New Zealand Companies Act 1993 - Directors

New Zealand New Zealand Companies Act 1993 New Zealand Companies Act 1993 New Zealand Companies Act 1993

Part 8 Directors and their powers and duties

126 Meaning of director

  • (1) In this Act, director, in relation to a company, includes—

    • (a) a person occupying the position of director of the company by whatever name called; and

    • (b) for the purposes of sections 131 to 141, 145 to 149, 298, 299, 301, 383, 385, 386A to 386F, and clause 3(4)(b) of Schedule 7,—

      • (i) a person in accordance with whose directions or instructions a person referred to in paragraph (a) may be required or is accustomed to act; and

      • (ii) a person in accordance with whose directions or instructions the board of the company may be required or is accustomed to act; and

      • (iii) a person who exercises or who is entitled to exercise or who controls or who is entitled to control the exercise of powers which, apart from the constitution of the company, would fall to be exercised by the board; and

    • (c) for the purposes of sections 131 to 149, 298, 299, 301, 383, 385, 386A to 386F, and clause 3(4)(b) of Schedule 7, a person to whom a power or duty of the board has been directly delegated by the board with that person's consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the board; and

    • (d) for the purposes of sections 145 to 149, and clause 3(4)(b) of Schedule 7, a person in accordance with whose directions or instructions a person referred to in paragraphs (a) to (c) may be required or is accustomed to act in respect of his or her duties and powers as a director.

    (1A) In this Act, director, in relation to a company, does not include a receiver.

    (2) If the constitution of a company confers a power on shareholders which would otherwise fall to be exercised by the board, any shareholder who exercises that power or who takes part in deciding whether to exercise that power is deemed, in relation to the exercise of the power or any consideration concerning its exercise, to be a director for the purposes of sections 131 to 138.

    (3) If the constitution of a company requires a director or the board to exercise or refrain from exercising a power in accordance with a decision or direction of shareholders, any shareholder who takes part in—

    • (a) the making of any decision that the power should or should not be exercised; or

    • (b) the making of any decision whether to give a direction,—

    as the case may be, is deemed, in relation to making any such decision, to be a director for the purposes of sections 131 to 138.

    (4) Paragraphs (b) to (d) of subsection (1) do not include a person to the extent that the person acts only in a professional capacity.

    Section 126(1)(b): amended, on 1 November 2007, by section 36(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 126(1)(b): amended, on 29 May 2004, by section 3(1) of the Companies Amendment Act 2004 (2004 No 10).

    Section 126(1)(b): amended, on 3 May 2001, by section 9 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

    Section 126(1)(c): amended, on 1 November 2007, by section 36(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 126(1)(c): amended, on 29 May 2004, by section 3(2) of the Companies Amendment Act 2004 (2004 No 10).

    Section 126(1)(c): amended, on 3 May 2001, by section 9 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

    Section 126(1)(d): amended, on 1 November 2007, by section 36(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 126(1)(d): amended, on 29 May 2004, by section 3(3) of the Companies Amendment Act 2004 (2004 No 10).

    Section 126(1A): inserted, on 1 July 1994, by section 16 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

127 Meaning of board

  • In this Act, the terms board and board of directors, in relation to a company, mean—

    • (a) directors of the company who number not less than the required quorum acting together as a board of directors; or

    • (b) if the company has only 1 director, that director.

Powers of management

128 Management of company

  • (1) The business and affairs of a company must be managed by, or under the direction or supervision of, the board of the company.

    (2) The board of a company has all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

    (3) Subsections (1) and (2) are subject to any modifications, exceptions, or limitations contained in this Act or in the company's constitution.

129 Major transactions

  • (1) A company must not enter into a major transaction unless the transaction is—

    • (a) approved by special resolution; or

    • (b) contingent on approval by special resolution.

