NEW ZEALAND Law and Practice Contributed by: Graeme Quigley, Ashton Goatley and Erin Hickey, Webb Henderson
management team, if it has one. (It is common for boards of directors to appoint senior employees to management positions and delegate the necessary authority for managing the day-to-day affairs of the business to those senior employees – see 2.2 Types of Decisions .) 2.2 Types of Decisions Under the Companies Act, shareholder approval is required for certain significant matters, including adopting or altering the constitution, approving an amalgamation, commencing a voluntary liquidation, and entering into “major transactions”. Major transac - tions are, in broad terms, those involving the acquisi - tion or disposal of assets, rights or interests (or the incurring of obligations or liabilities) worth more than 50% of the company’s gross asset value immediately before the transaction. In addition, for NZX-listed entities, the Listing Rules require shareholder approval for material related-party transactions and some categories of major transac - tions. Recent updates to NZX guidance reflect a shift towards stricter application of the criteria for waivers from these requirements, to preserve shareholder vot - ing rights. Other decisions rest with the board. While the board may delegate its powers, it remains responsible for monitoring the decisions made by its delegate. There are, however, some powers that may not be delegat - ed by the board, including issuing shares, authoris - ing dividends or other distributions, and acquiring the company’s own shares. 2.3 Decision-Making Processes Shareholder resolutions may be passed at a meeting (see 4.3 Shareholder Meetings ) or by written resolu - tion. When shareholders exercise a power reserved to them by the Companies Act or the company’s consti - tution, the power is exercised by ordinary resolution (ie, a simple majority of votes cast on the resolution) unless otherwise specified in the relevant provision of the Companies Act or constitution. Certain mat - ters require a “special resolution”, which must be approved by at least 75% of votes cast at a meeting.
That threshold may be increased (but not lowered) by the company’s constitution. A written resolution must be signed by at least 75% of shareholders who together hold at least 75% of the voting rights, and must be circulated to non-sign - ing shareholders within five working days after it is passed. Decision-Making by Directors Directors may make decisions at meetings or by a writ - ten resolution. Schedule 3 to the Companies Act sets default rules for directors’ meetings, including notice (two business days), quorum (a majority), attendance (electronic means are permitted), and voting (a simple majority of votes cast at the meeting, with the chair not having a casting vote). The board must keep min - utes of all meetings. Written resolutions require the assent of all directors entitled to receive notice, unless the constitution provides otherwise. Under the Companies Act, companies have a sin - gle board. Boards may appoint committees to take responsibility for particular aspects of the business or the governance of the company, and the Listing Rules require listed companies to have an audit com - mittee. The CGC also recommends that listed compa - nies have a remuneration committee and a nomination committee. 3.2 Board Members The Companies Act only provides for one class of director, meaning that all directors have the same fun - damental role. However, in practice, committee mem - berships can mean that directors are more involved in certain aspects of the business or its governance than other areas. In addition, the company’s constitution may (if desired) specify different categories of direc - tors. Usually, the board will elect a chair. The default position under the Companies Act is that the chair does not have a casting vote. 3. Directors and Officers 3.1 Board Structure
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