Why do I need Resolutions to Approve the Issue of New Shares?
In New Zealand, the Companies Act 1993 provides two ways for a company to authorise the issue of new shares:
- by a resolution (and certificate) of directors, under section 47 of the Act; or
- by the agreement of all entitled persons (essentially all shareholders), under section 107(3) of the Act
This Resolutions to Approve Issue of New Shares is flexible and allows for either option. However, if the company can obtain the agreement of all its shareholders to the issue of shares, we recommend using that method as it avoids public disclosure of the terms of issue of the shares, there is no need to separately obtain a waiver from the shareholders of any pre-emptive rights conferred under the Companies Act, and it avoids having to obtain any other shareholder consents required under sections 117 or 129 of the Act.
Any share issue not properly authorised may be invalid and can have serious consequences (including penalties under the Companies Act on both the company and its directors).
A company can't issue (or offer to issue) shares, options or other securities without disclosing certain information to the prospective investor, unless the company is satisfied an exclusion to the information disclosure requirements of the Financial Markets Conduct Act 2013 applies to that offer or issue. The exclusions are in Schedule 1 to the Act, and include offers made under a qualifying employee share scheme, to a relative of a director, to a close business associate and 'small offers'.
Before a company offers to issue shares, it must check whether an exclusion applies. If you’re unsure or need help understanding the exclusions, you should seek legal advice. For information on the exclusions see here and here.
What's in this Resolutions to Approve the Issue of New Shares?
This bundle includes:
- Directors’ Resolution
- Directors’ Certificate OR Shareholder Consent and Waiver (at your option)
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
- The name(s) of each new investor, the number and type of shares (ordinary or preference) being issued, price per share and total price payable (or if the shares are being issued for consideration other than cash, the present cash value and the basis of assessing this), share issue date
- Whether a subscription agreement has been signed with the investor(s)
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 documents are created?
The documents are ready to be signed as soon as you have downloaded them. Once signed, the company can issue the shares to the new shareholder(s) (provided any other conditions have been satisfied and the company has received the subscription price), by updating the Share Register with the new shareholding(s). You need to notify the Registrar of Companies (via the Companies Office) of the share issue within 10 working days after the shares are issued.
Other helpful information:
- You may also find these bundles or documents useful for your business: Company Constitution, Constitution (wholly owned subsidiary), Term Sheet for Shareholders Agreement, Shareholders' Agreement, Director Indemnity Bundle, Term Sheet for Sale and Purchase of Shares (one minority shareholding), Transfer of Company Shares and Approvals Bundle
- Check out our FAQs
If you’re unsure whether this document 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.