New Zealand Companies Act 1993 - Company Constitution

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

Part 5 Company constitution

26 No requirement for company to have constitution

  • A company may but does not have to have a constitution.

27 Effect of Act on company having constitution

  • If a company has a constitution, the company, the board, each director, and each shareholder of the company have the rights, powers, duties, and obligations set out in this Act except to the extent that they are negated or modified, in accordance with this Act, by the constitution of the company.

28 Effect of Act on company not having constitution

  • If a company does not have a constitution, the company, the board, each director, and each shareholder of the company have the rights, powers, duties, and obligations set out in this Act.

29 Form of constitution

  • The constitution of a company, if it has one, is,—

    • (a) in the case of a company registered under Part 2, a document certified by the applicant for registration of the company as the company's constitution; or

    • (b) in the case of an existing company that is reregistered pursuant to the Companies Reregistration Act 1993, a document certified by the applicant for reregistration as the company's constitution; or

    • (c) a document that is adopted by the company as its constitution under section 32; or

    • (d) a document described in section 33; or

    • (e) a document described in paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) as altered by the company under section 32 or varied by the court under section 34.

    Section 29(c): amended, on 1 July 1994, by section 3 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

30 Contents of constitution

  • Subject to section 16(2), the constitution of a company may contain—

    • (a) matters contemplated by this Act for inclusion in the constitution of a company:

    • (b) such other matters as the company wishes to include in its constitution.

31 Effect of constitution

  • (1) The constitution of a company has no effect to the extent that it contravenes, or is inconsistent with, this Act.

    (2) Subject to this Act, the constitution of a company is binding as between—

    • (a) the company and each shareholder; and

    • (b) each shareholder—

    in accordance with its terms.

32 Adoption, alteration, and revocation of constitution

  • (1) The shareholders of a company that does not have a constitution may, by special resolution, adopt a constitution for the company.

    (2) Without limiting section 117 (which relates to an alteration of shareholders' rights) and section 174 (which relates to the right of a shareholder to apply to the court for relief in cases of prejudice), but subject to section 57 (which relates to the reduction of shareholders' liability), the shareholders of a company may, by special resolution, alter or revoke the constitution of the company.

    (3) Within 10 working days of the adoption of a constitution by a company, or the alteration or revocation of the constitution of a company, as the case may be, the board must ensure that a notice in the prescribed form of the adoption of the constitution or of the alteration or revocation of the constitution is delivered to the Registrar for registration.

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

33 New form of constitution

  • (1) A company may, from time to time, deliver to the Registrar a single document that incorporates the provisions of a document referred to in paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) or paragraph (e) of section 29, together with all amendments to it.

    (2) The Registrar may, if the Registrar considers that by reason of the number of amendments to a company's constitution it would be desirable for the constitution to be contained in a single document, by notice in writing, require a company to deliver to the Registrar a single document that incorporates the provisions of a document referred to in paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) of section 29, together with all amendments to it.

    (3) Within 20 working days of receipt by a company of a notice under subsection (2), the board must ensure that the document required by that subsection is received by the Registrar for registration.

    (4) The board must ensure that a document delivered to the Registrar under this section is accompanied by a certificate signed by a person authorised by the board that the document complies with subsection (1) or subsection (2), as the case may be.

    (5) As soon as the Registrar receives a document certified in accordance with subsection (4), the Registrar must register the document.

    (6) If the board of a company fails to comply with subsection (3) or subsection (4), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

34 Court may alter constitution

  • (1) The court may, on the application of a director or shareholder of a company, if it is satisfied that it is not practicable to alter the constitution of the company using the procedure set out in this Act or in the constitution itself, make an order altering the constitution of a company on such terms and conditions that it thinks fit.

    (2) The applicant for the order must ensure that a copy of an order made under subsection (1), together with a copy of the constitution as altered, is delivered to the Registrar for registration within 10 working days.

    (3) A person who fails to comply with subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(2).

Part 6 Shares and debentures

  • Part 6 heading: amended, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).

35 Legal nature of shares

  • A share in a company is personal property.

