NEW ZEALAND Law and Practice Contributed by: Graeme Quigley, Ashton Goatley and Erin Hickey, Webb Henderson
4. Shareholders 4.1 Companies and Shareholders
er that exercises, or takes part in deciding whether to exercise, that power is deemed to be a director and subject to the directors’ duties contained in Sections 131 to 138 in relation to that action. Similar provisions apply where the constitution of a company requires a director or the board to exercise or refrain from exercising a power in accordance with a decision or direction by shareholders or, as mentioned in 3.5 Inde- pendence of Directors , where a director or the board is accustomed to acting or required to act in accord - ance with another person’s directions or instructions. 4.3 Shareholder Meetings The board of a company is required to call an annual shareholders’ meeting unless there is no business to be conducted, the board resolves not to hold one, and the company’s constitution does not require it. The board, or any person authorised by the constitu - tion, may call a shareholders’ meeting at any time. A meeting must be called on the written request of shareholders holding at least 5% of the voting rights. Schedule 1 to the Companies Act sets out the default rules for proceedings at shareholders’ meetings, as outlined below, but subject to modification by the company’s constitution. Written notice of the meeting, specifying the time, the place, the nature of the busi - ness to be transacted, and the text of any proposed special resolution, must be given to each shareholder, director and auditor at least ten working days prior to the meeting. Meetings may be held in person or by audio or audi - ovisual communication. Shareholders may attend personally, appoint a proxy or, if permitted by the constitution, vote by post (including electronically). A quorum is present if those attending or voting by proxy or postal vote hold a majority of the votes enti - tled to be cast. If the directors have elected a chair of the board, that person must chair the meeting if they are present. If the chair is not present within 15 minutes, the share - holders present may choose one of their number to chair the meeting.
A company has separate legal personality from its shareholders. Unless the company’s constitution provides otherwise, shareholders are not liable for the company’s obligations merely because they are shareholders. As such, their liability to the company is limited to amounts unpaid on their shares, liability for breaches of duty if they act as “deemed directors” of the company, recovery of unauthorised distributions, and liability provided for in the constitution (such as capital calls). The constitution of the company is binding as between the company and the shareholders and as between the shareholders (Section 31). In closely held com - panies, shareholders often enter into shareholders’ agreements regulating shareholder conduct. The key advantage of such an agreement is that it does not have to be disclosed – whereas the constitution must be filed with the Companies Office and is publicly searchable, as are the shareholding details of a com - pany’s ten largest shareholders (or, if it is not a publicly listed company, all shareholders). 4.2 Role of Shareholders Although the company’s business and affairs are man - aged by, or under the direction or supervision of, the board, certain key decisions are reserved to share - holders. These include approving a major transaction by special resolution (see 2.2 Types of Decisions ), appointing or removing directors by ordinary resolu - tion, and resolving to amalgamate (other than within a wholly owned group) or to commence a voluntary solvent liquidation, each by special resolution. The chair at a shareholders’ meeting must allow a reasonable opportunity for shareholders to question, discuss or comment on the management of the com - pany. Shareholders may also pass resolutions relating to the management of the company but, unless the constitution provides otherwise, such resolutions are not binding on the board. In addition, the company’s constitution may confer powers upon shareholders that would otherwise be exercised by the board (Section 126 (2)). A sharehold -
547 CHAMBERS.COM
Powered by FlippingBook