    (2) In this section,—

    assets includes property of any kind, whether tangible or intangible

    major transaction, in relation to a company, means:

    • (a) the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of the company's assets before the acquisition; or

    • (b) the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the company's assets before the disposition; or

    • (c) a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities, including contingent liabilities, the value of which is more than half the value of the company's assets before the transaction.

    (2A) Nothing in paragraph (b) or paragraph (c) of the definition of the term major transaction in subsection (2) applies by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company the value of which is more than half the value of the company's assets for the purpose of securing the repayment of money or the performance of an obligation.

    (2B) In assessing the value of any contingent liability for the purposes of paragraph (c) of the definition of major transaction in subsection (2), the directors—

    • (a) must have regard to all circumstances that the directors know, or ought to know, affect, or may affect, the value of the contingent liability; and

    • (b) may rely on estimates of the contingent liability that are reasonable in the circumstances; and

    • (c) may take account of—

      • (i) the likelihood of the contingency occurring; and

      • (ii) any claim the company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability.

    (3) Nothing in this section applies to a major transaction entered into by a receiver appointed pursuant to an instrument creating a charge over all or substantially all of the property of a company.

    Section 129(2) major transaction: replaced, on 1 July 1994, by section 17(1) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 129(2) major transaction paragraph (c): amended, on 15 April 2004, by section 8(1) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

    Section 129(2A): inserted, on 1 July 1994, by section 17(2) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 129(2A): amended, on 3 May 2001, by section 10 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

    Section 129(2A): amended, on 30 June 1997, by section 10 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

    Section 129(2B): inserted, on 15 April 2004, by section 8(2) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

130 Delegation of powers

  • (1) Subject to any restrictions in the constitution of the company, the board of a company may delegate to a committee of directors, a director or employee of the company, or any other person, any 1 or more of its powers other than its powers under any of the sections of this Act set out in Schedule 2.

    (2) A board that delegates a power under subsection (1) is responsible for the exercise of the power by the delegate as if the power had been exercised by the board, unless the board—

    • (a) believed on reasonable grounds at all times before the exercise of the power that the delegate would exercise the power in conformity with the duties imposed on directors of the company by this Act and the company's constitution; and

    • (b) has monitored, by means of reasonable methods properly used, the exercise of the power by the delegate.

Directors' duties

131 Duty of directors to act in good faith and in best interests of company

  • (1) Subject to this section, a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company.

    (2) A director of a company that is a wholly-owned subsidiary may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company, act in a manner which he or she believes is in the best interests of that company's holding company even though it may not be in the best interests of the company.

    (3) A director of a company that is a subsidiary (but not a wholly-owned subsidiary) may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company and with the prior agreement of the shareholders (other than its holding company), act in a manner which he or she believes is in the best interests of that company's holding company even though it may not be in the best interests of the company.

    (4) A director of a company that is carrying out a joint venture between the shareholders may, when exercising powers or performing duties as a director in connection with the carrying out of the joint venture, if expressly permitted to do so by the constitution of the company, act in a manner which he or she believes is in the best interests of a shareholder or shareholders, even though it may not be in the best interests of the company.

    Section 131(4): amended, on 30 June 1997, by section 11 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

132 Exercise of powers in relation to employees

  • (1) Nothing in section 131 limits the power of a director to make provision for the benefit of employees of the company in connection with the company ceasing to carry on the whole or part of its business.

    (2) In subsection (1),—

    company includes a subsidiary of a company

    employees includes former employees and the dependants of employees or former employees; but does not include an employee or former employee who is or was a director of the company.

133 Powers to be exercised for proper purpose

  • A director must exercise a power for a proper purpose.

134 Directors to comply with Act and constitution

  • A director of a company must not act, or agree to the company acting, in a manner that contravenes this Act or the constitution of the company.

135 Reckless trading

  • A director of a company must not—

    • (a) agree to the business of the company being carried on in a manner likely to create a substantial risk of serious loss to the company's creditors; or

    • (b) cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company's creditors.

136 Duty in relation to obligations

  • A director of a company must not agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so.