36 Rights and powers attaching to shares

  • (1) Subject to subsection (2), a share in a company confers on the holder—

    • (a) the right to 1 vote on a poll at a meeting of the company on any resolution, including any resolution to—

      • (i) appoint or remove a director or auditor:

      • (ii) adopt a constitution:

      • (iii) alter the company's constitution, if it has one:

      • (iv) approve a major transaction:

      • (v) approve an amalgamation of the company under section 221:

      • (vi) put the company into liquidation:

    • (b) the right to an equal share in dividends authorised by the board:

    • (c) the right to an equal share in the distribution of the surplus assets of the company.

    (2) Subject to section 53, the rights specified in subsection (1) may be negated, altered, or added to by the constitution of the company or in accordance with the terms on which the share is issued under section 41(b) or section 42 or section 44 or section 107(2), as the case may be.

    Section 36(2): amended, on 3 May 2001, by section 3 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

    Section 36(2): amended, on 30 June 1997, by section 2 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

    Section 36(2): amended, on 1 July 1994, by section 4 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

37 Types of shares

  • (1) Subject to the constitution of the company, different classes of shares may be issued in a company.

    (2) Without limiting subsection (1), shares in a company may—

    • (a) be redeemable within the meaning of section 68; or

    • (b) confer preferential rights to distributions of capital or income; or

    • (c) confer special, limited, or conditional voting rights; or

    • (d) not confer voting rights.

    Section 37(2)(a): replaced, on 1 July 1994, by section 5 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

38 No nominal value

  • (1) A share must not have a nominal or par value.

    (2) Nothing in subsection (1) prevents the issue by a company of a redeemable share.

39 Transferability of shares

  • (1) Subject to any limitation or restriction on the transfer of shares in the constitution, a share in a company is transferable.

    (2) A share is transferred by entry in the share register in accordance with section 84.

    (3) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

40 Contracts for issue of shares

  • A contract or deed under which a company is or may be required to issue shares, whether on the exercise of an option or on the conversion of securities or otherwise, is an illegal contract for the purposes of the Illegal Contracts Act 1970 unless—

    • (a) the board is entitled to issue the shares; and

    • (b) either—

      • (i) the board has complied with section 47 or section 49; or

      • (ii) all entitled persons agree or concur with the issue of the shares under section 107(2); or

      • (iii) the contract or deed expressly provides that the contract or deed is subject to—

        • (A) the board complying with section 47 or section 49; or

        • (B) all entitled persons agreeing to or concurring with the issue of the shares under section 107(2).

    Section 40: replaced, on 3 May 2001, by section 4 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

Issue of shares

41 Issue of shares on registration and amalgamation

  • A company must,—

    • (a) forthwith after the registration of the company, issue to any person or persons named in the application for registration as a shareholder or shareholders, the number of shares specified in the application as being the number of shares to be issued to that person or those persons:

    • (b) in the case of an amalgamated company, forthwith after the amalgamation is effective, issue to any person entitled to a share or shares under the amalgamation proposal, the share or shares to which that person is entitled.

    Section 41(b): amended, on 1 July 1994, by section 6 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

42 Issue of other shares

  • Subject to this Act and the constitution of the company, the board of a company may issue shares at any time, to any person, and in any number it thinks fit.

43 Notice of share issue

  • (1) The board of a company must deliver to the Registrar for registration, within 10 working days of the issue of shares under section 41(b) or section 42 or section 107(2), a notice in the prescribed form of the issue of the shares by the company.

    (2) If the board of a company fails to comply with subsection (1), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

    Section 43(1): amended, on 30 June 1997, by section 3 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

44 Shareholder approval for issue of shares

  • (1) Notwithstanding section 42, if shares cannot be issued by reason of any limitation or restriction in the company's constitution, the board may issue shares if the board obtains the approval for the issue in the same manner as approval is required for an alteration to the constitution that would permit such an issue.

    (2) Subject to the terms of the approval, the shares may be issued at any time, to any person, and in any number the board thinks fit.

