2 Interpretation

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

  accounting period, in relation to a company, means a year ending on a balance date of the company and, if as a result of the date of the registration of the company or a change of the balance date of the company, the period ending on that date is longer or shorter than a year, that longer or shorter period is an accounting period

  address for service in relation to a company, means the company's address for service adopted in accordance with section 192

  annual meeting means a meeting required to be held by section 120

  annual report—

  • (a) means a report prepared under section 208; and

  • (b) does not include a concise annual report

  applicable auditing and assurance standard has the same meaning as in section 5 of the Financial Reporting Act 2013

  applicable financial reporting standard has the same meaning as in section 5 of the Financial Reporting Act 2013

  balance date, in relation to a company or an overseas company, has the same meaning as in section 41 of the Financial Reporting Act 2013

  board and board of directors have the meanings set out in section 127

  charge includes a right or interest in relation to property owned by a company, by virtue of which a creditor of the company is entitled to claim payment in priority to creditors entitled to be paid under section 313; but does not include a charge under a charging order issued by a court in favour of a judgment creditor

  class has the meaning set out in section 116

  code company has the meaning set out in section 2(1) of the Takeovers Act 1993

  company means—

  • (a) a company registered under Part 2:

  • (b) a company reregistered under this Act in accordance with the Companies Reregistration Act 1993

  concise annual report, in relation to a company and an accounting period, means a report on the affairs of the company during that period that is prepared in accordance with the requirements prescribed in regulations made under this Act

  constitution means a document referred to in section 29

  court means the High Court of New Zealand

  designated settlement system has the meaning set out in section 156M of the Reserve Bank of New Zealand Act 1989

  director has the meaning set out in section 126

  distribution, in relation to a distribution by a company to a shareholder, means—

  • (a) the direct or indirect transfer of money or property, other than the company's own shares, to or for the benefit of the shareholder; or

  • (b) the incurring of a debt to or for the benefit of the shareholder—

  in relation to shares held by that shareholder, and whether by means of a purchase of property, the redemption or other acquisition of shares, a distribution of indebtedness, or by some other means

  dividend has the meaning set out in section 53

  document means a document in any form; and includes—

  • (a) any writing on any material; and

  • (b) information recorded or stored by means of a tape recorder, computer, or other device; and material subsequently derived from information so recorded or stored; and

  • (c) a book, graph, or drawing; and

  • (d) a photograph, film, negative, tape, or other device in which 1 or more visual images are embodied so as to be capable (with or without the aid of equipment) of being reproduced

  entitled person, in relation to a company, means—

  • (a) a shareholder; and

  • (b) a person upon whom the constitution confers any of the rights and powers of a shareholder

  existing company means a body corporate registered or deemed to be registered under Part 2 or Part 10 of the Companies Act 1955, or under the Companies Act 1933, the Companies Act 1908, the Companies Act 1903, the Companies Act 1882, or the Joint Stock Companies Act 1860

  financial markets participant has the same meaning as in section 4 of the Financial Markets Authority Act 2011

  financial statements has the same meaning as in section 6 of the Financial Reporting Act 2013

  FMA means the Financial Markets Authority established under Part 2 of the Financial Markets Authority Act 2011

  generally accepted accounting practice has the same meaning as in section 8 of the Financial Reporting Act 2013

  group financial statements has the same meaning as in section 7 of the Financial Reporting Act 2013

  holding company has the meaning set out in section 5

  interest group has the meaning set out in section 116

  interested, in relation to a director, has the meaning set out in section 139

  interests register means the register kept under section 189(1)(c)

  licensed insurer has the same meaning as in section 6(1) of the Insurance (Prudential Supervision) Act 2010

  major transaction has the meaning set out in section 129(2)

  New Zealand register means the register of companies incorporated in New Zealand kept pursuant to section 360(1)(a)

  ordinary resolution has the meaning set out in section 105(2)

  overseas company means a body corporate that is incorporated outside New Zealand

  overseas register means the register of bodies corporate that are incorporated outside New Zealand kept pursuant to section 360(1)(b)

  personal representative, in relation to an individual, means the executor, administrator or trustee of the estate of that individual

  pre-emptive rights means the rights conferred on shareholders under section 45

  prescribed form means a form prescribed by regulations made under this Act that contains, or has attached to it, such information or documents as those regulations may require

  property means property of every kind whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests, and claims of every kind in relation to property however they arise

  receiver has the same meaning as in section 2(1) of the Receiverships Act 1993

  records means the documents required to be kept by a company under section 189(1)

  redeemable has the meaning set out in section 68

  registered office has the meaning set out in section 186

  Registrar means the Registrar of Companies appointed in accordance with section 357(1)

  related company has the meaning set out in subsection (3)

  relative, in relation to any person, means—

  • (a) any parent, child, brother, or sister of that person; or

  • (b) any spouse, civil union partner, or de facto partner of that person; or

  • (ba) any parent, child, brother, or sister of a spouse, civil union partner, or de facto partner of that person; or

  • (c) a nominee or trustee for any of those persons

  relevant interest has the meaning set out in section 146

  secured creditor, in relation to a company, means a person entitled to a charge on or over property owned by that company

  securities has the same meaning as in the Securities Act 1978

  share has the meaning set out in section 35

  share register means the share register required to be kept under section 87

  shareholder has the meaning set out in section 96

  solvency test has the meaning set out in section 4

  special meeting means a meeting called in accordance with section 121

  special resolution means a resolution approved by a majority of 75% or, if a higher majority is required by the constitution, that higher majority, of the votes of those shareholders entitled to vote and voting on the question

  spouse, in relation to a person (A), includes a person with whom A has a de facto relationship (whether that person is of the same or a different sex) and a civil union partner

  subsidiary has the meaning set out in section 5

  surplus assets means the assets of a company remaining after the payment of creditors' claims and available for distribution in accordance with section 313 prior to its removal from the New Zealand register

  working day means a day of the week other than—

  • (a) Saturday, Sunday, Good Friday, Easter Monday, Anzac Day, the Sovereign's birthday, Labour Day, and Waitangi Day; and

  • (ab) if Waitangi Day or Anzac Day falls on a Saturday or a Sunday, the following Monday; and

  • (b) a day in the period commencing with 25 December in any year and ending with 2 January in the following year; and

  • (c) if 1 January in any year falls on a Friday, the following Monday; and

  • (d) if 1 January in any year falls on a Saturday or a Sunday, the following Monday and Tuesday.