137 Director's duty of care

  • A director of a company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account, but without limitation,—

    • (a) the nature of the company; and

    • (b) the nature of the decision; and

    • (c) the position of the director and the nature of the responsibilities undertaken by him or her.

138 Use of information and advice

  • (1) Subject to subsection (2), a director of a company, when exercising powers or performing duties as a director, may rely on reports, statements, and financial data and other information prepared or supplied, and on professional or expert advice given, by any of the following persons:

    • (a) an employee of the company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned:

    • (b) a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person's professional or expert competence:

    • (c) any other director or committee of directors upon which the director did not serve in relation to matters within the director's or committee's designated authority.

    (2) Subsection (1) applies to a director only if the director—

    • (a) acts in good faith; and

    • (b) makes proper inquiry where the need for inquiry is indicated by the circumstances; and

    • (c) has no knowledge that such reliance is unwarranted.

Transactions involving self-interest

139 Meaning of interested

  • (1) Subject to subsection (2), for the purposes of this Act, a director of a company is interested in a transaction to which the company is a party if, and only if, the director—

    • (a) is a party to, or will or may derive a material financial benefit from, the transaction; or

    • (b) has a material financial interest in another party to the transaction; or

    • (c) is a director, officer, or trustee of another party to, or person who will or may derive a material financial benefit from, the transaction, not being a party or person that is—

      • (i) the company's holding company being a holding company of which the company is a wholly-owned subsidiary; or

      • (ii) a wholly-owned subsidiary of the company; or

      • (iii) a wholly-owned subsidiary of a holding company of which the company is also a wholly-owned subsidiary; or

    • (d) is the parent, child, spouse, civil union partner, or de facto partner of another party to, or person who will or may derive a material financial benefit from, the transaction; or

    • (e) is otherwise directly or indirectly materially interested in the transaction.

    (2) For the purposes of this Act, a director of a company is not interested in a transaction to which the company is a party if the transaction comprises only the giving by the company of security to a third party which has no connection with the director, at the request of the third party, in respect of a debt or obligation of the company for which the director or another person has personally assumed responsibility in whole or in part under a guarantee, indemnity, or by the deposit of a security.

    Section 139(1)(d): amended, on 26 April 2005, by section 7 of the Relationships (Statutory References) Act 2005 (2005 No 3).

140 Disclosure of interest

  • (1) A director of a company must, forthwith after becoming aware of the fact that he or she is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register, and, if the company has more than 1 director, disclose to the board of the company—

    • (a) if the monetary value of the director's interest is able to be quantified, the nature and monetary value of that interest; or

    • (b) if the monetary value of the director's interest cannot be quantified, the nature and extent of that interest.

    (1A) A director of a company is not required to comply with subsection (1) if—

    • (a) the transaction or proposed transaction is between the director and the company; and

    • (b) the transaction or proposed transaction is or is to be entered into in the ordinary course of the company's business and on usual terms and conditions.

    (2) For the purposes of subsection (1), a general notice entered in the interests register and, if the company has more than 1 director, disclosed to the board to the effect that a director is a shareholder, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction.

    (3) A failure by a director to comply with subsection (1) does not affect the validity of a transaction entered into by the company or the director.

    (4) Every director who fails to comply with subsection (1) commits an offence and is liable on conviction to the penalty set out in section 373(2).

    Compare: 1955 No 63 s 199

    Section 140(1A): inserted, on 30 June 1997, by section 12 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

    Section 140(2): amended, on 3 May 2001, by section 11 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

141 Avoidance of transactions

  • (1) A transaction entered into by the company in which a director of the company is interested may be avoided by the company at any time before the expiration of 3 months after the transaction is disclosed to all the shareholders (whether by means of the company's annual report or otherwise).

    (2) A transaction cannot be avoided if the company receives fair value under it.

    (3) For the purposes of subsection (2), the question whether a company receives fair value under a transaction is to be determined on the basis of the information known to the company and to the interested director at the time the transaction is entered into.

