New Zealand Companies Act 1993 - Shareholders

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

Part 7 Shareholders and their rights and obligations

96 Meaning of shareholder

  • In this Act, the term shareholder, in relation to a company, means—

    • (a) a person whose name is entered in the share register as the holder for the time being of 1 or more shares in the company:

    • (b) until the person's name is entered in the share register, a person named as a shareholder in an application for the registration of a company at the time of registration of the company:

    • (c) until the person's name is entered in the share register, a person who is entitled to have that person's name entered in the share register under a registered amalgamation proposal as a shareholder in an amalgamated company.

Liability of shareholders

97 Liability of shareholders

  • (1) Except where the constitution of a company provides that the liability of the shareholders of the company is unlimited, a shareholder is not liable for an obligation of the company by reason only of being a shareholder.

    (2) Except where the constitution of a company provides that the liability of the shareholders of the company is unlimited, the liability of a shareholder to the company is limited to—

    • (a) any amount unpaid on a share held by the shareholder:

    • (b) any liability expressly provided for in the constitution of the company:

    • (c) any liability under sections 131 to 137 that arises by reason of section 126(2):

    • (d) any liability to repay a distribution received by the shareholder to the extent that the distribution is recoverable under section 56:

    • (e) any liability under section 100.

    (3) Nothing in this section affects the liability of a shareholder to a company under a contract, including a contract for the issue of shares, or for any tort, or breach of a fiduciary duty, or other actionable wrong committed by the shareholder.

98 Liability of former shareholders

  • (1) A former shareholder who ceased to be a shareholder during the specified period is liable to the company in respect of any amount unpaid on the shares held by that former shareholder or any liability provided for in the constitution of the company for which that former shareholder was liable to the company if the court is satisfied that the shareholders of the company are unable to discharge any liability—

    • (a) for any amount unpaid on shares held by them; or

    • (b) expressly provided for in the constitution of the company.

    (2) A former shareholder is not liable under subsection (1) for any debt or liability of the company contracted after ceasing to be a shareholder.

    (3) Subsections (1) and (2) apply, with such modifications as may be necessary, in relation to an existing company that has become reregistered under this Act in accordance with the Companies Reregistration Act 1993 and as if the reference to a former shareholder included a reference to a person who was a member of the company before the reregistration of the company.

    (4) Where a person ceased to be a shareholder of a company before the liability of the shareholders of the company ceased to be limited and became unlimited and that person has not since become a shareholder of the company, that person is liable to the company only to the same extent as if the liability of the shareholders had remained limited.

    (5) Subsection (4) applies, with such modifications as may be necessary, in relation to an existing company that has become reregistered under this Act in accordance with the Companies Reregistration Act 1993, whether or not the liability of the shareholders ceased to be limited before, on, or after the reregistration of the company and as if the reference to a person who was a shareholder included a reference to a person who was a member of the company before reregistration.

    (6) For the purposes of subsection (1), specified period means—

    • (a) a period of 1 year before the date of commencement of the liquidation of the company together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that has been put into liquidation by the court, the period of 1 year before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 1 year before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    Section 98(6)(a): replaced, on 26 April 1999, by section 2(1) of the Companies Amendment Act 1999 (1999 No 19).

    Section 98(6)(b): amended, on 26 April 1999, by section 2(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 98(6)(b): amended, on 3 June 1998, by section 3 of the Companies Amendment Act 1998 (1998 No 31).

    Section 98(6)(c): inserted, on 3 June 1998, by section 3 of the Companies Amendment Act 1998 (1998 No 31).