  (2) Where,—

  • (a) in relation to a company or an overseas company, any document is required to be delivered or any thing is required to be done to a District Registrar or an Assistant Registrar in whose office the records relating to the company or overseas company are kept within a period specified by this Act; and

  • (b) the last day of that period falls on the day of the anniversary of the province in which that office is situated,—

  the document may be delivered or that thing may be done to that District Registrar or Assistant Registrar on the next working day.

  (3) In this Act, a company is related to another company if—

  • (a) the other company is its holding company or subsidiary; or

  • (b) more than half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital, are held by the other company and companies related to that other company (whether directly or indirectly, but other than in a fiduciary capacity); or

  • (c) more than half of the issued shares, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital, of each of them are held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or

  • (d) the businesses of the companies have been so carried on that the separate business of each company, or a substantial part of it, is not readily identifiable; or

  • (e) there is another company to which both companies are related;—

  and related company has a corresponding meaning.

  (4) [Repealed]

  (5) A reference in this Act to an address means,—

  • (a) in relation to an individual, the full address of the place where that person usually lives:

  • (b) in relation to a body corporate, its registered office or, if it does not have a registered office, its principal place of business.

  (6) An example used in this Act is only illustrative of the provisions to which it relates. It does not limit those provisions.

  (7) If an example and a provision to which it relates are inconsistent, the provision prevails.

  Section 2(1) annual report: inserted, on 18 June 2007, by section 4(3) of the Companies Amendment Act (No 2) 2006 (2006 No 62).

  Section 2(1) applicable auditing and assurance standard: inserted, on 1 April 2014, by section 24(6) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) applicable financial reporting standard: inserted, on 1 April 2014, by section 24(6) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) balance date: replaced, on 1 April 2014, by section 24(1) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) code company: inserted, on 3 July 2014, by section 27 of the Companies Amendment Act 2014 (2014 No 46).

  Section 2(1) concise annual report: inserted, on 18 June 2007, by section 4(3) of the Companies Amendment Act (No 2) 2006 (2006 No 62).

  Section 2(1) designated settlement system: inserted, on 24 November 2009, by section 16 of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).

  Section 2(1) exempt company: repealed, on 1 April 2014, by section 24(2) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) financial markets participant: inserted, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).

  Section 2(1) financial statements: replaced, on 1 April 2014, by section 24(3) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) FMA: inserted, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).

  Section 2(1) generally accepted accounting practice: inserted, on 1 April 2014, by section 24(6) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) group financial statements: replaced, on 1 April 2014, by section 24(4) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) group of companies: repealed, on 1 April 2014, by section 24(5) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(1) licensed insurer: inserted, on 1 February 2011, by section 241(2) of the Insurance (Prudential Supervision) Act 2010 (2010 No 111).

  Section 2(1) receiver: inserted, on 1 November 2007, by section 4(1) of the Companies Amendment Act 2006 (2006 No 56).

  Section 2(1) relative paragraph (a): replaced, on 26 April 2005, by section 7 of the Relationships (Statutory References) Act 2005 (2005 No 3).

  Section 2(1) relative paragraph (b): replaced, on 26 April 2005, by section 7 of the Relationships (Statutory References) Act 2005 (2005 No 3).

  Section 2(1) relative paragraph (ba): inserted, on 26 April 2005, by section 7 of the Relationships (Statutory References) Act 2005 (2005 No 3).

  Section 2(1) spouse: replaced, on 1 November 2007, by section 4(2) of the Companies Amendment Act 2006 (2006 No 56).

  Section 2(1) working day paragraph (ab): inserted, on 1 January 2014, by section 8 of the Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Act 2013 (2013 No 19).

  Section 2(3)(b): amended, on 15 April 2004, by section 3 of the Companies Amendment Act (No 2) 2004 (2004 No 24).

  Section 2(4): repealed, on 5 December 2013, by section 4 of the Companies Amendment Act 2013 (2013 No 111).

  Section 2(6): inserted, on 1 April 2014, by section 24(7) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 2(7): inserted, on 1 April 2014, by section 24(7) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

3 Public notice

• (1) Where, pursuant to this Act, public notice must be given of any matter affecting a company, that notice must be given by publishing notice of the matter—

  • (a) in at least 1 issue of the Gazette; and

  • (b) in at least 1 issue of a newspaper circulating in the area in which is situated—

    • (i) the company's place of business; or

    • (ii) if the company has more than 1 place of business, the company's principal place of business; or

    • (iii) if the company has no place of business or neither its place of business nor its principal place of business is known, the company's registered office.

  (2) Where, pursuant to this Act, public notice must be given of any matter affecting an overseas company, that notice must be given by publishing notice of the matter—

  • (a) in at least 1 issue of the Gazette; and

  • (b) in at least 1 issue of a newspaper circulating in the area in which is situated—

    • (i) the place of business in New Zealand of the overseas company; or

    • (ii) if the overseas company has more than 1 place of business in New Zealand, the principal place of business in New Zealand of the overseas company.

  (3) However, subsections (1) and (2) do not apply to the public notice required to be given by the Registrar under sections 319(1)(c), 320(1), 328(3)(a), and 360A(2)(b).

  (4) The public notice required to be given by the Registrar under the provisions referred to in subsection (3) must be given by publishing the notice in at least 1 issue of the Gazette.

  (5) The Registrar must ensure that a copy of the notice referred to in subsection (4) is available on an Internet site maintained by or on behalf of the Registrar, at all reasonable times, for a period of not less than 20 working days.

  Section 3(3): inserted, on 7 July 2010, by section 4 of the Companies Amendment Act (No 2) 2010 (2010 No 53).