    (4) If a transaction is entered into by the company in the ordinary course of its business and on usual terms and conditions, the company is presumed to receive fair value under the transaction.

    (5) For the purposes of this section,—

    • (a) a person seeking to uphold a transaction and who knew or ought to have known of the director's interest at the time the transaction was entered into has the onus of establishing fair value; and

    • (b) in any other case, the company has the onus of establishing that it did not receive fair value.

    (6) A transaction in which a director is interested can only be avoided on the ground of the director's interest in accordance with this section or the company's constitution.

142 Effect on third parties

  • The avoidance of a transaction under section 141 does not affect the title or interest of a person in or to property which that person has acquired if the property was acquired—

    • (a) from a person other than the company; and

    • (b) for valuable consideration; and

    • (c) without knowledge of the circumstances of the transaction under which the person referred to in paragraph (a) acquired the property from the company.

143 Application of sections 140 and 141 in certain cases

  • Nothing in section 140 and section 141 applies in relation to—

    • (a) remuneration or any other benefit given to a director in accordance with section 161; or

    • (b) an indemnity given or insurance provided in accordance with section 162.

144 Interested director may vote

  • Subject to the constitution of the company, a director of a company who is interested in a transaction entered into, or to be entered into, by the company, may—

    • (a) vote on a matter relating to the transaction; and

    • (b) attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purpose of a quorum; and

    • (c) sign a document relating to the transaction on behalf of the company; and

    • (d) do any other thing in his or her capacity as a director in relation to the transaction—

    as if the director were not interested in the transaction.

145 Use of company information

  • (1) A director of a company who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or make use of or act on the information, except—

    • (a) for the purposes of the company; or

    • (b) as required by law; or

    • (c) in accordance with subsection (2) or subsection (3); or

    • (d) in complying with section 140.

    (2) A director of a company may, unless prohibited by the board, disclose information to—

    • (a) a person whose interests the director represents; or

    • (b) a person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director's powers and duties and, if the director discloses the information, the name of the person to whom it is disclosed must be entered in the interests register.

    (3) A director of a company may disclose, make use of, or act on the information if—

    • (a) particulars of the disclosure, use, or the act in question are entered in the interests register; and

    • (b) the director is first authorised to do so by the board; and

    • (c) the disclosure, use, or act in question will not, or will not be likely to, prejudice the company.

146 Meaning of relevant interest

  • (1) For the purposes of section 148, a director of a company has a relevant interest in a share issued by a company (whether or not the director is registered in the share register as the holder of it) if the director—

    • (a) is a beneficial owner of the share; or

    • (b) has the power to exercise any right to vote attached to the share; or

    • (c) has the power to control the exercise of any right to vote attached to the share; or

    • (d) has the power to acquire or dispose of the share; or

    • (e) has the power to control the acquisition or disposition of the share by another person; or

    • (f) under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share (whether or not that person is a party to it)—

      • (i) may at any time have the power to exercise any right to vote attached to the share; or

      • (ii) may at any time have the power to control the exercise of any right to vote attached to the share; or

      • (iii) may at any time have the power to acquire or dispose of, the share; or

      • (iv) may at any time have the power to control the acquisition or disposition of the share by another person.

    (2) Where a person would, if that person were a director of the company, have a relevant interest in a share by virtue of subsection (1) and—

    • (a) that person or its directors are accustomed or under an obligation, whether legally enforceable or not, to act in accordance with the directions, instructions, or wishes of a director of the company in relation to—

      • (i) the exercise of the right to vote attached to the share; or

      • (ii) the control of the exercise of any right to vote attached to the share; or

      • (iii) the acquisition or disposition of the share; or

      • (iv) the exercise of the power to control the acquisition or disposition of the share by another person; or

    • (b) a director of the company has the power to exercise the right to vote attached to 20% or more of the shares of that person; or

    • (c) a director of the company has the power to control the exercise of the right to vote attached to 20% or more of the shares of that person; or

    • (d) a director of the company has the power to acquire or dispose of 20% or more of the shares of that person; or

    • (e) a director of the company has the power to control the acquisition or disposition of 20% or more of the shares of that person,—

    that director has a relevant interest in the share.