    Section 98(6)(c): amended, on 26 April 1999, by section 2(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

99 Additional provisions relating to liability of shareholders and former shareholders

  • (1) If—

    • (a) a shareholder or former shareholder of a company was, at any time, liable to the company in respect of a share held by that person; and

    • (b) that liability was cancelled or reduced by—

      • (i) an alteration of the constitution, repurchase or redemption of the share, or amalgamation; or

      • (ii) reregistration under this Act in accordance with the Companies Reregistration Act 1993; or

      • (iii) a change of registration under section 30 of the Companies Act 1955; and

    • (c) the company is, at the commencement of its liquidation, subject to liabilities incurred prior to the alteration of the constitution, repurchase or redemption of the share, amalgamation, reregistration, or change of registration, as the case may be; and

    • (d) the assets of the company are not sufficient to discharge those liabilities in full,—

    that person is liable to the company for the amount specified in subsection (2).

    (2) A person is liable under subsection (1) for the lesser of—

    • (a) the amount by which the liability in respect of that share was reduced:

    • (b) the amount required to be contributed in respect of each such share in order to discharge those liabilities.

    (3) The liability of a person under subsection (1) is reduced by an amount received by that person as a distribution under section 57 and recovered from that person by the company.

    (4) The amount received by a person as a distribution under section 57 is reduced by any amount recovered from that person pursuant to subsection (1).

    (5) For the purposes of this section,—

    • (a) the term company includes an amalgamating company which amalgamated with 1 or more other amalgamating companies to continue as that company:

    • (b) a member of a company limited by guarantee registered under the Companies Act 1955 is to be treated as if the member was, prior to reregistration of that company under this Act in accordance with the Companies Reregistration Act 1993, the holder of a share which rendered the member liable to calls not exceeding the amount of contribution specified in the memorandum of association as the amount undertaken to be contributed by that member in a winding up:

    • (c) a member of an unlimited company registered under the Companies Act 1955 is to be treated as if the member was, prior to reregistration of that company under this Act in accordance with the Companies Reregistration Act 1993, the holder of a share which rendered the member liable to unlimited calls.

100 Liability for calls

  • (1) Where a share renders its holder liable to calls, or otherwise imposes a liability on its holder, that liability attaches to the holder of the share for the time being, and not to a prior holder of the share, whether or not the liability became enforceable before the share was registered in the name of the current holder.

    (2) Where—

    • (a) all or part of the consideration payable in respect of the issue of a share remains unsatisfied; and

    • (b) the person to whom the share was issued no longer holds that share,—

    liability in respect of that unsatisfied consideration does not attach to subsequent holders of the share, but remains the liability of the person to whom the share was issued, or of any other person who assumed that liability at the time of issue.

101 Shareholders not required to acquire shares by alteration to constitution

  • Notwithstanding anything in the constitution of the company, a shareholder is not bound by an alteration of the constitution of a company that—

    • (a) requires the shareholder to acquire or hold more shares in the company than the number held on the date the alteration is made; or

    • (b) increases the liability of the shareholder to the company—

    unless the shareholder agrees in writing to be bound by the alteration either before, on, or after it is made.

102 Liability of personal representative

  • (1) The liability of the personal representative of the estate of a deceased person, who is registered as the holder of a share comprised in the estate, does not, in respect of that share, exceed the proportional amount available from the assets of the estate, after satisfaction of prior claims, for distribution among creditors of the estate, being assets which, at the time when any demand is made for the satisfaction of the liability, are held by that personal representative on the same trusts as apply to that share.

    (2) For the purposes of this section, trust extends to the duties of a personal representative.

103 Liability of an assignee

  • (1) The liability of the assignee of the property of a bankrupt, who is registered as the holder of a share which is comprised in the property of the bankrupt, does not, in respect of that share, exceed the proportional amount available from the property of the estate of the bankrupt, after satisfaction of prior claims, for distribution among creditors of the estate, being property of the bankrupt which, at the time when demand is made for the satisfaction of the liability, is vested in the assignee.

    (2) In this section, assignee means the assignee in whom the property of a bankrupt is vested pursuant to the Insolvency Act 2006.

    Section 103(2): amended, on 3 December 2007, by section 445 of the Insolvency Act 2006 (2006 No 55).

