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Companies Act 1993

Shareholders and their rights and obligations - Minority buy-out rights

112A: Price for shares referred to arbitration if shareholder objects to price

You could also call this:

“Settling share price disputes through independent arbitration”

If you disagree with the price a company offers for your shares, you can ask for an arbitration. This means a neutral person will decide on a fair price. The company must pay you the price they first offered within 5 working days of your objection. This is called a provisional price.

If the arbitrator decides the shares are worth more than the provisional price, the company must pay you the difference. If the arbitrator decides the shares are worth less, you must pay back the extra money to the company.

Usually, the arbitrator will add interest to any extra payment. If the company owes you money, the arbitrator might also give you money for any losses you had because of the lower initial payment.

Any payments decided by the arbitrator must be made within 10 days, unless the arbitrator says otherwise.

This process follows the rules of the Arbitration Act 1996. You can’t change some parts of this act, like the rules about costs. If the company owes you money, these costs can include your legal fees and the cost of any expert witnesses you needed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1624955.

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Business > Industry rules
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Part 7 Shareholders and their rights and obligations
Minority buy-out rights

112APrice for shares referred to arbitration if shareholder objects to price

  1. If a company receives an objection to the price offered for shares in accordance with section 112(4),—

  2. the following issues must be submitted to arbitration:
    1. the fair and reasonable price for the shares, on the basis set out in section 112(2) and (3); and
      1. the remedies available to the holder of the shares or the company in respect of any price for the shares that differs from that determined by the board under section 112; and
      2. the company must, within 5 working days of receiving the objection, pay to the shareholder a provisional price in respect of each share equal to the price offered by the board under section 112(1).

        1. If the price determined for the shares—

        2. exceeds the provisional price paid, the arbitral tribunal must order the company to pay the balance owing to the shareholder:
          1. is less than the provisional price paid, the arbitral tribunal must order the shareholder to pay the excess to the company.

            1. Except in exceptional circumstances, an arbitral tribunal must award interest on any balance owing or excess to be paid under subsection (2).

            2. If a balance is owing to the shareholder, an arbitral tribunal may award to the shareholder, in addition to or instead of an award of interest, damages for loss attributable to the shortfall in the initial payment.

            3. Any sum that must be paid in accordance with this section must be paid no later than 10 days after the date of the arbitral tribunal’s determination, unless the arbitral tribunal specifically orders otherwise.

            4. A submission to arbitration under this section is an arbitration agreement for the purposes of the Arbitration Act 1996, and the provisions of that Act apply accordingly.

            5. Clause 6 of Schedule 2 of the Arbitration Act 1996 may not be excluded from the arbitration agreement, and the term costs and expenses of an arbitration in that clause includes, where a balance is owing to the shareholder,—

            6. the reasonable legal costs of the shareholder on a solicitor-and-client basis; and
              1. the reasonable costs of expert witnesses.

                Notes
                • Section 112A: inserted, on , by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).