    (3) A person who has, or may have, a power referred to in any of paragraphs (b) to (f) of subsection (1), has a relevant interest in a share regardless of whether the power—

    • (a) is expressed or implied:

    • (b) is direct or indirect:

    • (c) is legally enforceable or not:

    • (d) is related to a particular share or not:

    • (e) is subject to restraint or restriction or is capable of being made subject to restraint or restriction:

    • (f) is exercisable presently or in the future:

    • (g) is exercisable only on the fulfilment of a condition:

    • (h) is exercisable alone or jointly with another person or persons.

    (4) A power referred to in subsection (1) exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.

    (5) A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them, whether or not it is legally enforceable.

    Section 146(2): amended, on 30 June 1997, by section 13 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

147 Relevant interests to be disregarded in certain cases

  • (1) For the purposes of section 148, no account shall be taken of a relevant interest of a person in a share if—

    • (a) the ordinary business of the person who has the relevant interest consists of, or includes, the lending of money or the provision of financial services, or both, and that person has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of that person; or

    • (b) that person has the relevant interest by reason only of acting for another person to acquire or dispose of that share on behalf of the other person in the ordinary course of business of a sharebroker and that person is a person authorised to undertake trading activities on a stock exchange; or

    • (c) that person has the relevant interest solely by reason of being appointed as a proxy to vote at a particular meeting of members, or of a class of members, of the company and the instrument of that person's appointment is produced before the start of the meeting in accordance with clause 6(4) of Schedule 1 or by a time specified in the company's constitution, as the case may be; or

    • (d) that person—

      • (i) is a trustee corporation or a nominee company; and

      • (ii) has the relevant interest by reason only of acting for another person in the ordinary course of business of that trustee corporation or nominee company; or

    • (e) the person has the relevant interest by reason only that the person is a bare trustee of a trust to which the share is subject.

    (2) For the purposes of subsection (1)(e), a trustee may be a bare trustee notwithstanding that he or she is entitled as a trustee to be remunerated out of the income or property of the trust.

    Section 147(1)(b): amended, on 1 December 2002, by section 30 of the Securities Markets Amendment Act 2002 (2002 No 44).

148 Disclosure of share dealing by directors

  • (1) A director of a company that has become registered under this Act in accordance with the Companies Reregistration Act 1993 and who has a relevant interest in any shares issued by the company must, forthwith after the reregistration of the company,—

    • (a) disclose to the board the number and class of shares in which the relevant interest is held and the nature of the relevant interest; and

    • (b) ensure that the particulars disclosed to the board under paragraph (a) are entered in the interests register.

    (2) A director of a company who acquires or disposes of a relevant interest in shares issued by the company must, forthwith after the acquisition or disposition,—

    • (a) disclose to the board—

      • (i) the number and class of shares in which the relevant interest has been acquired or the number and class of shares in which the relevant interest was disposed of, as the case may be; and

      • (ii) the nature of the relevant interest; and

      • (iii) the consideration paid or received; and

      • (iv) the date of the acquisition or disposition; and

    • (b) ensure that the particulars disclosed to the board under paragraph (a) are entered in the interests register.

149 Restrictions on share dealing by directors

  • (1) If a director of a company has information in his or her capacity as a director or employee of the company or a related company, being information that would not otherwise be available to him or her, but which is information material to an assessment of the value of shares or other securities issued by the company or a related company, the director may acquire or dispose of those shares or securities only if,—

    • (a) in the case of an acquisition, the consideration given for the acquisition is not less than the fair value of the shares or securities; or

    • (b) in the case of a disposition, the consideration received for the disposition is not more than the fair value of the shares or securities.

    (2) For the purposes of subsection (1), the fair value of shares or securities is to be determined on the basis of all information known to the director or publicly available at the time.