Powers of shareholders

104 Exercise of powers reserved to shareholders

  • (1) Powers reserved to the shareholders of a company by this Act may be exercised only—

    • (a) at a meeting of shareholders pursuant to section 120 or section 121; or

    • (b) by a resolution in lieu of a meeting pursuant to section 122.

    (2) Powers reserved to the shareholders of a company by the constitution of the company may, subject to the constitution, be exercised—

    • (a) at a meeting of shareholders pursuant to section 120 or section 121; or

    • (b) by a resolution in lieu of a meeting pursuant to section 122.

105 Exercise of powers by ordinary resolution

  • (1) Unless otherwise specified in this Act or the constitution of a company, a power reserved to shareholders may be exercised by an ordinary resolution.

    (2) An ordinary resolution is a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the question.

106 Powers exercised by special resolution

  • (1) Notwithstanding the constitution of a company, when shareholders exercise a power to—

    • (a) adopt a constitution or, if it has one, alter or revoke the company's constitution:

    • (b) approve a major transaction:

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

    • (d) put the company into liquidation,—

    the power must be exercised by special resolution.

    (2) A special resolution pursuant to paragraph (a) or paragraph (b) or paragraph (c) of subsection (1) can be rescinded only by a special resolution.

    (3) A special resolution pursuant to paragraph (d) of subsection (1) cannot be rescinded in any circumstances.

107 Unanimous assent to certain types of action

  • (1) Notwithstanding section 52 but subject to section 108, if all entitled persons have agreed or concur,—

    • (a) a dividend may be authorised otherwise than in accordance with section 53:

    • (b) a discount scheme may be approved otherwise than in accordance with section 55:

    • (c) shares in a company may be acquired otherwise than in accordance with sections 59 to 65:

    • (d) shares in a company may be redeemed otherwise than in accordance with sections 69 to 72:

    • (e) financial assistance may be given for the purpose of, or in connection with, the purchase of shares otherwise than in accordance with sections 76 to 80:

    • (f) any of the matters referred to in section 161(1) may be authorised otherwise than in accordance with that section.

    (2) If all entitled persons have agreed or concur, shares may be issued otherwise than in accordance with section 42 or section 44 or section 45.

    (3) If all entitled persons have agreed to or concur in a company entering into a transaction in which a director is interested, nothing in sections 140 and 141 shall apply in relation to that transaction.

    (4) For the purposes of this section, no agreement or concurrence of the entitled persons is valid or enforceable unless the agreement or concurrence is in writing.

    (5) An agreement or concurrence may be—

    • (a) a separate agreement to, or concurrence in, the particular exercise of the power referred to; or

    • (b) an agreement to, or concurrence in, the exercise of the power generally or from time to time.

    (6) An entitled person may at any time, by notice in writing to the company, withdraw from any agreement or concurrence referred to in subsection (5)(b) and any such notice shall have effect accordingly.

    (7) Where a power is exercised pursuant to an agreement or concurrence referred to in subsection (5)(b), the board of the company must, within 10 working days of the exercise of the power, send to every entitled person a notice in writing containing details of the exercise of the power.

    (8) If the board of a company fails to comply with subsection (7), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1).

    Section 107(1)(c): amended, on 3 May 2001, by section 7 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

  • 108 Company to satisfy solvency test

    • (1) A power referred to in subsection (1) of section 107 must not be exercised unless the board of the company is satisfied on reasonable grounds that the company will, immediately after the exercise of the power, satisfy the solvency test.

      (2) The directors who vote in favour of the exercise of the power must sign a certificate stating that, in their opinion, the company will, after the exercise of the power, satisfy the solvency test.

      (3) If, after a resolution is passed under subsection (1) and before the power is exercised, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the power is exercised, satisfy the solvency test, any exercise of the power is deemed not to have been authorised.

      (4) The provisions of section 56 apply in relation to the exercise of a power referred to in subsection (1) of section 107, with such modifications as may be necessary.

