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New Zealand law explained for everyone

Companies Act 1993

Shares and debentures - Debentures

95A: Perpetual debentures

You could also call this:

“Companies can issue loans that may never be repaid”

A company can issue a special type of loan called a debenture. When a company creates a debenture, it can include terms that say the loan will never be paid back, or will only be paid back if something specific happens or after a very long time. These terms are allowed and are not invalid just because they make the loan hard or impossible to repay.

This rule applies even if other laws or legal principles might suggest otherwise. Specifically, it overrides section 97 of the Property Law Act 2007 and any other rules that courts or lawyers might use to argue against such terms.

You should know that this law is part of the Companies Act 1993, which sets out rules for how companies in New Zealand should operate.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1122454.

Topics:
Business > Industry rules
Business > Fair trading
Money and consumer rights > Banking and loans
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95: Share certificates, or

“Rules for receiving and using share certificates”

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95B: Power to reissue redeemed debentures in certain cases, or

“Reissuing or replacing company debentures that have been paid off”

Part 6 Shares and debentures
Debentures

95APerpetual debentures

  1. A term that is expressed in a debenture or in a deed securing a debenture, issued or executed by a company, is not invalid by reason only that it provides that the debenture is—

  2. irredeemable; or
    1. redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

      1. This section applies despite anything to the contrary in section 97 of the Property Law Act 2007 or in any rule of law or equity.

      Compare
      Notes
      • Section 95A: inserted, on , by section 364(1) of the Property Law Act 2007 (2007 No 91).