Due Diligence Checklist (New Zealand)

A Due Diligence Checklist in New Zealand records a corporate governance arrangement and the obligations of the company and its officers, consistent with the Companies Act 1993.

New Zealand due diligence is primarily governed by the Contract and Commercial Law Act 2017 (CCLA), which is the foundational legislation for commercial contracts in New Zealand. The CCLA governs the formation and enforcement of contracts, remedies for breach and misrepresentation, and the legal effect of electronic transactions. A well-prepared due diligence checklist confirms that the proposed transaction is structured to achieve the acquirer's commercial objectives while minimising legal, financial, and regulatory risk.

Corporate due diligence in New Zealand requires a thorough review of the target company's records on the New Zealand Companies Register maintained by the Registrar of Companies. The Companies Act 1993 governs the formation, management, and dissolution of New Zealand companies. Key registers that must be reviewed include the share register (s 87), the register of directors (s 189), and the register of interests (s 189). The company's constitution (if adopted) and any shareholders' agreements are also critical documents.

Financial due diligence involves reviewing the target's financial statements prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP) under the External Reporting Board Act 2011. Large companies are subject to mandatory audit requirements under the Financial Reporting Act 2013. GST compliance under the Goods and Services Tax Act 1985 (GST rate 15%) and income tax compliance under the Income Tax Act 2007 are always key areas of financial review.

Employment due diligence is particularly important in New Zealand because the Employment Relations Act 2000 gives employees strong statutory protections. In an asset sale, section 69I of the Employment Relations Act 2000 provides specific rights for employees to transfer to the new employer on existing terms and conditions. Compliance with the Holidays Act 2003, Health and Safety at Work Act 2015, and KiwiSaver Act 2006 must be verified.

Intellectual property due diligence under the Copyright Act 1994, Trade Marks Act 2002, and Patents Act 2013 confirms that the target owns the IP assets it relies on. Environmental due diligence reviews compliance with resource consents granted under the Resource Management Act 1991 and obligations under the Climate Change Response Act 2002 and the New Zealand Emissions Trading Scheme.

The Due Diligence Checklist is designed specifically for New Zealand transactions and reflects the requirements of New Zealand law.

A Due Diligence Checklist is required whenever a business or investor in New Zealand proposes to acquire shares in, or purchase the assets of, another business. Due diligence is the most effective mechanism for identifying risks and liabilities that could affect the value of the target or expose the acquirer to unexpected claims after completion of the transaction.

You should use a Due Diligence Checklist when entering into a share purchase agreement, where the acquirer will purchase all or a majority of the shares in a target company. In a share purchase, the acquirer steps into the shoes of the target and inherits all liabilities — known and unknown — making thorough due diligence essential. Under the Companies Act 1993, directors of the target company owe duties to shareholders, and disclosure of material information is critical to avoid misrepresentation claims under the Contract and Commercial Law Act 2017.

A Due Diligence Checklist is equally important in an asset purchase, where the acquirer purchases specific assets (such as plant and equipment, inventory, customer contracts, and intellectual property) rather than shares. Asset purchases require careful review of which liabilities transfer with the assets, particularly employment liabilities under section 69I of the Employment Relations Act 2000.

Private equity firms and venture capital investors conducting investment due diligence on New Zealand portfolio companies need a structured checklist to assess the legal and financial health of the target before investing. Investors also need to confirm that the target's NZBN is correctly registered, that its constitutional documents are in order, and that all directors' duties under the Companies Act 1993 have been properly observed.

Business acquirers in regulated industries — financial services, healthcare, telecommunications, and energy — need to confirm that the target holds all required regulatory licences and consents, and that these will remain in force following the change of ownership. The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) imposes specific due diligence obligations on reporting entities in the financial sector.

Where a target company owns property or operates from leased premises, property due diligence is required to verify title, resource consents under the Resource Management Act 1991, Land Information Memorandum (LIM) reports, and the terms of any commercial leases. Environmental due diligence is essential where the target's operations have involved hazardous substances or where there is potential for contamination of land or water.

A well-structured New Zealand Due Diligence Checklist should address all of the following key areas to provide a thorough assessment of the target company.

Corporate and Constitutional Documents — The checklist must cover a review of the target's Companies Act 1993 statutory registers, including the share register (s 87), register of directors (s 189), register of interests (s 189), the company's constitution (if any), and all board and shareholder resolutions passed during the review period. A Companies Register search should confirm the target's current shareholders, directors, registered office, and NZBN.

Financial Review — The financial due diligence section should require audited financial statements for the review period, current management accounts, GST returns under the Goods and Services Tax Act 1985 (GST at 15%), income tax returns under the Income Tax Act 2007, PAYE and KiwiSaver returns, and details of all banking facilities, creditors, debtors, and intercompany transactions.

Legal Contracts and Compliance — All material contracts (particularly those with change-of-control clauses) must be identified and reviewed. Legal due diligence covers compliance with the Fair Trading Act 1986, Consumer Guarantees Act 1993, and Contract and Commercial Law Act 2017, as well as the status of any litigation, regulatory proceedings, or enforcement actions.

Employment and HR — Employment due diligence must confirm that all individual employment agreements are in writing (Employment Relations Act 2000, s 65), that employees are paid at or above the minimum wage (Minimum Wage Act 1983), that Holidays Act 2003 entitlements are correctly accrued, and that Health and Safety at Work Act 2015 obligations are met.

Intellectual Property — The IP section identifies all registered and unregistered IP owned by the target, confirms that copyright in contractor-created works has been validly assigned under the Copyright Act 1994, and verifies the status of trade marks on the New Zealand Trade Marks Register under the Trade Marks Act 2002 and patents under the Patents Act 2013.

Environmental Compliance — Environmental due diligence confirms that all resource consents under the Resource Management Act 1991 are current, that conditions are being met, and that there are no outstanding enforcement actions from regional or territorial authorities.

Tax Due Diligence — The tax section reviews income tax compliance under the Income Tax Act 2007, GST compliance, PAYE and KiwiSaver, FBT obligations, and the availability of tax losses for carry-forward following the transaction under the continuity of ownership provisions.

Confidentiality and Governing Law — All due diligence materials are subject to strict confidentiality. This checklist is governed by the laws of New Zealand. The forms-legal.com Due Diligence Checklist (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.