      (5) In applying the solvency test for the purposes of section 107(1)(e),—

      • (a) assets excludes all amounts of financial assistance given by the company at any time under section 76 or section 107(1)(e) in the form of loans; and

      • (b) liabilities includes the face value of all outstanding liabilities, whether contingent or otherwise, incurred by the company at any time in connection with the giving of financial assistance under section 76 or section 107(1)(e).

      (5A) Nothing in subsection (5) limits or affects the application of section 4(4).

      (6) 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).

      Section 108(5)(a): amended, on 15 April 2004, by section 6(1) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

      Section 108(5)(b): amended, on 15 April 2004, by section 6(2) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

      Section 108(5A): inserted, on 30 June 1997, by section 7 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

    109 Management review by shareholders

    • (1) Notwithstanding anything in this Act or the constitution of the company, the chairperson of a meeting of shareholders of a company must allow a reasonable opportunity for shareholders at the meeting to question, discuss, or comment on the management of the company.

      (2) Notwithstanding anything in this Act or the constitution of the company, but subject to subsections (2A) and (3), a meeting of shareholders may pass a resolution under this section relating to the management of a company.

      (2A) The provisions of Schedule 1 govern proceedings at a meeting of shareholders at which a resolution under this section is passed except to the extent that the constitution of the company provides for matters that are expressed in that schedule to be subject to the constitution of the company.

      (3) Unless the constitution provides that the resolution is binding, a resolution passed pursuant to subsection (2) is not binding on the board.

      Section 109(2): amended, on 15 April 2004, by section 7(1) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

      Section 109(2A): inserted, on 15 April 2004, by section 7(2) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

    Minority buy-out rights

    110 Shareholder may require company to purchase shares

    • Where—

      • (a) a shareholder is entitled to vote on the exercise of 1 or more of the powers set out in—

        • (i) section 106(1)(a), and the proposed alteration imposes or removes a restriction on the activities of the company; or

        • (ii) section 106(1)(b) or (c); and

      • (b) the shareholders resolved, pursuant to section 106, to exercise the power; and

      • (c) the shareholder cast all the votes attached to shares registered in the shareholder's name and having the same beneficial owner against the exercise of the power; or

      • (d) where the resolution to exercise the power was passed under section 122, the shareholder did not sign the resolution,—

      that shareholder is entitled to require the company to purchase those shares in accordance with section 111.

    111 Notice requiring purchase

    • (1) A shareholder of a company who is entitled to require the company to purchase shares by virtue of section 110 or section 118 may,—

      • (a) within 10 working days of the passing of the resolution at a meeting of shareholders; or

      • (b) where the resolution was passed under section 122, before the expiration of 10 working days after the date on which notice of the passing of the resolution is given to the shareholder,—

      give a written notice to the company requiring the company to purchase those shares.

      (2) Within 20 working days of receiving a notice under subsection (1), the board must—

      • (a) agree to the purchase of the shares by the company; or

      • (b) arrange for some other person to agree to purchase the shares; or

      • (c) apply to the court for an order under section 114 or section 115; or

      • (d) arrange, before taking the action concerned, for the resolution to be rescinded in accordance with section 106 or decide in the appropriate manner not to take the action concerned, as the case may be; and

      • (e) give written notice to the shareholder of the board's decision under this subsection.

    112 Price for shares to be purchased by company determined

    • (1) Within 5 working days of giving notice under section 111(2)(e) that the board agrees to the purchase of shares by the company, the board must give to the holder of the shares written notice of—

      • (a) the price it offers to pay for those shares; and

      • (b) how—

        • (i) the matters in subsection (2) were calculated; or

        • (ii) the price was calculated under subsection (3) and why calculating the price using the methodology set out in paragraphs (a) to (c) of subsection (2) would be clearly unfair.

