Plain language law

New Zealand law explained for everyone

Companies Act 1993

Preliminary

7: Control defined

You could also call this:

“How control of a company's board is determined”

When a company can control another company’s board, it means they have the power to choose who sits on that board. This power lets them appoint or remove all the directors, or enough directors to have most of the voting power at board meetings.

You can tell a company has this control if someone can’t become a director without their say-so, or if being a director or officer in the controlling company automatically makes you a director in the controlled company.

This definition of control is used in section 5 of the Companies Act 1993. It’s important to note that this isn’t the only way a company can control another company’s board, but it’s a clear example of what control means in this law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320102.

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Part 1 Preliminary

7Control defined

  1. For the purposes of section 5, without limiting the circumstances in which the composition of a company's board is to be taken to be controlled by another company, the composition of the board is to be taken to be so controlled if the other company, by exercising a power exercisable (whether with or without the consent or concurrence of any other person) by it, can appoint or remove all the directors of the company, or such number of directors as together hold a majority of the voting rights at meetings of the board of the company, and for this purpose, the other company is to be taken as having power to make such an appointment if—

  2. a person cannot be appointed as a director of the company without the exercise by the other company of such a power in the person's favour; or
    1. a person's appointment as a director of the company follows necessarily from the person being a director or other officer of the other company.

      Compare
      • Corporations Act 1989 s 47 (Aust)