  Section 3(4): inserted, on 7 July 2010, by section 4 of the Companies Amendment Act (No 2) 2010 (2010 No 53).

  Section 3(5): inserted, on 7 July 2010, by section 4 of the Companies Amendment Act (No 2) 2010 (2010 No 53).

4 Meaning of solvency test

• (1) For the purposes of this Act, a company satisfies the solvency test if—

  • (a) the company is able to pay its debts as they become due in the normal course of business; and

  • (b) the value of the company's assets is greater than the value of its liabilities, including contingent liabilities.

  (2) Without limiting sections 52 and 55(3), in determining for the purposes of this Act (other than sections 221 and 222 which relate to amalgamations) whether the value of a company's assets is greater than the value of its liabilities, including contingent liabilities, the directors—

  • (a) must have regard to—

    • (i) the most recent financial statements of the company that are prepared under this Act or any other enactment (if any); and

    • (ia) the accounting records of the company; and

    • (ii) all other circumstances that the directors know or ought to know affect, or may affect, the value of the company's assets and the value of the company's liabilities, including its contingent liabilities:

  • (b) may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.

  (3) Without limiting sections 221 and 222, in determining for the purposes of those sections whether the value of the amalgamated company's assets will be greater than the value of its liabilities, including contingent liabilities, the directors of each amalgamating company—

  • (a) must have regard to—

    • (i) the most recent financial statements of each amalgamating company that are prepared under this Act or any other enactment (if any); and

    • (ia) the accounting records of the amalgamating company; and

    • (ii) all other circumstances that the directors know or ought to know would affect, or may affect, the value of the amalgamated company's assets and the value of its liabilities, including contingent liabilities:

  • (b) may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.

  (4) In determining, for the purposes of this section, the value of a contingent liability, account may be taken of—

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

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

  Section 4(2)(a)(i): replaced, on 1 April 2014, by section 25(1) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 4(2)(a)(ia): inserted, on 1 April 2014, by section 25(1) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 4(3)(a)(i): replaced, on 1 April 2014, by section 25(2) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 4(3)(a)(ia): inserted, on 1 April 2014, by section 25(2) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

5 Meaning of holding company and subsidiary

• (1) For the purposes of this Act, a company is a subsidiary of another company if, but only if,—

  • (a) that other company—

    • (i) controls the composition of the board of the company; or

    • (ii) is in a position to exercise, or control the exercise of, more than one-half the maximum number of votes that can be exercised at a meeting of the company; or

    • (iii) holds more than one-half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

    • (iv) is entitled to receive more than one-half of every dividend paid on shares issued by the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

  • (b) the company is a subsidiary of a company that is that other company's subsidiary.

  (2) For the purposes of this Act, a company is another company's holding company, if, but only if, that other company is its subsidiary.

  (3) In this section and sections 7 and 8, the expression company includes a body corporate.

  Compare: Corporations Act 1989 s 46 (Aust)

6 Extended meaning of subsidiary

• [Repealed]

  Section 6: repealed, on 5 December 2013, by section 5 of the Companies Amendment Act 2013 (2013 No 111).

7 Control defined

• For the purposes of section 5, without limiting the circumstances in which the composition of a company's board is to be taken to be controlled by another company, the composition of the board is to be taken to be so controlled if the other company, by exercising a power exercisable (whether with or without the consent or concurrence of any other person) by it, can appoint or remove all the directors of the company, or such number of directors as together hold a majority of the voting rights at meetings of the board of the company, and for this purpose, the other company is to be taken as having power to make such an appointment if—

  • (a) a person cannot be appointed as a director of the company without the exercise by the other company of such a power in the person's favour; or

  • (b) a person's appointment as a director of the company follows necessarily from the person being a director or other officer of the other company.

  Compare: Corporations Act 1989 s 47 (Aust)

8 Certain matters to be disregarded

• In determining whether a company is a subsidiary of another company,—

  • (a) shares held or a power exercisable by that other company in a fiduciary capacity are not to be treated as held or exercisable by it:

  • (b) subject to paragraphs (c) and (d), shares held or a power exercisable—

    • (i) by a person as a nominee for that other company, except where that other company is concerned only in a fiduciary capacity; or

    • (ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity,—

    are to be treated as held or exercisable by that other company:

  • (c) shares held or a power exercisable by a person under the provisions of debentures of the company or of a trust deed for securing an issue of debentures shall be disregarded:

  • (d) shares held or a power exercisable by, or by a nominee for, that other company or its subsidiary (not being held or exercisable in the manner described in paragraph (c)) are not to be treated as held or exercisable by that other company if—

    • (i) the ordinary business of that other company or its subsidiary, as the case may be, includes the lending of money; and

    • (ii) the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

  Compare: Corporations Act 1989 s 48 (Aust)

9 Act binds the Crown

• This Act binds the Crown.

10 Essential requirements

• A company must have—

  • (a) a name; and

  • (b) 1 or more shares; and

  • (c) 1 or more shareholders, having limited or unlimited liability for the obligations of the company; and

  • (d) 1 or more directors.

11 Right to apply for registration

• Any person may, either alone or together with another person, apply for registration of a company under this Act.

12 Application for registration

• (1) An application for registration of a company under this Act must be sent or delivered to the Registrar, and must be—

  • (a) in the prescribed form; and

  • (b) signed by each applicant; and

  • (c) accompanied by a document in the prescribed form signed by every person named as a director, containing his or her consent to be a director and a certificate that he or she is not disqualified from being appointed or holding office as a director of a company; and

  • (d) accompanied by—

    • (i) a document in the prescribed form signed by every person named as a shareholder, or by an agent of that person authorised in writing, containing his or her consent to being a shareholder and to taking the class and number of shares specified in the document; and

    • (ii) if the document has been signed by an agent, the instrument authorising the agent to sign it; and

  • (e) accompanied by a notice reserving a name for the proposed company; and

  • (f) if the proposed company is to have a constitution, accompanied by a document certified by at least 1 applicant as the company's constitution.