    (3) Subsection (1) does not apply in relation to a share or security that is acquired or disposed of by a director only as a nominee for the company or a related company.

    (4) Where a director acquires shares or securities in contravention of subsection (1)(a), the director is liable to the person from whom the shares or securities were acquired for the amount by which the fair value of the shares or securities exceeds the amount paid by the director.

    (5) Where a director disposes of shares or securities in contravention of subsection (1)(b), the director is liable to the person to whom the shares or securities were disposed of for the amount by which the consideration received by the director exceeds the fair value of the shares or securities.

    (6) Nothing in this section applies in relation to a company to which Part 1 of the Securities Markets Act 1988 applies.

    Section 149(6): amended, on 1 December 2002, by section 30 of the Securities Markets Amendment Act 2002 (2002 No 44).

Appointment and removal of directors

150 Number of directors

  • A company must have at least 1 director.

151 Qualifications of directors

  • (1) A natural person who is not disqualified by subsection (2) may be appointed as a director of a company.

    (2) The following persons are disqualified from being appointed or holding office as a director of a company:

    • (a) a person who is under 18 years of age:

    • (b) a person who is an undischarged bankrupt:

    • (ba) [Repealed]

    • (c) [Repealed]

    • (d) [Repealed]

    • (e) a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company under section 382 or section 383 or section 385:

    • (ea) a person who is prohibited from being a director or promoter of, or being concerned or taking part in the management of, an incorporated or unincorporated body under the Securities Act 1978 or the Securities Markets Act 1988 or the Takeovers Act 1993:

    • (eb) a person who is prohibited from 1 or more of the following under an order made, or a notice given, under a law of a prescribed country, State, or territory outside New Zealand:

      • (i) being a director of an overseas company:

      • (ii) being a promoter of an overseas company:

      • (iii) being concerned or taking part in the management of an overseas company:

    • (f) a person who is subject to a property order made under section 30 or section 31 of the Protection of Personal and Property Rights Act 1988:

    • (g) in relation to any particular company, a person who does not comply with any qualifications for directors contained in the constitution of that company.

    (3) A person that is not a natural person cannot be a director of a company.

    (4) A person who is disqualified from being a director but who acts as a director is a director for the purposes of a provision of this Act that imposes a duty or an obligation on a director of a company.

    Section 151(2)(ba): repealed, on 5 December 2013, by section 7 of the Companies Amendment Act 2013 (2013 No 111).

    Section 151(2)(c): repealed, on 5 December 2013, by section 7 of the Companies Amendment Act 2013 (2013 No 111).

    Section 151(2)(d): repealed, on 5 December 2013, by section 7 of the Companies Amendment Act 2013 (2013 No 111).

    Section 151(2)(ea): inserted, on 25 October 2006, by section 25 of the Securities Amendment Act 2006 (2006 No 46).

    Section 151(2)(eb): inserted, on 18 June 2007, by section 5(1) of the Companies Amendment Act (No 2) 2006 (2006 No 62).

152 Director's consent required

  • A person must not be appointed a director of a company unless he or she has consented in writing to be a director and certified that he or she is not disqualified from being appointed or holding office as a director of a company.

    Section 152: amended, on 1 July 1994, by section 19 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

153 Appointment of first and subsequent directors

  • (1) A person named as a director in an application for registration or in an amalgamation proposal holds office as a director from the date of registration or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office as a director in accordance with this Act.

    (2) All subsequent directors of a company must, unless the constitution of the company otherwise provides, be appointed by ordinary resolution.

154 Court may appoint directors

  • (1) If—

    • (a) there are no directors of a company, or the number of directors is less than the quorum required for a meeting of the board; and

    • (b) it is not possible or practicable to appoint directors in accordance with the company's constitution,—

    a shareholder or creditor of the company may apply to the court to appoint 1 or more persons as directors of the company, and the court may make an appointment if it considers that it is in the interests of the company to do so.

