning with our purpose.

Risks / Considerations: - Our constitution must strictly adhere to charitable legal requirements; mistakes may lead to rejection. - Governance and transparency obligations will be ongoing (e.g., annual returns to Charities Services). - Any private benefit (such as employment of directors) must be carefully documented and justified. - We must operate continuously within our defined charitable purposes to retain our status.

References / Helpful Resources: - Charities Services: Apply Now - Application checklist and helpful tips (CommunityNet) - NZ Companies Register - Charitable company constitution templates