  (2) Without limiting subsection (1), the application must state—

  • (a) the full name and address of each applicant; and

  • (b) the full name and residential address of every director of the proposed company; and

  • (c) the full name and residential address of every shareholder of the proposed company, and the number of shares to be issued to every shareholder; and

  • (d) the registered office of the proposed company; and

  • (e) the address for service of the proposed company.

13 Registration

• As soon as the Registrar receives a properly completed application for registration of a company, the Registrar must—

  • (a) register the application; and

  • (b) issue a certificate of incorporation.

14 Certificate of incorporation

• A certificate of incorporation of a company issued under section 13 is conclusive evidence that—

  • (a) all the requirements of this Act as to registration have been complied with; and

  • (b) on and from the date of incorporation stated in the certificate, the company is incorporated under this Act.

15 Separate legal personality

• A company is a legal entity in its own right separate from its shareholders and continues in existence until it is removed from the New Zealand register.

16 Capacity and powers

• (1) Subject to this Act, any other enactment, and the general law, a company has, both within and outside New Zealand,—

  • (a) full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and

  • (b) for the purposes of paragraph (a), full rights, powers, and privileges.

  (2) The constitution of a company may contain a provision relating to the capacity, rights, powers, or privileges of the company only if the provision restricts the capacity of the company or those rights, powers, and privileges.

17 Validity of actions

• (1) No act of a company and no transfer of property to or by a company is invalid merely because the company did not have the capacity, the right, or the power to do the act or to transfer or take a transfer of the property.

  (2) Subsection (1) does not limit—

  • (a) section 164 (which relates to injunctions to restrain conduct by a company that would contravene its constitution); or

  • (b) section 165 (which relates to derivative actions by directors and shareholders); or

  • (c) section 169 (which relates to actions by shareholders of a company against the directors); or

  • (d) section 170 (which relates to actions by shareholders to require the directors of a company to take action under the constitution or this Act).

  (3) The fact that an act is not, or would not be, in the best interests of a company does not affect the capacity of the company to do the act.

  Compare: 1955 No 63 s 18A; 1983 No 53 s 8

18 Dealings between company and other persons

• (1) A company or a guarantor of an obligation of a company may not assert against a person dealing with the company or with a person who has acquired property, rights, or interests from the company that—

  • (a) this Act or the constitution of the company has not been complied with:

  • (b) a person named as a director of the company in the most recent notice received by the Registrar under section 159—

    • (i) is not a director of a company; or

    • (ii) has not been duly appointed; or

    • (iii) does not have authority to exercise a power which a director of a company carrying on business of the kind carried on by the company customarily has authority to exercise:

  • (c) a person held out by the company as a director, employee, or agent of the company—

    • (i) has not been duly appointed; or

    • (ii) does not have authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise:

  • (d) a person held out by the company as a director, employee, or agent of the company with authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power:

  • (e) a document issued on behalf of a company by a director, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine—

  unless the person has, or ought to have, by virtue of his or her position with or relationship to the company, knowledge of the matters referred to in any of paragraphs (a), (b), (c), (d), or (e), as the case may be.

  (2) Subsection (1) applies even though a person of the kind referred to in paragraphs (b) to (e) of that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery.

  Compare: 1955 No 63 ss 18C, 18D; 1985 No 80 s 2

19 No constructive notice

• A person is not affected by, or deemed to have notice or knowledge of the contents of, the constitution of, or any other document relating to, a company merely because—

  • (a) the constitution or document is registered on the New Zealand register; or

  • (b) it is available for inspection at an office of the company.

  Compare: 1955 No 63 s 18B; 1985 No 80 s 2

20 Name to be reserved

• The Registrar must not register a company under a name or register a change of the name of a company unless the name has been reserved.

21 Name of company if liability of shareholders limited

• The registered name of a company must end with the word “Limited” or the words “Tāpui (Limited)” if the liability of the shareholders of the company is limited.

22 Application for reservation of name

• (1) An application for reservation of the name of a company must be sent or delivered to the Registrar, and must be in the prescribed form.

  (2) The Registrar must not reserve a name—

  • (a) the use of which would contravene an enactment; or

  • (b) that is identical or almost identical to the name of another company; or

  • (c) that is identical or almost identical to a name that the Registrar has already reserved under this Act and that is still available for registration; or

  • (d) that, in the opinion of the Registrar, is offensive.

  (3) The Registrar must advise the applicant by notice in writing—

  • (a) whether or not the Registrar has reserved the name; and

  • (b) if the name has been reserved, that, unless the reservation is sooner revoked by the Registrar, the name is available for registration of a company with that name or on a change of name for 20 working days after the date stated in the notice.

  Section 22(2)(b): amended, on 5 December 2013, by section 6(1) of the Companies Amendment Act 2013 (2013 No 111).

  Section 22(2)(c): amended, on 5 December 2013, by section 6(2) of the Companies Amendment Act 2013 (2013 No 111).

  Section 22(3)(b): amended, on 1 July 1994, by section 2 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

23 Change of name

• (1) An application to change the name of a company must—

  • (a) be in the prescribed form; and

  • (b) be accompanied by a notice reserving the name; and

  • (c) subject to the constitution of the company, be made by a director of the company with the approval of its board.

  (2) Subject to its constitution, an application to change the name of a company is not an amendment of the constitution of the company for the purposes of this Act.

  (3) As soon as the Registrar receives a properly completed application, the Registrar must—

  • (a) enter the new name of the company on the New Zealand register; and

  • (b) issue a certificate of incorporation for the company recording the change of name of the company.

  (4) A change of name of a company—

  • (a) takes effect from the date of the certificate issued under subsection (3); and

  • (b) does not affect rights or obligations of the company, or legal proceedings by or against the company, and legal proceedings that might have been continued or commenced against the company under its former name may be continued or commenced against it under its new name.

24 Direction to change name

• (1) If the Registrar believes on reasonable grounds that the name under which a company is registered should not have been reserved, the Registrar may serve written notice on the company to change its name by a date specified in the notice, being a date not less than 20 working days after the date on which the notice is served.