    (2) An appointment may be made on such terms and conditions as the court thinks fit.

155 Appointment of directors to be voted on individually

  • (1) Subject to the constitution of the company, the shareholders of a company may vote on a resolution to appoint a director of the company only if—

    • (a) the resolution is for the appointment of 1 director; or

    • (b) the resolution is a single resolution for the appointment of 2 or more persons as directors of the company and a separate resolution that it be so voted on has first been passed without a vote being cast against it.

    (2) A resolution moved in contravention of subsection (1) is void even though the moving of it was not objected to at the time.

    (3) Subsection (2) does not limit the operation of section 158.

    (4) No provision for the automatic reappointment of retiring directors in default of another appointment applies on the passing of a resolution in contravention of subsection (1).

    (5) Nothing in this section prevents the election of 2 or more directors by ballot or poll.

156 Removal of directors

  • (1) Subject to the constitution of a company, a director of the company may be removed from office by ordinary resolution passed at a meeting called for the purpose or for purposes that include the removal of the director.

    (2) The notice of meeting must state that the purpose or a purpose of the meeting is the removal of the director.

157 Director ceasing to hold office

  • (1) The office of director of a company is vacated if the person holding that office—

    • (a) resigns in accordance with subsection (2); or

    • (b) is removed from office in accordance with this Act or the constitution of the company; or

    • (c) becomes disqualified from being a director pursuant to section 151; or

    • (d) dies; or

    • (e) otherwise vacates office in accordance with the constitution of the company.

    (2) A director of a company may resign office by signing a written notice of resignation and delivering it to the address for service of the company. The notice is effective when it is received at that address or at a later time specified in the notice.

    (3) Notwithstanding the vacation of office, a person who held office as a director remains liable under the provisions of this Act that impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director.

158 Validity of director's acts

  • The acts of a person as a director are valid even though—

    • (a) the person's appointment was defective; or

    • (b) the person is not qualified for appointment.

159 Notice of change of directors

  • (1) The board of a company must ensure that notice in the prescribed form of—

    • (a) a change in the directors of a company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both; or

    • (b) a change in the name or the residential address of a director of a company—

    is delivered to the Registrar for registration.

    (2) A notice under subsection (1) must—

    • (a) specify the date of the change; and

    • (b) include the full name and residential address of every person who is a director of the company from the date of the notice; and

    • (c) in the case of the appointment of a new director, have attached the form of consent and certificate required pursuant to section 152; and

    • (d) be delivered to the Registrar within 20 working days of—

      • (i) the change occurring, in the case of the appointment or resignation of a director; or

      • (ii) the company first becoming aware of the change, in the case of the death of a director or a change in the name or residential address of a director.

    (3) If the board of a company fails to comply with this section, every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

Miscellaneous provisions relating to directors

160 Proceedings of board

  • Subject to the constitution of a company, the provisions set out in Schedule 3 govern the proceedings of the board of a company.

161 Remuneration and other benefits

  • (1) The board of a company may, subject to any restrictions contained in the constitution of the company, authorise—

    • (a) the payment of remuneration or the provision of other benefits by the company to a director for services as a director or in any other capacity:

    • (b) the payment by the company to a director or former director of compensation for loss of office:

    • (c) the making of loans by the company to a director:

    • (d) the giving of guarantees by the company for debts incurred by a director:

    • (e) the entering into of a contract to do any of the things set out in paragraphs (a), (b), (c), and (d),—

    if the board is satisfied that to do so is fair to the company.

    (2) The board must ensure that forthwith after authorising the making of the payment or the provision of the benefit or the making of the loan or the giving of the guarantee or the entering into of the contract, as the case may be, particulars of the payment or benefit or loan or guarantee or contract are entered in the interests register.

    (3) The payment of remuneration or the giving of any other benefit to a director in accordance with a contract authorised under subsection (1) need not be separately authorised under that subsection.

