NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
if they do not comply, explain why in a formal corpo - rate governance statement. Implications for FDI One of the key considerations for foreign investors in New Zealand when selecting a corporate or other legal entity form is taxation. As outlined in 9.3 Tax Mit- igation Strategies , the acquisition structure (including which legal entity form is utilised) can have a signifi - cant impact on what New Zealand tax consequences arise. 4.2 Relationship Between Companies and Minority Investors The legal relationship between a company and its minority investors is primarily governed by the Com - panies Act, which is relatively permissive. In the absence of any additional requirements under the Listing Rules or industry-specific legislation, a com - pany may add to, negate or modify many (but not all) of the governance provisions of the Companies Act by adopting a constitution. A shareholders’ agreement may also include “reserved matters” for which addi - tional approvals are required. For all companies, Section 174 of the Companies Act gives shareholders a broad right to challenge aspects of the conduct of the affairs of a company that are oppressive, unfairly discriminatory or unfairly prejudi - cial to them. In addition, Sections 110–115 allow dis - senting shareholders in respect of certain key matters to require the company to buy back their shares at a fair and reasonable price. Minority investors in listed companies have addi - tional protections in the Listing Rules, including that an issuer is prohibited from entering into a “material transaction” (being a transaction involving an aggre - gate value above 10% of the issuer’s average market capitalisation) with a related party unless the transac - tion is approved by a simple majority of votes cast by shareholders not involved in the transaction. The Listing Rules also require listed companies to have at least two independent directors and two directors who ordinarily reside in New Zealand (these may be the same individuals, subject to an overall minimum of three directors). The Corporate Governance Code
further recommends that a majority of the board be independent directors. 4.3 Disclosure and Reporting Obligations In addition to the OIO approval requirements dis - cussed in 7.1 Applicable Regulator and Process Overview , other disclosure and reporting obligations for FDI when making, holding or disposing of FDI include the following. • Substantial product holder notices for investments in listed securities – Under the Financial Markets Conduct Act 2013 (FMCA), a person is a “substan - tial product holder” of a listed issuer if they have a “relevant interest” in 5% or more of a class of the issuer’s quoted voting products (eg, ordinary shares). The term “relevant interest” is defined broadly and includes direct or indirect ownership, control of voting rights and control of acquisition or disposal. A substantial product holder must notify the issuer and the NZX (for public release) when they first become a substantial product holder, when the extent of their relevant interest changes by 1% or more of the total or undergoes a change in nature, or when they cease to be a substantial product holder. • Financial reporting requirements – Companies that exceed specified asset or revenue thresholds are required to file signed audited financial statements with the Companies Office within five months of each balance date. • OIO decision summaries – For transactions that require OIO consent, the OIO releases summaries of its decisions on its website in the month follow - ing the decision, whether consent was granted or declined. Acquirers may ask the OIO to have sensitive details, such as the consideration paid, redacted on the basis of specified grounds for withholding information, set out in the Official Infor - mation Act 1982. These include if disclosure would unreasonably prejudice the commercial position of the applicant in circumstances where there is no overriding public interest in disclosure.
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