  (2) If the company does not change its name within the period specified in the notice, the Registrar may enter on the New Zealand register a new name for the company selected by the Registrar, being a name under which the company may be registered under this Part.

  (3) If the Registrar registers a new name under subsection (2), the Registrar must issue a certificate of incorporation for the company recording the new name of the company, and section 23(4) applies in relation to the registration of the new name as if the name of the company had been changed under that section.

25 Use of company name

• (1) A company must ensure that its name is clearly stated in—

  • (a) every written communication sent by, or on behalf of, the company; and

  • (b) every document issued or signed by, or on behalf of, the company that evidences or creates a legal obligation of the company.

  (2) Where—

  • (a) a document that evidences or creates a legal obligation of a company is issued or signed by or on behalf of the company; and

  • (b) the name of the company is incorrectly stated in the document,—

  every person who issued or signed the document is liable to the same extent as the company if the company fails to discharge the obligation unless—

  • (c) the person who issued or signed the document proves that the person in whose favour the obligation was incurred was aware at the time the document was issued or signed that the obligation was incurred by the company; or

  • (d) the court is satisfied that it would not be just and equitable for the person who issued or signed the document to be so liable.

  (3) For the purposes of subsections (1) and (2) and of section 180 (which relates to the manner in which a company may enter into contracts and other obligations), a company may use a generally recognised abbreviation of a word or words in its name if it is not misleading to do so.

  (4) If, within the period of 12 months immediately preceding the giving by a company of any public notice, the name of the company was changed, the company must ensure that the notice states—

  • (a) that the name of the company was changed in that period; and

  • (b) the former name or names of the company.

  (5) If a company fails to comply with subsection (1) or subsection (4),—

  • (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).

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).

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).

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.

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.

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).

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 a company fails to comply with subsection (6),—

  • (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 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).

  Section 63(10): replaced, on 11 September 2014, by section 58 of the Companies Amendment Act 2014 (2014 No 46).

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.

65 Stock exchange acquisitions not subject to prior notice to shareholders

• (1) The board of a company may acquire shares on a stock exchange from its shareholders if the following conditions are satisfied:

  • (a) that, prior to the acquisition, the board of the company has resolved—

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

    • (ii) that the terms of and consideration for the acquisition are fair and reasonable to the company; and

    • (iii) that it is not aware of any information that is not available to shareholders—

      • (A) that is material to an assessment of the value of the shares; and

      • (B) as a result of which the terms of and consideration for the acquisition are unfair to shareholders from whom any shares are acquired; and

  • (b) that the number of shares acquired together with any other shares acquired under this section in the preceding 12 months does not exceed 5% of the shares in the same class as at the date 12 months prior to the acquisition of the shares.

  (2) Within 10 working days after the shares are acquired, the company must send to each stock exchange on which the shares of the company are listed a notice containing the following particulars:

  • (a) the class of shares acquired:

  • (b) the number of shares acquired:

  • (c) the consideration paid or payable for the shares acquired:

  • (d) if known to the company, the identity of the seller and, if the seller was not the beneficial owner, the beneficial owner.

  (2A) [Repealed]

  (2B) Acquisitions 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.

  (3) If a company fails to comply with subsection (2),—

  • (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 65(2): replaced, on 1 July 1994, by section 11(1) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

  Section 65(2A): repealed, on 31 August 2012, by section 4(1) of the Companies Amendment Act (No 2) 2012 (2012 No 60).

  Section 65(2B): inserted, on 1 July 1994, by section 11(1) of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

  Section 65(3): amended, on 31 August 2012, by section 4(2) of the Companies Amendment Act (No 2) 2012 (2012 No 60).

66 Cancellation of shares repurchased

• (1) Subject to sections 67A to 67C, shares that are acquired by a company pursuant to section 59 or sections 112 to 112C are deemed to be cancelled immediately on acquisition.

  (2) Shares are acquired for the purposes of subsection (1) on the date on which the company would, apart from this section, become entitled to exercise the rights attached to the shares.

  (3) On the cancellation of a share under this section,—

  • (a) the rights and privileges attached to that share expire; but

  • (b) the share may be reissued in accordance with this Part.

  Section 66(1): replaced, on 1 July 1994, by section 2 of the Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82).

  Section 66(1): amended, on 17 September 2008, by section 5 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

67 Enforceability of contract to repurchase shares

• (1) A contract with a company providing for the acquisition by the company of its shares is specifically enforceable against the company except to the extent that the company would, by performance, be unable to satisfy the solvency test in accordance with section 52.

  (2) The company has the burden of proving that performance of the contract would result in the company being unable to satisfy the solvency test in accordance with section 52.

  (3) Until the company has fully performed a contract referred to in subsection (1), the other party to the contract retains the status of a claimant entitled to be paid as soon as the company is lawfully able to do so or, prior to the removal of the company from the New Zealand register, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.

67A Company may hold its own shares

• (1) Shares acquired by a company pursuant to section 59 or sections 112 to 112C shall not be deemed to be cancelled under section 66(1) if—

  • (a) the constitution of the company expressly permits the company to hold its own shares; and

  • (b) the board of the company resolves that the shares concerned shall not be cancelled on acquisition; and

  • (c) the number of shares acquired, when aggregated with shares of the same class held by the company pursuant to this section at the time of the acquisition, does not exceed 5% of the shares of that class previously issued by the company, excluding shares previously deemed to be cancelled under section 66(1).

  (2) Shares acquired by a company pursuant to section 59 or sections 112 to 112C that, pursuant to this section, are not deemed to be cancelled shall be held by the company in itself.

  (3) A share that a company holds in itself under subsection (2) may be cancelled by the board of the company resolving that the share is cancelled; and the share shall be deemed to be cancelled on the making of such a resolution.

  Section 67A: inserted, on 1 July 1994, by section 3 of the Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82).

  Section 67A(1): amended, on 17 September 2008, by section 6 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

  Section 67A(2): amended, on 17 September 2008, by section 6 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).