    (3) Within 10 working days of approval being given under subsection (1), the board must ensure that notice of that approval in the prescribed form is delivered to the Registrar for registration.

    (4) Nothing in this section affects the need to obtain the approval of an interest group in accordance with section 117 (which relates to the alteration of shareholders' rights) if the issue of shares affects the rights of that interest group.

    (5) A failure to comply with this section does not affect the validity of an issue of shares.

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

45 Pre-emptive rights

  • (1) Shares issued or proposed to be issued by a company that rank or would rank as to voting or distribution rights, or both, equally with or prior to shares already issued by the company must be offered for acquisition to the holders of the shares already issued in a manner and on terms that would, if accepted, maintain the existing voting or distribution rights, or both, of those holders.

    (2) An offer under subsection (1) must remain open for acceptance for a reasonable time.

    (3) The constitution of a company may negate, limit, or modify the requirements of this section.

46 Consideration for issue of shares

  • The consideration for which a share is issued may take any form and may be cash, promissory notes, contracts for future services, real or personal property, or other securities of the company.

46A Consideration for issue of shares on registration

  • A shareholder is not liable to pay or provide any consideration in respect of an issue of shares under section 41(a) unless—

    • (a) the constitution of the company specifies the consideration to be paid or provided for those shares; or

    • (b) the shareholder is liable to pay or provide consideration for those shares pursuant to either a pre-incorporation contract (within the meaning of section 182) or a contract entered into after the registration of the company.

    Section 46A: inserted, on 30 June 1997, by section 4 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

47 Consideration to be decided by board

  • (1) Before the board of a company issues shares under section 42 or section 44, the board must—

    • (a) decide the consideration for which the shares will be issued and the terms on which they will be issued; and

    • (b) if the shares are to be issued other than for cash, determine the reasonable present cash value of the consideration for the issue; and

    • (c) resolve that, in its opinion, the consideration for and terms of the issue are fair and reasonable to the company and to all existing shareholders; and

    • (d) if the shares are to be issued other than for cash, resolve that, in its opinion, the present cash value of the consideration to be provided for the issue of the shares is not less than the amount to be credited for the issue of the shares.

    (2) The directors who vote in favour of a resolution required by subsection (1) must sign a certificate—

    • (a) stating the consideration for, and the terms of, the issue; and

    • (b) describing the consideration in sufficient detail to identify it; and

    • (c) where a present cash value has been determined in accordance with subsection (1)(b), stating that value and the basis for assessing it; and

    • (d) stating that, in their opinion, the consideration for and terms of issue are fair and reasonable to the company and to all existing shareholders; and

    • (e) if the shares are to be issued other than for cash stating that, in their opinion, the present cash value of the consideration to be provided for the issue of the shares is not less than the amount to be credited for the issue of the shares.

    (3) Before shares that have already been issued are credited as fully or partly paid up other than for cash, the board must—

    • (a) determine the reasonable present cash value of the consideration; and

    • (b) resolve that, in its opinion, the present cash value of the consideration is—

      • (i) fair and reasonable to the company and to all existing shareholders; and

      • (ii) not less than the amount to be credited in respect of the shares.

    (4) The directors who vote in favour of a resolution under subsection (3) must sign a certificate—

    • (a) describing the consideration in sufficient detail to identify it; and

    • (b) stating—

      • (i) the present cash value of the consideration and the basis for assessing it; and

      • (ii) that the present cash value of the consideration is fair and reasonable to the company and to all existing shareholders; and

      • (iii) that the present cash value of the consideration is not less than the amount to be credited in respect of the shares.

    (5) The board must deliver a copy of a certificate that complies with subsection (2) or subsection (4) to the Registrar for registration within 10 working days after it is given.

    (6) For the purposes of this section, shares that are or are to be credited as paid up, whether wholly or partly, as part of an arrangement that involves the transfer of property or the provision of services and an exchange of cash or cheques or other negotiable instruments, whether simultaneously or not, must be treated as paid up other than in cash to the value of the property or services.

