Why do I need a Constitution?
It looks like boring paperwork (and it kinda is!), but it’s an important document.
In New Zealand, companies don’t have to have a constitution. The Companies Act 1993 includes rules for a company, its directors and shareholders which act as a “default constitution”. However, there are some things a company can’t do unless they are authorised in a constitution, such as to buy-back shares from its shareholder, indemnify its directors or employees, get directors and officers insurance for its directors or employees, or issue redeemable shares.
These actions can be very useful for a company to be able to do.
This constitution is designed for a company that is wholly owned by another company (its ‘parent company’). If your company has more than one corporate shareholder, you need our Standard Constitution instead.
What’s in a Constitution for a wholly owned subsidiary?
A simple constitution created by experienced New Zealand lawyers that permits a wholly owned subsidiary company (ie, a company that has only one shareholder) to take certain actions or avoid certain procedures that it would not otherwise be legally able to do.
It doesn’t repeat large chunks of the Companies Act as many constitutions do, and is designed specifically for companies that are 100% controlled by one shareholder. Just a heads up, we couldn’t eliminate all the legalese, as some of the wording is required under the Companies Act to ‘opt-out’ of the default provisions.
This Constitution also includes a Shareholder Resolution Adopting Constitution – required under the Companies Act 1993 for the parent company to approve the adoption of the constitution.
How long will it take to create my document?
Under 5 minutes - less time than making a coffee! During the Q&A you can save your progress to come back later, or repeat the Q&A to change an answer or produce a new version of a document.
What information do I need to complete the Q&A?
- company number (if the company has one)
- minimum and maximum (this is optional) number of directors
- names of the directors (if the constitution is being adopted on incorporation)
- quorum requirements – how many directors must be present at a board meeting?
What if I need help?
On Your Terms has teamed up with Luminate Legal to offer its customers the option of obtaining legal advice from a lawyer to provide extra assurance and peace of mind. If you would like to ask a lawyer some quick questions about your document (or your responses to the Q&A), or have your document reviewed/edited by a lawyer, click here to view and select Luminate Legal's packages and fixed-fee pricing exclusively for On Your Terms customers.
What do I do once my Constitution is created?
The Constitution is ready to go as soon as you have downloaded it. It doesn’t need to be signed. The parent company (being the sole shareholder) must approve and adopt the Constitution by signing the Special Resolution of Shareholder Adopting Constitution. If:
- the company is not yet incorporated (also known as registered), the Constitution must be uploaded to the New Zealand Companies Office at the time the company is incorporated. See our Guide to Incorporating a Company which guides you through the company incorporation process if you wish to do it on your own (without paying for a lawyer or accountant).
- the company already exists, the constitution must be uploaded to the New Zealand Companies Office within 10 working days after it is adopted by the shareholders.
Other helpful information:
- See our Guide to Director Obligations and Responsibilities in New Zealand which includes a summary of the key duties and responsibilities on directors under New Zealand law and our Guide to Incorporating a Company in New Zealand
- You may also find these bundles or documents useful for your business: Director Indemnity Bundle,Transfer of Company Shares and Approvals Bundle, Resolutions to Approve Issue of New Shares, Company Registers
- Check out our FAQs
If you’re unsure whether this document/bundle is what you need, reach out to us at hello@onyourterms.co.nz – we’re happy to help!
If you’re not satisfied with your purchase of this product for any reason, let us know why within 10 days of your purchase and we’ll work with you to make sure you’re happy, including giving you a full refund if necessary.
Disclaimer: On Your Terms was created to provide fast, easy and affordable access to legal information and documentation. We are not a law firm and do not provide legal advice. The information and documents we provide are of a general nature, designed for common situations, and may not be suitable for your needs or circumstances. If you need legal advice, we have a network of specialist law firm partners able to help you here.