NEW ZEALAND Law and Practice Contributed by: Graeme Quigley, Ashton Goatley and Erin Hickey, Webb Henderson
5. Shareholders 5.1 Relationship Between Companies and Shareholders A company has separate legal personality from its shareholders. Unless the company’s con - stitution 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 distribu - tions, and liability provided for in the constitution (eg, for capital calls on shares). The constitution of the company is binding as between the company and the shareholders and as between the shareholders (Section 31). It is also common for shareholders in more close - ly held companies to enter into shareholders’ agreements that govern the conduct of share - holders and are distinct from the constitution. 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 in its electronic registry, which is freely searchable by the public. The shareholding details of a company’s ten largest sharehold - ers (or, if it is not a publicly listed company, all shareholders), as at the date of the company’s last annual return, are also publicly available on the Companies Office website. 5.2 Role of Shareholders in Company Management Although the business and affairs of the com - pany must be managed by – or under the direc - tion or supervision of – the board of the com - pany, some particularly important decisions are reserved for the shareholders of the company. These include:
is fair to the company. Any director who votes in favour must sign a certificate to this effect that also sets out the grounds for their opinion. Such grounds must be reasonable. If these require - ments are not satisfied, the director receiving the payment or other benefit is liable to the company for the payment or benefit unless they prove that it was fair to the company. For listed companies, the Listing Rules require directors’ remuneration – and any increase in such remuneration – to be approved by ordinary resolution. Failure to do so is a breach of the Listing Rules and action may be taken in accord - ance with the enforcement policy of NZ RegCo (NZX’s independently governed regulatory arm). The Corporate Governance Code also recom - mends that listed companies have a remunera - tion committee – the functions of which include recommending to shareholders (for their approv - al) the appropriate remuneration for directors. 4.11 Disclosure of Payments to Directors/Officers Directors’ remuneration (or any other benefit covered by Section 161) must be entered in the company’s interests register, which must be made available for inspection by shareholders in the company. For listed companies, the Corporate Govern - ance Code also recommends that issuers have a publicly available remuneration policy in which the components of director remuneration are clearly separated. Director remuneration should be fully disclosed to shareholders in the issuer’s annual report, including a breakdown of remu - neration for committee roles and for fees and benefits received for any other services provided to the issuer.
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