      (2) That price must be a fair and reasonable price (as at the close of business on the day before the date on which the resolution was passed) for the shares held by the shareholder, calculated as follows:

      • (a) first, the fair and reasonable value of the total shares in each class to which the shares belong must be calculated (the class value):

      • (b) secondly, each class value must be adjusted to exclude any fluctuation (whether positive or negative) in the class value that has occurred (whether before or after the resolution was passed) that was due to, or in expectation of, the event proposed or authorised by the resolution:

      • (c) thirdly, a portion of each adjusted class value must be allocated to the shareholder in proportion to the number of shares he, she, or it holds in the relevant class.

      (3) However, a different methodology from that set out in paragraphs (a) to (c) of subsection (2) may be used to calculate the fair and reasonable price for the shares if using the methodology set out in those paragraphs would be clearly unfair to the shareholder or the company.

      (4) The shareholder may object to the price offered by the board for the shares by giving written notice to the company no later than 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

      (5) If the company does not receive an objection to the price in accordance with subsection (4), the company must purchase all the shares at the nominated price no later than 10 working days after—

      • (a) the date on which the board’s offer under subsection (1) is accepted; or

      • (b) if the board has not received an acceptance, the date that is 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

      (6) The time periods in subsection (5) do not apply if there is a written agreement between the board and the shareholder that specifically sets a different date for purchase of the shares.

      (7) In this section, resolution means the resolution referred to in section 110 or 118 that, due to it having been passed, entitles the shareholder to require the company to purchase the shareholder’s shares in accordance with section 111.

      Section 112: replaced, on 17 September 2008, by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    112A Price for shares referred to arbitration if shareholder objects to price

    • (1) If a company receives an objection to the price offered for shares in accordance with section 112(4),—

      • (a) the following issues must be submitted to arbitration:

        • (i) the fair and reasonable price for the shares, on the basis set out in section 112(2) and (3); and

        • (ii) the remedies available to the holder of the shares or the company in respect of any price for the shares that differs from that determined by the board under section 112; and

      • (b) the company must, within 5 working days of receiving the objection, pay to the shareholder a provisional price in respect of each share equal to the price offered by the board under section 112(1).

      (2) If the price determined for the shares—

      • (a) exceeds the provisional price paid, the arbitral tribunal must order the company to pay the balance owing to the shareholder:

      • (b) is less than the provisional price paid, the arbitral tribunal must order the shareholder to pay the excess to the company.

      (3) Except in exceptional circumstances, an arbitral tribunal must award interest on any balance owing or excess to be paid under subsection (2).

      (4) If a balance is owing to the shareholder, an arbitral tribunal may award to the shareholder, in addition to or instead of an award of interest, damages for loss attributable to the shortfall in the initial payment.

      (5) Any sum that must be paid in accordance with this section must be paid no later than 10 days after the date of the arbitral tribunal’s determination, unless the arbitral tribunal specifically orders otherwise.

      (6) A submission to arbitration under this section is an arbitration agreement for the purposes of the Arbitration Act 1996, and the provisions of that Act apply accordingly.

      (7) Clause 6 of Schedule 2 of the Arbitration Act 1996 may not be excluded from the arbitration agreement, and the term costs and expenses of an arbitration in that clause includes, where a balance is owing to the shareholder,—

      • (a) the reasonable legal costs of the shareholder on a solicitor-and-client basis; and

      • (b) the reasonable costs of expert witnesses.

      Section 112A: inserted, on 17 September 2008, by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    112B Interest payable on outstanding payments

    • (1) Interest on any sum that must be paid under section 112 or 112A that is outstanding after the date on which it falls due is payable,—

      • (a) in the case of a share price determined under section 112, at the same rate of interest as the prescribed rate under section 87(3) of the Judicature Act 1908; and

      • (b) in the case of a share price determined under section 112A, on the basis and at the rate that the arbitral tribunal thinks fit having regard to all of the circumstances.

      (2) The sum on which interest is payable under subsection (1)(b) includes any interest or damages for loss awarded under section 112A.