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

    (8) Nothing in this section applies to the issue of shares in a company on—

    • (a) the conversion of any convertible securities; or

    • (b) the exercise of any option to acquire shares in the company.

    (9) If the board of a company fails to comply with subsection (5), every director of the company commits an offence and is liable, on conviction, to the penalty set out in section 374(2).

48 Exceptions to section 47

  • Section 47 does not apply to—

    • (a) the issue of shares that are fully paid up from the reserves of the company to all shareholders of the same class in proportion to the number of shares held by each shareholder:

    • (b) the consolidation and division of the shares or any class of shares in the company in proportion to those shares or the shares in that class:

    • (c) the subdivision of the shares or any class of shares in the company in proportion to those shares or the shares in that class.

49 Consideration in relation to issue of options and convertible securities

  • (1) Before the board of a company issues any securities that are convertible into shares in the company or any options to acquire shares in the company, the board must—

    • (a) decide the consideration for which the convertible securities or options, and, in either case, the shares will be issued and the terms on which they will be issued; and

    • (b) if the shares are to be issued other than for cash, determine the reasonable present cash value of the consideration for the issue; and

    • (c) resolve that, in its opinion, the consideration for and terms of the issue of the convertible securities or options, and, in either case, the shares are fair and reasonable to the company and to all existing shareholders; and

    • (d) if the shares are to be issued other than for cash, resolve that, in its opinion, the present cash value of the consideration to be provided is not less than the amount to be credited for the issue of the shares.

    (2) The directors who vote in favour of a resolution required by subsection (1) must sign a certificate—

    • (a) stating the consideration for, and the terms of, the issue of the convertible securities or options, and, in either case, the shares; and

    • (b) describing the consideration in sufficient detail to identify it; and

    • (c) where a present cash value has been determined in accordance with subsection (1)(b), stating that value and the basis for assessing it; and

    • (d) stating that, in their opinion, the consideration for and terms of issue of the convertible securities or options, and, in either case, the shares are fair and reasonable to the company and to all existing shareholders; and

    • (e) if the shares are to be issued other than for cash, stating that, in their opinion, the present cash value of the consideration to be provided is not less than the amount to be credited for the issue of the shares.

    (3) The board must deliver a copy of a certificate that complies with subsection (2) to the Registrar for registration within 10 working days after it is given.

    (4) For the purposes of this section, shares that are to be credited as paid up, whether wholly or partly, as part of an arrangement that involves the transfer of property or the provision of services and an exchange of cash or cheques or other negotiable instruments, whether simultaneously or not, must be treated as paid up other than in cash to the value of the property or services.

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

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

50 Consent to issue of shares

  • The issue by a company of a share that—

    • (a) increases a liability of a person to the company; or

    • (b) imposes a new liability on a person to the company—

    is void if that person or an agent of that person authorised in writing does not consent in writing to becoming the holder of the share before it is issued.

51 Time of issue of shares

  • A share is issued when the name of the holder is entered on the share register.

Distributions to shareholders

52 Board may authorise distributions

  • (1) The board of a company that is satisfied on reasonable grounds that the company will, immediately after the distribution, satisfy the solvency test may, subject to section 53 and the constitution of the company, authorise a distribution by the company at a time, and of an amount, and to any shareholders it thinks fit.

    (2) The directors who vote in favour of a distribution must sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test and the grounds for that opinion.

    (3) If, after a distribution is authorised and before it is made, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the distribution is made, satisfy the solvency test, any distribution made by the company is deemed not to have been authorised.

    (4) In applying the solvency test for the purposes of this section and section 56,—

    • (a)debts includes fixed preferential returns on shares ranking ahead of those in respect of which a distribution is made (except where that fixed preferential return is expressed in the constitution as being subject to the power of the directors to make distributions), but does not include debts arising by reason of the authorisation; and

    • (b)liabilities includes the amount that would be required, if the company were to be removed from the New Zealand register after the distribution, to repay all fixed preferential amounts payable by the company to shareholders, at that time, or on earlier redemption (except where such fixed preferential amounts are expressed in the constitution as being subject to the power of directors to make distributions); but, subject to paragraph (a), does not include dividends payable in the future.