    (4) Directors who vote in favour of authorising a payment, benefit, loan, guarantee, or contract under subsection (1) must sign a certificate stating that, in their opinion, the making of the payment or the provision of the benefit, or the making of the loan, or the giving of the guarantee, or the entering into of the contract is fair to the company, and the grounds for that opinion.

    (5) Where a payment is made or other benefit provided or a guarantee is given to which subsection (1) applies and either—

    • (a) the provisions of subsections (1) and (4) have not been complied with; or

    • (b) reasonable grounds did not exist for the opinion set out in the certificate given under subsection (4),—

    the director or former director to whom the payment is made or the benefit is provided, or in respect of whom the guarantee is given, as the case may be, is personally liable to the company for the amount of the payment, or the monetary value of the benefit, or any amount paid by the company under the guarantee, except to the extent to which he or she proves that the payment or benefit or guarantee was fair to the company at the time it was made, provided, or given.

    (6) Where a loan is made to which subsection (1) applies and either—

    • (a) the provisions of subsections (1) and (4) have not been complied with; or

    • (b) reasonable grounds did not exist for the opinion set out in the certificate given under subsection (4),—

    the loan becomes immediately repayable to the company by the director, notwithstanding the terms of any agreement relating to the giving of the loan, except to the extent to which he or she proves that the loan was fair to the company at the time it was given.

162 Indemnity and insurance

  • (1) Except as provided in this section, a company must not indemnify, or directly or indirectly effect insurance for, a director or employee of the company or a related company in respect of—

    • (a) liability for any act or omission in his or her capacity as a director or employee; or

    • (b) costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability.

    (2) An indemnity given in breach of this section is void.

    (3) A company may, if expressly authorised by its constitution, indemnify a director or employee of the company or a related company for any costs incurred by him or her in any proceeding—

    • (a) that relates to liability for any act or omission in his or her capacity as a director or employee; and

    • (b) in which judgment is given in his or her favour, or in which he or she is acquitted, or which is discontinued.

    (4) A company may, if expressly authorised by its constitution, indemnify a director or employee of the company or a related company in respect of—

    • (a) liability to any person other than the company or a related company for any act or omission in his or her capacity as a director or employee; or

    • (b) costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability,—

    not being criminal liability or liability in respect of a breach, in the case of a director, of the duty specified in section 131 or, in the case of an employee, of any fiduciary duty owed to the company or related company.

    (5) A company may, if expressly authorised by its constitution and with the prior approval of the board, effect insurance for a director or employee of the company or a related company in respect of—

    • (a) liability, not being criminal liability, for any act or omission in his or her capacity as a director or employee; or

    • (b) costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability; or

    • (c) costs incurred by that director or employee in defending any criminal proceedings—

      • (i) that have been brought against the director or employee in relation to any act or omission in his or her capacity as a director or employee; and

      • (ii) in which he or she is acquitted.

    (6) The directors who vote in favour of authorising the effecting of insurance under subsection (5) must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the company.

    (7) The board of a company must ensure that particulars of any indemnity given to, or insurance effected for, any director or employee of the company or a related company are forthwith entered in the interests register.

    (8) Where insurance is effected for a director or employee of a company or a related company and—

    • (a) the provisions of either subsection (5) or subsection (6) have not been complied with; or

    • (b) reasonable grounds did not exist for the opinion set out in the certificate given under subsection (6),—

    the director or employee is personally liable to the company for the cost of effecting the insurance except to the extent that he or she proves that it was fair to the company at the time the insurance was effected.

    (9) In this section,—

    director includes a former director

    effect insurance includes pay, whether directly or indirectly, the costs of the insurance

    employee includes a former employee

    indemnify includes relieve or excuse from liability, whether before or after the liability arises; and indemnity has a corresponding meaning.

    Section 162(5)(c): replaced, on 3 June 1998, by section 5 of the Companies Amendment Act 1998 (1998 No 31).

New Zealand Companies Act 1993 New Zealand Companies Act 1993 New Zealand Companies Act 1993
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