      Section 112B: inserted, on 17 September 2008, by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

      Section 112B(1): replaced, on 31 August 2012, by section 5(1) of the Companies Amendment Act (No 2) 2012 (2012 No 60).

      Section 112B(2): amended, on 31 August 2012, by section 5(2) of the Companies Amendment Act (No 2) 2012 (2012 No 60).

    112C Timing of transfer of shares

    • (1) On the day on which a board gives notice under section 111(2)(e) that the board agrees to the purchase of shares by the company,—

      • (a) the legal title to those shares passes to the company; and

      • (b) the rights of the shareholder in relation to those shares end.

      (2) However, for the purposes of sections 112 and 112A, shareholder and holder of the shares means the person who held the legal title to the shares immediately before the board gave notice under section 111(2)(e) that the board agrees to the purchase of those shares by the company.

      (3) Subsection (2) applies despite subsection (1).

      Section 112C: inserted, on 17 September 2008, by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    113 Purchase of shares by third party

    • (1) Sections 112 to 112C apply to the purchase of shares by a person with whom the company has entered into an arrangement for purchase in accordance with section 111(2)(b) subject to such modifications as may be necessary, and, in particular, as if references in that section to the board and the company were references to that person.

      (2) Every holder of shares that are to be purchased in accordance with the arrangement is indemnified by the company in respect of loss suffered by reason of the failure by the person who has agreed to purchase the shares to purchase them at the price nominated or fixed by arbitration, as the case may be.

      Section 113(1): amended, on 17 September 2008, by section 8 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    114 Court may grant exemption

    • (1) A company to which a notice has been given under section 111 may apply to the court for an order exempting it from the obligation to purchase the shares to which the notice relates on the grounds that—

      • (a) the purchase would be disproportionately damaging to the company; or

      • (b) the company cannot reasonably be required to finance the purchase; or

      • (c) it would not be just and equitable to require the company to purchase the shares.

      (2) On an application under this section, the court may make an order exempting the company from the obligation to purchase the shares, and may make any other order it thinks fit, including an order—

      • (a) setting aside a resolution of the shareholders:

      • (b) directing the company to take, or refrain from taking, any action specified in the order:

      • (c) requiring the company to pay compensation to the shareholders affected:

      • (d) that the company be put into liquidation.

      (3) The court shall not make an order under subsection (2) on either of the grounds set out in paragraph (a) or paragraph (b) of subsection (1) unless it is satisfied that the company has made reasonable efforts to arrange for another person to purchase the shares in accordance with section 111(2)(b).

    115 Court may grant exemption if company insolvent

    • (1) If—

      • (a) a notice is given to a company under section 111; and

      • (b) the board has resolved that the purchase by the company of the shares to which the notice relates would result in it failing to satisfy the solvency test; and

      • (c) the company has, having made reasonable efforts to do so, been unable to arrange for the shares to be purchased by another person in accordance with section 111(2)(b),—

      the company must apply to the court for an order exempting it from the obligation to purchase the shares.

      (2) The court may, on an application under subsection (1), if it is satisfied that—

      • (a) the purchase of the shares would result in the company failing to satisfy the solvency test; and

      • (b) the company has made reasonable efforts to arrange for the shares to be purchased by another person in accordance with section 111(2)(b),—

      make—

      • (c) an order exempting the company from the obligation to purchase the shares:

      • (d) an order suspending the obligation to purchase the shares:

      • (e) such other order as it thinks fit, including any order referred to in section 114(2).

    Interest groups

    116 Meaning of classes and interest groups

    • (1) In this Act, unless the context otherwise requires,—

      class means a class of shares having attached to them identical rights, privileges, limitations, and conditions

      interest group, in relation to any action or proposal affecting rights attached to shares, means a group of shareholders—

      • (a) whose affected rights are identical; and

      • (b) whose rights are affected by the action or proposal in the same way; and

      • (c) subject to subsection (2)(b), who comprise the holders of 1 or more classes of shares in the company.