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

53 Dividends

  • (1) A dividend is a distribution other than a distribution to which section 59 or section 76 applies.

    (2) The board of a company must not authorise a dividend—

    • (a) in respect of some but not all the shares in a class; or

    • (b) that is of a greater value per share in respect of some shares of a class than it is in respect of other shares of that class—

    unless the amount of the dividend in respect of a share of that class is in proportion to the amount paid to the company in satisfaction of the liability of the shareholder under the constitution of the company or under the terms of issue of the share or is required, for a portfolio tax rate entity, as a result of section HL 7 of the Income Tax Act 2004.

    (3) Notwithstanding subsection (2), a shareholder may waive his or her entitlement to receive a dividend by notice in writing to the company signed by or on behalf of the shareholder.

    Section 53(2): amended, on 1 October 2007, by section 70 of the Taxation (KiwiSaver and Company Tax Rate Amendments) Act 2007 (2007 No 19).

    Section 53(2): amended, on 1 October 2007, by section 219 of the Taxation (Savings Investment and Miscellaneous Provisions) Act 2006 (2006 No 81).

54 Shares in lieu of dividends

  • Subject to the constitution of the company, the board of a company may issue shares to any shareholders who have agreed to accept the issue of shares, wholly or partly, in lieu of a proposed dividend or proposed future dividends if—

    • (a) the right to receive shares, wholly or partly, in lieu of the proposed dividend or proposed future dividends has been offered to all shareholders of the same class on the same terms; and

    • (b) if all shareholders elected to receive the shares in lieu of the proposed dividend, relative voting or distribution rights, or both, would be maintained; and

    • (c) the shareholders to whom the right is offered are afforded a reasonable opportunity of accepting it; and

    • (d) the shares issued to each shareholder are issued on the same terms and subject to the same rights as the shares issued to all shareholders in that class who agree to receive the shares; and

    • (e) the provisions of section 47 are complied with by the board.

55 Shareholder discounts

  • (1) The board of a company may resolve that the company offer shareholders discounts in respect of some or all of the goods sold or services provided by the company.

    (2) The board may approve a discount scheme under subsection (1) only if it has previously resolved that the proposed discounts are—

    • (a) fair and reasonable to the company and to all shareholders; and

    • (b) to be available to all shareholders or all shareholders of the same class on the same terms.

    (3) A discount scheme may not be approved or continued by the board unless it is satisfied on reasonable grounds that the company satisfies the solvency test.

    (4) Subject to subsection (5), a discount accepted by a shareholder under a discount scheme approved under this section is not a distribution for the purposes of this Act.

    (5) Where—

    • (a) a discount is accepted by a shareholder under a scheme approved or continued by the board; and

    • (b) at the time the scheme was approved or the discount was offered, the board ceased to be satisfied on reasonable grounds that the company would satisfy the solvency test,—

    the provisions of section 56 shall apply in relation to the discount with such modifications as may be necessary as if the discount were a distribution that is deemed not to have been authorised.

56 Recovery of distributions

  • (1) A distribution made to a shareholder at a time when the company did not, immediately after the distribution, satisfy the solvency test may be recovered by the company from the shareholder unless—

    • (a) the shareholder received the distribution in good faith and without knowledge of the company's failure to satisfy the solvency test; and

    • (b) the shareholder has altered the shareholder's position in reliance on the validity of the distribution; and

    • (c) it would be unfair to require repayment in full or at all.

