Who are these Resolutions to Approve Agreements and Transactions for?
This simple, easy-to-understand Directors’ Resolution with an optional Shareholders’ Resolution is for any privately owned New Zealand company approving entry into an agreement, contract or transaction and authorising its directors to sign it.
Why do I need Resolutions to Approve Agreements and Transactions?
Under the Companies Act 1993, directors are delegated certain powers by the shareholders of a company so that they can manage and run the company. This means directors have the power to enter into agreements or contracts on behalf of the company. To enter into those agreements or contracts, the board of directors must first authorise the entry by resolution of the directors. If the company has a delegated authority framework, where the company essentially pre-authorises certain directors or staff to enter into certain agreements, and the transaction is not a ‘major transaction’ (or doesn’t otherwise require shareholder approval), you may not need the directors to provide authorisation (and therefore you will not require the Resolutions to Approve Agreements and Transactions).
If the transaction being approved is a ‘major transaction’ under section 129 of the Companies Act 1993, the shareholders must also approve the transaction before the company signs the agreement. A major transaction involves assets or obligations greater in value than half of the company’s existing assets. Also, if a director has a conflict of interest relating to the transaction (defined as ‘interested’ in the Companies Act 1993), approval of all shareholders (and anyone given the powers of a shareholder under the company’s constitution) is also required.
Many standard commercial agreements (including banking documentation) will contain ‘warranties’ (contractual promises or guarantees) from all parties confirming that the agreement has been properly authorised and that each party has the power and authority to sign it. This bundle contains the resolutions needed to authorise a company's directors' entry into these agreements.
What’s in this Bundle?
In addition to Directors Resolutions authorising entry into an agreement or transaction, this bundle contains an optional Shareholders’ Resolution, required if the transactions being approved are ‘major transactions’ under section 129 of the Companies Act 1993 or require approval of all ‘entitled persons’ (essentially all shareholders) due to a director conflict of interest. You will be asked the relevant questions to determine whether a Shareholders’ Resolution is required or not when you complete the Q&A.
How long will it take to create my documents?
5-10 minutes - less time than it takes to email your lawyer! 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?
- The company’s New Zealand Business Number – this can be found by searching the company here.
- A description of the agreement, contract or transaction being authorised
- Whether the transaction is a ‘major transaction’ – see above
- Whether a director has a conflict of interest in the transaction (such as if the director is related to the other party to the transaction or will get some material financial benefit from the transaction)
- How many directors does the company have
- The names of the shareholders
What if I need help?
We’d love to help. Just contact us at hello@onyourterms.co.nz and we can either help over email or jump on a call.
Your documents will be downloadable in MS Word, so you can make changes if you like (and add branding). Also, our legal partner, Luminate Legal, can provide legal advice for a fixed price if you’d like it.
What do I do once my documents are created?
The documents are ready to sign as soon as you download them. As the resolutions are written resolutions (as opposed to being passed at a meeting), all directors and shareholders (if shareholder approval is required) should sign unless the company’s constitution clearly states otherwise.
Other helpful information:
- See our Guide to Director's Obligations and Responsibilities
- You may also find these bundles or documents useful for your business: Company Constitution, Shareholders' Agreement and Constitution Bundle, Constitution, Term Sheet for Shareholders' Agreement, Shareholders' Agreement, Director Indemnity Bundle, Transfer of Company Shares and Approvals Bundle
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.