      (2) For the purposes of this Act and the definition of the term interest group,—

      • (a) 1 or more interest groups may exist in relation to any action or proposal; and

      • (b) if—

        • (i) action is taken in relation to some holders of shares in a class and not others; or

        • (ii) a proposal expressly distinguishes between some holders of shares in a class and other holders of shares of that class,—

        holders of shares in the same class may fall into 2 or more interest groups.

    117 Alteration of shareholder rights

    • (1) A company must not take action that affects the rights attached to shares unless that action has been approved by a special resolution of each interest group.

      (2) For the purposes of subsection (1), the rights attached to a share include—

      • (a) the rights, privileges, limitations, and conditions attached to the share by this Act or the constitution, including voting rights and rights to distributions:

      • (b) pre-emptive rights arising under section 45:

      • (c) the right to have the procedure set out in this section, and any further procedure required by the constitution for the amendment or alteration of rights, observed by the company:

      • (d) the right that a procedure required by the constitution for the amendment or alteration of rights not be amended or altered.

      (3) For the purposes of subsection (1), the issue of further shares ranking equally with, or in priority to, existing shares, whether as to voting rights or distributions, is deemed to be action affecting the rights attached to the existing shares, unless—

      • (a) the constitution of the company expressly permits the issue of further shares ranking equally with, or in priority to, those shares; or

      • (b) the issue is made in accordance with the pre-emptive rights of shareholders under section 45 or under the constitution of the company.

      Section 117(3)(b): amended, on 1 July 1994, by section 14 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

    118 Shareholder may require company to purchase shares

    • Where—

      • (a) an interest group has, under section 117, approved, by special resolution, the taking of action that affects the rights attached to shares; and

      • (b) the company becomes entitled to take the action; and

      • (c) a shareholder who was a member of the interest group cast all the votes attached to the shares registered in that shareholder's name and having the same beneficial owner against approving the action; or

      • (d) where the resolution approving the taking of the action was passed under section 122, a shareholder who was a member of the interest group did not sign the resolution,—

      that shareholder is entitled to require the company to purchase those shares in accordance with section 111.

    119 Actions not invalid

    • The taking of action by a company affecting the rights attached to shares is not invalid by reason only that the action was not approved in accordance with section 117.

    Meetings of shareholders

    120 Annual meeting of shareholders

    • (1) Subject to subsections (2) and (3), the board of a company must call an annual meeting of shareholders to be held—

      • (a) [Repealed]

      • (b) either—

        • (i) in the case of an exempt company, if all the shareholders of the company agree, not later than 10 months after the balance date of the company; or

        • (ii) in the case of a company, not being a company to which subparagraph (i) applies, not later than 6 months after the balance date of the company; and

      • (c) not later than 15 months after the previous annual meeting.

      (2) A company, not being a company that is reregistered under this Act, does not have to hold its first annual meeting in the calendar year of its registration but must hold that meeting within 18 months of its registration.

      (3) A company that is reregistered under this Act does not have to hold its first annual meeting in the calendar year of its reregistration but must hold that meeting within 18 months of its registration under the Companies Act 1955.

      (4) The company must hold the meeting on the date on which it is called to be held.

      Section 120: replaced, on 2 September 1996, by section 3(1) of the Companies Act 1993 Amendment Act 1996 (1996 No 115).

      Section 120(1)(a): repealed, on 3 June 1998, by section 4 of the Companies Amendment Act 1998 (1998 No 31).

    121 Special meetings of shareholders

    • A special meeting of shareholders entitled to vote on an issue—

      • (a) may be called at any time by—

        • (i) the board; or

        • (ii) a person who is authorised by the constitution to call the meeting:

      • (b) must be called by the board on the written request of shareholders holding shares carrying together not less than 5% of the voting rights entitled to be exercised on the issue.