    (2) If, in relation to a distribution made to shareholders,—

    • (a) the procedure set out in section 52 or section 70 or section 77, as the case may be, has not been followed; or

    • (b) reasonable grounds for believing that the company would satisfy the solvency test in accordance with section 52 or section 70 or section 77, as the case may be, did not exist at the time the certificate was signed,—

    a director who—

    • (c) failed to take reasonable steps to ensure the procedure was followed; or

    • (d) signed the certificate, as the case may be,—

    is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

    (3) If, by virtue of section 52(3) or section 70(3) or section 77(3), as the case may be, a distribution is deemed not to have been authorised, a director who—

    • (a) ceased after authorisation but before the making of the distribution to be satisfied on reasonable grounds for believing that the company would satisfy the solvency test immediately after the distribution is made; and

    • (b) failed to take reasonable steps to prevent the distribution being made,—

    is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

    (4) If, by virtue of section 55(5), a distribution is deemed not to have been authorised, a director who failed to take reasonable steps to prevent the distribution being made is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

    (5) If, in an action brought against a director or shareholder under this section, the court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the solvency test, the court may—

    • (a) permit the shareholder to retain; or

    • (b) relieve the director from liability in respect of—

    an amount equal to the value of any distribution that could properly have been made.

57 Reduction of shareholder liability a distribution

  • (1) If a company proposes to alter its constitution, or to acquire shares issued by it, or redeem shares under section 69, as the case may be, in a manner which would cancel or reduce the liability of a shareholder to the company in relation to a share held prior to that alteration, acquisition, or redemption, the proposed cancellation or reduction of liability is to be treated,—

    • (a) for the purposes of section 52, as if it were a distribution; and

    • (b) for the purposes of subsections (2) and (3) of section 53, as if it were a dividend.

    (2) If a company has altered its constitution, or acquired shares, or redeemed shares under section 69, as the case may be, in a manner which cancels or reduces the liability of a shareholder to the company in relation to a share held prior to that alteration, acquisition, or redemption, that cancellation or reduction of liability is to be treated for the purposes of section 56 as a distribution of the amount by which that liability was reduced.

    (3) If the liability of a shareholder of an amalgamating company to that company in relation to a share held before the amalgamation is—

    • (a) greater than the liability of that shareholder to the amalgamated company in relation to a share or shares into which that share is converted; or

    • (b) cancelled by the cancellation of that share in the amalgamation,—

    the reduction of liability effected by the amalgamation is to be treated for the purposes of section 56(1) and (5) as a distribution by the amalgamated company to that shareholder, whether or not that shareholder becomes a shareholder of the amalgamated company of the amount by which that liability was reduced.

Company may acquire its own shares

58 Company may acquire its own shares

  • (1) A company may, in accordance with sections 59 to 66, section 107, and sections 110 to 112C, but not otherwise, acquire its own shares.

    (2) Shares acquired by a company otherwise than in accordance with sections 59 to 66 and 110 to 112C are deemed to be cancelled immediately on acquisition.

    (3) Within 10 working days of the purchase or acquisition of the shares, the board of the company must ensure that notice in the prescribed form of the purchase or acquisition is delivered to the Registrar for registration.

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

    Section 58(1): amended, on 17 September 2008, by section 4 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    Section 58(2): amended, on 17 September 2008, by section 4 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    Section 58(2): amended, on 1 July 1994, by section 7 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

59 Acquisition of company's own shares

  • (1) Subject to section 52, a company may purchase or otherwise acquire shares issued by it if it is expressly permitted to do so by its constitution.

    (2) The purchase or acquisition of the shares must be made in accordance with section 60 or section 63 or section 65.

    (3) Nothing in this section or in sections 60 to 67 limits or affects—

    • (a) an order of the court that requires a company to purchase or acquire its own shares; or

    • (b) sections 110 and 118 (which relate to the right of a shareholder to require a company to purchase shares).

    Section 59(3)(b): replaced, on 1 July 1994, by section 8 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

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60 Board may make offer to acquire shares

  • (1) The board of a company may make an offer to acquire shares issued by the company if the offer is—

    • (a) an offer to all shareholders to acquire a proportion of their shares, that—

      • (i) would, if accepted, leave unaffected relative voting and distribution rights; and

      • (ii) affords a reasonable opportunity to accept the offer; or

    • (b) an offer to 1 or more shareholders to acquire shares—

      • (i) to which all shareholders have consented in writing; or

      • (ii) that is expressly permitted by the constitution, and is made in accordance with the procedure set out in section 61.