67B Rights and obligations of shares company holds in itself suspended

• (1) The rights and obligations attaching to a share that a company holds in itself pursuant to section 67A shall not be exercised by or against a company while it holds the share.

  (2) Without limiting subsection (1), while a company holds a share in itself pursuant to section 67A, the company shall not—

  • (a) exercise any voting rights attaching to the share; or

  • (b) make or receive any distribution authorised or payable in respect of the share.

  Section 67B: inserted, on 1 July 1994, by section 3 of the Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82).

67C Reissue of shares company holds in itself

• (1) Subject to subsection (2), section 47 shall apply to the transfer of a share held by a company in itself as if the transfer were the issue of the share under section 42 or section 44.

  (2) Section 47(2) shall not apply to the transfer of a share held by a company in itself if the share is transferred by means of a system that is approved under section 7 of the Securities Transfer Act 1991.

  (3) Subject to subsection (1), the transfer of a share by a company in itself shall not be subject to any provisions in this Act or the company's constitution relating to the issue of shares, except to the extent the company's constitution expressly applies those provisions.

  (4) A company shall not grant an option to acquire a share it holds in itself or enter into any obligations to transfer such a share where the company has received notice in writing of a takeover offer made under the takeovers code in force under the Takeovers Act 1993 or, in the case of a company that is a party to a listing agreement with a stock exchange, where the exchange makes a public release to the sharemarket that a takeover offer for more than 20% of the company's shares is to be made.

  Section 67C: inserted, on 1 July 1994, by section 3 of the Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82).

  Section 67C(4): amended, on 25 October 2006, by section 30(1) of the Takeovers Amendment Act 2006 (2006 No 48).

68 Meaning of redeemable

• For the purposes of this Act, a share is redeemable if—

  • (a) the constitution of the company makes provision for the company to issue redeemable shares; and

  • (b) the constitution or the terms of issue of the share makes provision for the redemption of that share by the company—

    • (i) at the option of the company; or

    • (ii) at the option of the holder of the share; or

    • (iii) on a date specified in the constitution or the terms of issue of the share—

    for a consideration that is—

    • (iv) specified; or

    • (v) to be calculated by reference to a formula; or

    • (vi) required to be fixed by a suitably qualified person who is not associated with or interested in the company.

  Section 68: replaced, on 3 June 1998, by section 2 of the Companies Amendment Act 1998 (1998 No 31).

69 Redemption at option of company

• (1) A company must not exercise an option to redeem shares unless—

  • (a) the option is exercised in relation to all shareholders of the same class and in a manner that will leave unaffected relative voting and distribution rights; or

  • (b) the option is exercised in relation to 1 or more shareholders and—

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

    • (ii) the option is expressly permitted by the constitution and is exercised in accordance with the procedure set out in section 71.

  (2) A company must not exercise an option to redeem shares unless, before the exercise of the option, the board of the company has resolved—

  • (a) that the redemption of the shares is in the best interests of the company; and

  • (b) the consideration for the redemption of the shares is fair and reasonable to the company.

  (3) The resolution must set out in full the grounds for the directors’ conclusions.

  (4) The directors who vote in favour of a resolution required by subsection (2) must sign a certificate as to the matters set out in that subsection and may combine it with the certificate required by section 70 and any certificate required by section 71.

  (5) A company must not exercise an option to redeem shares under subsection (1) if, after the passing of a resolution under that subsection and before the exercise of the option to redeem the shares, the board ceases to be satisfied that—

  • (a) the redemption of the shares is in the best interests of the company; or

  • (b) the consideration for the exercise of the option is fair and reasonable to the company.

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

70 Company must satisfy solvency test

• (1) A company must not exercise an option to redeem a share unless the board of the company is satisfied on reasonable grounds that the company will, immediately after the share is redeemed, satisfy the solvency test in accordance with section 52.

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

  (3) If, after a resolution is passed under subsection (1) and before the option is exercised, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the share is redeemed, satisfy the solvency test in accordance with section 52, any redemption of the share is deemed not to have been authorised for the purpose of that section.

  (4) 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).

  (5) The provisions of section 56 apply in relation to the redemption of a share at the option of the company with such modifications as may be necessary.

71 Special redemption of shares

• (1) A company may exercise an option to redeem shares under section 69(1)(b)(ii) only if the board has previously resolved—

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

  • (b) that the consideration for the redemption of the shares is fair and reasonable to the remaining shareholders.

  (2) The resolution must set out in full the grounds 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 company must not exercise an option to redeem shares under section 69(1)(b)(ii) if, after the passing of a resolution under subsection (1) and before the option is exercised, the board ceases to be satisfied that—

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

  • (b) the consideration for the redemption of the shares is fair and reasonable to the remaining shareholders.

  (5) Before the option is exercised pursuant to a resolution under subsection (1), the company must send to each shareholder a disclosure document that complies with section 72.

  (6) The option must be exercised not less than 10 and not more than 30 working days after the disclosure document has been sent to each shareholder.

  (7) A shareholder or the company may apply to the court for an order restraining the proposed exercise of the option on the grounds that—

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

  • (b) the consideration for the redemption is not fair or reasonable to the company or remaining shareholders.

  (8) 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).

  (9) 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).

72 Disclosure document

• For the purposes of section 71, a disclosure document is a document that sets out—

  • (a) the nature and terms of the redemption of the shares, and if the option to redeem the shares is to be exercised in relation to specified shareholders, the names of those shareholders; and

  • (b) the text of the resolution required by section 71, 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 redemption.

73 Cancellation of shares redeemed

• (1) Shares that are redeemed by a company pursuant to section 69 are deemed to be cancelled immediately on redemption.

  (2) On the cancellation of a share under this section,—

  • (a) the rights and privileges attached to that share expire; but

  • (b) the share may be reissued in accordance with this Part.

74 Redemption at option of shareholder

• (1) Subject to this section, if a share is redeemable at the option of the holder of the share, and the holder gives proper notice to the company requiring the company to redeem the share,—

  • (a) the company must redeem the share on the date specified in the notice, or if no date is specified, on the date of receipt of the notice; and

  • (b) the share is deemed to be cancelled on the date of redemption; and

  • (c) from the date of redemption the former shareholder ranks as an unsecured creditor of the company for the consideration payable on redemption.