    122 Resolution in lieu of meeting

    • (1) Subject to subsections (2) and (3), a resolution in writing signed by not less than—

      • (a) 75%; or

      • (b) such other percentage as the constitution may require for passing a special resolution,—

      whichever is the greater, of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% or, if a higher percentage is required by the constitution, that higher percentage, of the votes entitled to be cast on that resolution, is as valid as if it had been passed at a meeting of those shareholders.

      (2) A resolution in writing that—

      • (a) relates to a matter that is required by this Act or by the constitution to be decided at a meeting of the shareholders of a company; and

      • (b) is signed by the shareholders specified in subsection (3)—

      is made in accordance with this Act or the constitution of the company.

      (3) For the purposes of subsection (2)(b), the shareholders are,—

      • (a) in the case of a resolution under section 196(2), all the shareholders who are entitled to vote on the resolution:

      • (b) in any other case, the shareholders referred to in subsection (1).

      (3A) Any resolution in writing under this section may consist of 1 or more documents in similar form (including letters, telegrams, cables, facsimiles, telex messages, electronic mail, or other similar means of communication) each signed or assented to by or on behalf of 1 or more of the shareholders specified in subsection (3).

      (4) It shall not be necessary for a company to hold an annual meeting of shareholders under section 120 if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with subsections (2) and (3).

      (5) Within 5 working days of a resolution being passed under this section, the company must send to every shareholder who did not sign the resolution or on whose behalf the resolution was not signed,—

      • (a) a copy of the resolution; and

      • (b) if the resolution was a special resolution required by section 106(1)(a) or (b), a statement setting out the rights of shareholders under section 110.

      (6) A resolution may be signed under subsection (1) or subsection (2) without any prior notice being given to shareholders.

      (7) 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):

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

      Section 122(1): replaced, on 30 June 1997, by section 8(1) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

      Section 122(3A): inserted, on 30 June 1997, by section 8(2) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

      Section 122(3A): amended, on 3 May 2001, by section 8 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

      Section 122(5): replaced, on 17 September 2008, by section 9 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

    123 Court may call meeting of shareholders

    • (1) If the court is satisfied that—

      • (a) it is impracticable to call or conduct a meeting of shareholders in the manner prescribed by this Act or the constitution; or

      • (b) it is in the interests of a company that a meeting of shareholders be held,—

      the court may order a meeting of shareholders to be held or conducted in such manner as the court directs.

      (2) Application to the court may be made by a director, or a shareholder, or a creditor of the company.

      (3) The court may make the order on such terms as to the costs of conducting the meeting and as to security for those costs as the court thinks fit.

    124 Proceedings at meetings

    • The provisions of Schedule 1 govern proceedings at meetings of shareholders of a company except to the extent that the constitution of the company makes provision for the matters that are expressed in that schedule to be subject to the constitution of the company.

    Ascertaining shareholders

    125 Shareholders entitled to receive distributions, attend meetings, and exercise rights

    • (1) The shareholders who are—

      • (a) entitled to receive distributions; or

      • (b) entitled to exercise pre-emptive rights to acquire shares in accordance with section 45; or

      • (c) entitled to exercise any other right or receive any other benefit under this Act or the constitution or pursuant to the terms of issue of shares—

      are,—

      • (d) if the board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date:

      • (e) if the board does not fix a date for the purpose, those shareholders whose names are registered in the share register on the day on which the board or the shareholders, as the case may be, pass the resolution concerned.

      (2) A date must not be fixed under subsection (1) that precedes by more than 20 working days the date on which the proposed action will be taken.

      (3) The shareholders who are entitled to receive notice of a meeting of shareholders are,—

      • (a) if the board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date:

      • (b) if the board does not fix a date for the purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

      (4) A date must not be fixed under subsection (3) that precedes by more than 30 working days or less than 10 working days the date on which the meeting is to be held.

      Section 125(1)(c): replaced, on 30 June 1997, by section 9(1) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

      Section 125(1)(e): replaced, on 30 June 1997, by section 9(2) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

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