    (2) Where an offer is made in accordance with subsection (1)(a),—

    • (a) the offer may also permit the company to acquire additional shares from a shareholder to the extent that another shareholder does not accept the offer or accepts the offer only in part; and

    • (b) if the number of additional shares exceeds the number of shares that the company is entitled to acquire, the number of additional shares shall be reduced rateably.

    (3) The board may make an offer under subsection (1) only if it has previously resolved—

    • (a) that the acquisition in question is in the best interests of the company; and

    • (b) that the terms of the offer and the consideration offered for the shares are fair and reasonable to the company; and

    • (c) that it is not aware of any information that will not be disclosed to shareholders—

      • (i) which is material to an assessment of the value of the shares; and

      • (ii) as a result of which the terms of the offer and consideration offered for the shares are unfair to shareholders accepting the offer.

    (4) The resolution must set out in full the reasons for the director's conclusions.

    (5) The directors who vote in favour of a resolution required by subsection (3) must sign a certificate as to the matters set out in that subsection, and may combine it with the certificate required by section 52 and any certificate required under section 61.

    (6) The board of a company must not make an offer under subsection (1) if, after the passing of a resolution under subsection (3) and before the making of the offer to acquire the shares,—

    • (a) the board ceases to be satisfied that the acquisition in question is in the best interests of the company; or

    • (b) the board ceases to be satisfied that the terms of the offer and the consideration offered for the shares are fair and reasonable to the company; or

    • (c) the board becomes aware of any information that will not be disclosed to shareholders—

      • (i) which is material to an assessment of the value of the shares; or

      • (ii) as a result of which the terms of the offer and consideration offered for the shares would be unfair to shareholders accepting the offer.

    (7) Every director who fails to comply with subsection (5) commits an offence and is liable on conviction to the penalty set out in section 373(1).

61 Special offers to acquire shares

  • (1) The board may make an offer under section 60(1)(b)(ii) only if it has previously resolved—

    • (a) that the acquisition is of benefit to the remaining shareholders; and

    • (b) that the terms of the offer and the consideration offered for the shares are fair and reasonable to the remaining shareholders.

    (2) The resolution must set out in full the reasons for the directors' conclusions.

    (3) The directors who vote in favour of a resolution required by subsection (1) must sign a certificate as to the matters set out in that subsection.

    (4) A board must not make an offer under section 60(1)(b)(ii) if, after the passing of a resolution under subsection (1) of this section and before the making of the offer to acquire the shares, the board ceases to be satisfied that—

    • (a) the acquisition is of benefit to the remaining shareholders; or

    • (b) the terms of the offer and the consideration offered for the shares are fair and reasonable to the remaining shareholders.

    (5) Before an offer is made pursuant to a resolution under subsection (1), the company must send to each shareholder a disclosure document that complies with section 62.

    (6) The offer must be made not less than 10 working days and not more than 12 months after the disclosure document has been sent to each shareholder.

    (7) Nothing in subsections (5) and (6) applies to an offer to a shareholder by a company if—

    • (a) the company is a party to a listing agreement with a registered exchange (within the meaning of section 2(1) of the Securities Markets Act 1988); and

    • (b) the offer is to acquire fewer of the shares quoted on the registered exchange's securities market than is the minimum holding of shares in the company determined by that exchange.

    (8) A shareholder or the company may apply to the court for an order restraining the proposed acquisition on the grounds that—

    • (a) it is not in the best interests of the company and of benefit to remaining shareholders; or

    • (b) the terms of the offer and the consideration offered for the shares are not fair and reasonable to the company and remaining shareholders.

    (9) Every director who fails to comply with subsection (3) commits an offence and is liable on conviction to the penalty set out in section 373(1).

    (10) If a company fails to comply with subsection (5),—

    • (a) the company commits an offence and is liable on conviction to the penalty set out in section 373(1); and

    • (b) every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1).

    Section 61(7): replaced, on 1 December 2002, by section 30 of the Securities Markets Amendment Act 2002 (2002 No 44).

    Section 61(7)(b): amended, on 24 November 2009, by section 23(1) of the Securities Markets Amendment Act 2009 (2009 No 54).