  (2) A redemption under this section—

  • (a) is not a distribution for the purposes of sections 52 and 53; but

  • (b) is deemed to be a distribution for the purposes of subsections (1) and (5) of section 56.

  Section 74(1)(c): amended, on 15  April 2004, by section 4 of the Companies Amendment Act (No 2) 2004 (2004 No 24).

75 Redemption on fixed date

• (1) Subject to this section, if a share is redeemable on a specified date—

  • (a) the company must redeem the share on that date; and

  • (b) the share is deemed to be cancelled on that date; and

  • (c) from that date the former shareholder ranks as an unsecured creditor of the company for the consideration payable on redemption.

  (2) A redemption under this section—

  • (a) is not a distribution for the purposes of sections 52 and 53; but

  • (b) is deemed to be a distribution for the purposes of subsections (1) and (5) of section 56.

  Section 75(1)(c): amended, on 30 June 1997, by section 5 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

76 Financial assistance

• (1) A company may give financial assistance to a person for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, or by its holding company, whether directly or indirectly, only if the financial assistance is given in accordance with subsection (2); and—

  • (a) all shareholders have consented in writing to the giving of the assistance; or

  • (b) the procedure set out in section 78 is followed; or

  • (c) the financial assistance is given in accordance with section 80.

  (2) A company may give financial assistance under subsection (1) if the board has previously resolved that—

  • (a) the company should provide the assistance; and

  • (b) giving the assistance is in the best interests of the company; and

  • (c) the terms and conditions under which the assistance is given are fair and reasonable to the company.

  (3) The resolution must set out in full the grounds for the directors' conclusions.

  (4) The directors who vote in favour of a resolution under subsection (2) must sign a certificate as to the matters set out in that subsection and may combine that certificate with the certificate required under section 77 and any certificate required under section 78.

  (5) A company must not give financial assistance under subsection (1) if, after the passing of a resolution under subsection (2) and before the assistance is given, the board ceases to be satisfied that—

  • (a) the giving of the assistance is in the best interests of the company; or

  • (b) the terms and conditions under which the assistance is proposed are fair and reasonable to the company.

  (6) For the purposes of this section, financial assistance includes a loan, a guarantee, and the provision of a security.

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

77 Company must satisfy solvency test

• (1) A company must not give any financial assistance under section 76 unless the board of the company is satisfied on reasonable grounds that the company will, immediately after the giving of the financial assistance, satisfy the solvency test.

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

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

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

  (5) The provisions of section 56 apply in relation to the giving of financial assistance by a company with such modifications as may be necessary.

  (6) In applying the solvency test for the purposes of this section,—

  assets excludes 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

  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 107(1)(e).

  (7) Nothing in subsection (6) limits or affects the application of section 4(4).

  Section 77(4): amended, on 1 July 2013, by section 413 of the Criminal Procedure Act 2011 (2011 No 81).

  Section 77(6): replaced, on 1 July 1994, by section 12 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

  Section 77(6) assets: amended, on 15 April 2004, by section 5(a) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

  Section 77(6) liabilities: amended, on 15 April 2004, by section 5(b) of the Companies Amendment Act (No 2) 2004 (2004 No 24).

  Section 77(7): inserted, on 1 July 1994, by section 12 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

78 Special financial assistance

• (1) Financial assistance may be given under section 76(1)(b) only if the board has previously resolved—

  • (a) that giving the assistance in question is of benefit to those shareholders not receiving the assistance; and

  • (b) that the terms and conditions under which the assistance is given are fair and reasonable to those shareholders not receiving the assistance.

  (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 company must not give financial assistance under section 76(1)(b) if, after the passing of a resolution under subsection (1) and before the financial assistance is given, the board ceases to be satisfied that—

  • (a) the giving of the financial assistance is of benefit to those shareholders not receiving the assistance; or

  • (b) the terms and conditions under which the assistance is given are fair and reasonable to those shareholders not receiving it.

  (5) Before the financial assistance is given under section 76(1)(b), the company must send to each shareholder a disclosure document that complies with section 79.

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

  (7) A shareholder or the company may apply to the court for an order restraining the proposed assistance being given on the ground that—

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

  • (b) the terms and conditions under which the assistance is to be given are not fair and reasonable to the company and to those shareholders not receiving the assistance.

  (8) 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).

  (9) 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).

79 Disclosure document

• For the purposes of section 78, a disclosure document is a document that sets out—

  • (a) the nature and terms of the financial assistance to be given, and to whom it will be given; and

  • (b) if the financial assistance is to be given to a nominee for another person, the name of that other person; and

  • (c) the text of the resolution required by section 78(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 transaction.

80 Financial assistance not exceeding 5% of shareholders' funds

• (1) Financial assistance may be given under section 76(1)(c), only if—

  • (a) the amount of the financial assistance, together with any other financial assistance given by the company pursuant to this paragraph, repayment of which remains outstanding, would not exceed 5% of the aggregate of amounts received by the company in respect of the issue of shares and reserves as disclosed in the relevant statements or records, and the company receives fair value in connection with the assistance; and

  • (b) within 10 working days of providing the financial assistance, the company sends to each shareholder a notice containing the following particulars:

    • (i) the class and number of shares in respect of which the financial assistance has been provided:

    • (ii) the consideration paid or payable for the shares in respect of which the financial assistance has been provided:

    • (iii) the identity of the person receiving the financial assistance and, if that person is not the beneficial owner of the shares in respect of which the financial assistance has been provided, the identity of that beneficial owner:

    • (iv) the nature and, if quantifiable, the amount of the financial assistance.

  (1A) In subsection (1), relevant statements or records means—

  • (a) financial statements of the company prepared for the most recently completed accounting period in accordance with generally accepted accounting practice; or

  • (b) if those financial statements have not been prepared, the accounting records of the company.

