NEW ZEALAND Law and Practice Contributed by: Graeme Quigley, Ashton Goatley and Erin Hickey, Webb Henderson
board the number and class of shares in which the relevant interest was acquired or disposed of, the nature of the director’s relevant interest, the consideration, and the date of the transac - tion. That information must be entered in the interests register. A director has a relevant inter - est in a share if: • the director is the beneficial owner of the share; or • the director may exercise (or control the exer - cise of): (a) the power to vote; or (b) the power to acquire, or dispose of, the share. In the case of a listed company, its directors and senior managers are required to also publicly disclose any acquisition or disposal of “relevant interest” in the company’s (and its related bodies corporates’) quoted financial products. A director must not trade in an unlisted com - pany’s shares or other financial products if the director possesses information material to an assessment of the financial products’ value that they would not be in possession of but for their position as director or employee – unless the director pays no less or receives no more than the fair value of the financial products. Other - wise, the director is liable to the counterparty for the difference between fair value and the consideration. As regards the quoted financial products of a listed company, the insider trading provisions of the Financial Markets Conduct Act 2013 (FMCA) apply instead. In general terms, these provisions prohibit persons (including directors) who have “inside information” from: • trading quoted financial products;
• encouraging or advising other persons to trade or hold those financial products (or to advise or encourage a third person to do so); or • disclosing the inside information. In this context, “inside information” refers broad- ly to information that: • is not generally available to the market (but that a reasonable person would expect to have a material effect on the price of the relevant financial products were it generally available to the market); and • relates to particular financial products or issuers (rather than to financial products or issuers generally). 4.6 Legal Duties of Directors/Officers The principal legal duties of directors under the Companies Act are described in the following sections. Directors also have a number of admin - istrative obligations, including those relating to disclosure of their interests and share dealings (see 4.5 Rules/Requirements Concerning Inde- pendence of Directors ), as well as an obligation to supervise the maintenance of the company’s share register and obligations to ensure relevant filings are made with the Companies Office. Section 131 – Good Faith and Best Interests of the Company As mentioned in 4.5 Rules/Requirements Con- cerning Independence of Directors , a direc - tor is required to act in good faith and in what the director believes to be the best interests of the company when exercising their powers or duties. This test is subjective – ie, it relies on the director’s belief, rather than what is objectively in the company’s best interests (Madsen-Ries and Levin as Liquidators of Debut Homes Limited (in liquidation) v Cooper [2020] NZSC 100 at [112]) –
620 CHAMBERS.COM
Powered by FlippingBook