NEW ZEALAND Law and Practice Contributed by: Graeme Quigley, Ashton Goatley and Erin Hickey, Webb Henderson
• is otherwise directly or indirectly materially interested in the transaction. A director who is interested in a transaction with the company must disclose that interest to the board immediately after becoming aware that they are interested in the transaction – except where the transaction is in the ordinary course of the company’s business and on its usual terms. Such disclosure must be entered in the interests register, including the nature and monetary value of the interest or the extent of the interest (if not quantifiable). A director may disclose an ongoing interest in a named person or company, with the effect that the director will be treated as having disclosed an interest in any future transaction with that person or company. Failure to disclose an interest does not invali - date the transaction but does allow the company to avoid the transaction at any point during the first three months following the disclosure of the transaction to all shareholders if the com - pany did not receive fair value (based on the knowledge of the company and the interested director at the time the transaction was entered into). Where the property has been transferred on to a third party, the company’s right to avoid the transaction does not affect the title or inter - est of that third party if they are a purchaser for valuable consideration without knowledge of the circumstances under which the first person acquired the property. The default position under the Companies Act is that an interested director may vote on mat - ters relating to the transaction, be counted in the quorum, and otherwise do anything as though the director were not interested in that transac - tion. However, boards often adopt charters or codes of conduct that record their collective expectations as to how conflicts of interest
(which may be more broadly described than the formal definition of “interested” contained in the Companies Act) will be managed. Those char - ters or codes of conduct commonly provide that directors with an actual or potential conflict of interest will abstain from participating in meet - ings and voting on matters in respect of which the conflict exists – an approach that directors of listed companies are also required to follow under the Listing Rules. A director is also subject to restrictions on the disclosure and use of company informa - tion where that information is obtained in their capacity as a director or an employee of the company and would not otherwise be available to them. A director may, unless prohibited by the board, disclose such information to a per - son whose interests the director represents or a person in accordance with whose directions the director is required or is accustomed to act (see 5.2 Role of Shareholders in Company Management ). These exceptions contemplate the concept of a nominee director – ie, a direc - tor nominated by a shareholder to represent its interests on the board of the company. In the latter case, the name of the person to whom the information is disclosed must be entered in the interests register. Alternatively, a director may disclose or make use of such information if: • the board approves the disclosure or use; • the disclosure or use will not, or will not be likely to, prejudice the company; and • particulars of the disclosure or use are entered in the interests register. When a director of a company acquires or dis - poses of “relevant interest” in shares issued by that company, the director must disclose to the
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