  (2) If a company fails to comply with subsection (1)(b),—

  • (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 80(1)(a): amended, on 1 April 2014, by section 26(1) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

  Section 80(1A): inserted, on 1 April 2014, by section 26(2) of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).

81 Enforceability of transactions

• (1) Failure to comply with section 76 or section 78 or section 79 or section 80 does not affect the validity of a transaction.

  (2) This section does not affect a liability of a director or any other person for breach of a duty, or as a constructive trustee, or otherwise.

82 Subsidiary may not hold shares in holding company

• (1) Subject to this section, a subsidiary must not hold shares in its holding company.

  (2) An issue of shares by a holding company to its subsidiary is void and of no effect.

  (3) A transfer of shares in a holding company to its subsidiary is void and of no effect.

  (4) Where a company that holds shares in another company becomes a subsidiary of that other company—

  • (a) the company may, notwithstanding subsection (1), continue to hold those shares; but

  • (b) the exercise of any voting rights attaching to those shares shall be of no effect.

  (5) Where a company on reregistration under this Act in accordance with the Companies Reregistration Act 1993 held shares in another company and was a subsidiary of that other company,—

  • (a) the company may, notwithstanding subsection (1), continue to hold those shares; but

  • (b) the exercise of any voting rights attaching to those shares shall be of no effect.

  (6) Nothing in this section prevents a subsidiary holding shares in its holding company in its capacity as a personal representative or a trustee unless the holding company or another subsidiary has a beneficial interest under the trust other than an interest that arises by way of security for the purposes of a transaction made in the ordinary course of the business of lending money.

  (7) This section applies to a nominee for a subsidiary in the same way as it applies to the subsidiary.

83 Statement of rights to be given to shareholders

• (1) Every company must issue to a shareholder, on request, a statement that sets out—

  • (a) the class of shares held by the shareholder, the total number of shares of that class issued by the company, and the number of shares of that class held by the shareholder; and

  • (b) the rights, privileges, conditions, and limitations, including restrictions on transfer, attaching to the shares held by the shareholder; and

  • (c) the relationship of the shares held by the shareholder to other classes of shares.

  (2) The company is not obliged to provide a shareholder with a statement if—

  • (a) a statement has been provided within the previous 6 months; and

  • (b) the shareholder has not acquired or disposed of shares since the previous statement was provided; and

  • (c) the rights attached to shares of the company have not been altered since the previous statement was provided; and

  • (d) there are special circumstances that make it reasonable for the company to refuse the request.

  (3) The statement is not evidence of title to the shares or of any of the matters set out in it.

  (4) The statement must state in a prominent place that it is not evidence of title to the shares or of the matters set out in it.

  (5) If a company fails to comply with subsection (1),—

  • (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 penalties set out in section 374(1).

  Section 83(2)(d): replaced, on 30 June 1997, by section 6 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

84 Transfer of shares

• (1) Subject to the constitution of the company, shares in a company may be transferred by entry of the name of the transferee on the share register.

  (2) For the purpose of transferring shares, a form of transfer signed by the present holder of the shares or by his or her personal representative must be delivered to—

  • (a) the company; or

  • (b) an agent of the company who maintains the share register under section 87(3).

  (3) The form of transfer must be signed by the transferee if registration as holder of the shares imposes a liability to the company on the transferee.

  (4) On receipt of a form of transfer in accordance with subsection (2) and, if applicable, subsection (3), the company must forthwith enter or cause to be entered the name of the transferee on the share register as holder of the shares, unless—

  • (a) the board resolves within 30 working days of receipt of the transfer to refuse or delay the registration of the transfer, and the resolution sets out in full the reasons for doing so; and

  • (b) notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and

  • (c) the Act or the constitution expressly permits the board to refuse or delay registration for the reasons stated.

  (5) Subject to the constitution of a company, the board may refuse or delay the registration of a transfer of shares if the holder of the shares has failed to pay to the company an amount due in respect of those shares, whether by way of consideration for the issue of the shares or in respect of sums payable by the holder of the shares in accordance with the constitution.

  (6) If a company fails to comply with subsection (4),—

  • (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).

85 Transfer of shares under approved system

• (1) Where shares in a company are transferred under a system of transfer approved under section 7 of the Securities Transfer Act 1991, the company may refuse to complete or delay the registration of the transfer of the shares if—

  • (a) the board resolves, within 30 working days of such date as may be specified for the purpose in the Order in Council approving the system, to refuse or delay registration of the transfer, and the resolution sets out in full the reasons for doing so; and

  • (b) notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and

  • (c) either—

    • (i) the Act or the constitution expressly permits the board to refuse or delay registration for the reasons stated; or

    • (ii) any identification number assigned to the shares or issued to the holder of the shares under a system of transfer approved under section 7 of the Securities Transfer Act 1991 is not recorded on the form of transfer of the shares or otherwise communicated in writing to the company by or on behalf of the transferor.

  (1A) If shares in a company are transferred in accordance with the rules of a designated settlement system, the company may refuse to complete or delay the registration of the transfer of the shares if—

  • (a) the board of the company resolves, within 30 working days of the date on which the settlement was effected, to refuse or delay registration of the transfer, and the resolution sets out in full the reasons for doing so; and

  • (b) notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and

  • (c) this Act or the constitution of the company expressly permits the board to refuse or delay registration for the reasons stated.

  (2) Subject to subsections (1) and (1A), if a company fails to enter or cause to be entered the name of the transferee on the share register on a transfer of shares effected in accordance with the rules of a designated settlement system, or under a system approved under section 7 of the Securities Transfer Act 1991,—

  • (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 85(1)(c): replaced, on 3 May 2001, by section 5 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).

  Section 85(1A): inserted, on 24 November 2009, by section 17(1) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).

  Section 85(2): amended, on 24 November 2009, by section 17(2)(a) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).

  Section 85(2): amended, on 24 November 2009, by section 17(2)(b) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).

86 Transfer of shares by operation of law

• Shares in a company may pass by operation of law notwithstanding the constitution of the company.

87 Company to maintain share register