62 Disclosure document

  • For the purposes of section 61, a disclosure document is a document that sets out—

    • (a) the nature and terms of the offer, and if made to specified shareholders, to whom it will be made; and

    • (b) the nature and extent of any relevant interest of any director of the company in any shares the subject of the offer; and

    • (c) the text of the resolution required by section 61, together with such further information and explanation as may be necessary to enable a reasonable shareholder to understand the nature and implications for the company and its shareholders of the proposed acquisition.

63 Stock exchange acquisitions subject to prior notice to shareholders

  • (1) The board of a company may make offers on 1 or more stock exchanges to all shareholders to acquire shares only if it has previously resolved—

    • (a) to acquire, by means of offers on 1 or more stock exchanges to all shareholders, not more than a specified number of shares; and

    • (b) that the acquisition is in the best interests of the company and its shareholders; and

    • (c) that the terms of the offer and the consideration offered for the shares are fair and reasonable to the company and its shareholders; and

    • (d) that it is not aware of any information that will not be disclosed to shareholders—

      • (i) which is material to an assessment of the value of the shares; and

      • (ii) as a result of which the terms of the offer and consideration offered for the shares are unfair to shareholders accepting the offer.

    (2) The resolution must set out in full the reasons for the directors' conclusions.

    (3) The directors who vote in favour of a resolution required by subsection (1) must sign a certificate as to the matters set out in that subsection and may combine it with the certificate required by section 52.

    (3A) Offers may be made under subsection (1) by any director or employee of the company who is authorised to do so by the resolution of the board under that subsection.

    (4) An offer must not be made under subsection (1) if the number of shares to be acquired together with any shares already acquired would exceed the maximum number of shares the board has resolved to acquire under that subsection.

    (5) An offer must not be made under subsection (1) if, after the passing of a resolution under that subsection and before the making of the offer to acquire the shares,—

    • (a) the board ceases to be satisfied that the acquisition is in the best interests of the company and its shareholders; or

    • (b) the board ceases to be satisfied that the terms of the offer and the consideration offered for the shares are fair and reasonable to the company and its shareholders; or

    • (c) the board becomes aware of any information that will not be disclosed to shareholders—

      • (i) which is material to an assessment of the value of the shares; or

      • (ii) as a result of which the terms of the offer and consideration offered for the shares would be unfair to shareholders accepting the offer.

    (6) Before an offer is made pursuant to a resolution under subsection (1), the company must send to each shareholder a disclosure document that complies with section 64.

    (7) The offer must be made not less than 10 working days and not more than 12 months after the disclosure document has been sent to each shareholder.

    (8) A shareholder or the company may apply to the court for an order restraining the proposed acquisition on the grounds that—

    • (a) it is not in the best interests of the company or the shareholders; or

    • (b) the terms of the offer and, if it is disclosed, the consideration offered for the shares are not fair and reasonable to the company or the shareholders.

    (9) Every director who fails to comply with subsection (3) commits an offence and is liable on conviction to the penalty set out in section 373(1).

    (10) If the board of a company fails to comply with subsection (5), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1).

    Section 63(1): amended, on 1 July 1994, by section 10(1) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 63(1)(a): amended, on 1 July 1994, by section 10(1) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 63(3A): inserted, on 1 July 1994, by section 10(2) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 63(4): amended, on 1 July 1994, by section 10(3) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    Section 63(5): amended, on 1 July 1994, by section 10(4) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

64 Disclosure document

  • (1) For the purposes of section 63, a disclosure document is a document that sets out—

    • (a) the maximum number of shares that the board has resolved to acquire under section 63(1); and

    • (b) the nature and terms of the offer; and

    • (c) the nature and extent of any relevant interest of any director of the company in any shares that may be acquired; and

    • (d) the text of the resolution required by section 63(1), together with such further information and explanation as may be necessary to enable a reasonable shareholder to understand the nature and implications for the company and its shareholders of the proposed acquisition.

    (2) Nothing in subsection (1) requires the disclosure of the consideration the board proposes to offer to acquire the shares.

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