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Companies Act 1993

Shares and debentures - Issue of shares

44: Shareholder approval for issue of shares

You could also call this:

“Company boards can issue new shares if shareholders approve changes to company rules”

If a company can’t issue shares because of rules in its constitution, the board can still issue them if they get approval to change the constitution. This approval needs to be obtained in the same way as changing the constitution itself.

Once the board gets approval, they can issue shares whenever they want, to anyone they choose, and in any amount they think is right.

After getting approval, the board must tell the Registrar about it within 10 working days. They need to send a special form to do this.

If issuing new shares affects the rights of a specific group of shareholders, the board still needs to get approval from that group as per section 117.

Even if the board doesn’t follow these rules, the shares they issue are still valid.

If the board doesn’t tell the Registrar about the approval within 10 working days, each director can get in trouble. They might be punished as described in section 374(2).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320159.

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43: Notice of share issue, or

“Telling the Registrar when new shares are issued”

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Part 6 Shares and debentures
Issue of shares

44Shareholder approval for issue of shares

  1. Notwithstanding section 42, if shares cannot be issued by reason of any limitation or restriction in the company's constitution, the board may issue shares if the board obtains the approval for the issue in the same manner as approval is required for an alteration to the constitution that would permit such an issue.

  2. Subject to the terms of the approval, the shares may be issued at any time, to any person, and in any number the board thinks fit.

  3. Within 10 working days of approval being given under subsection (1), the board must ensure that notice of that approval in the prescribed form is delivered to the Registrar for registration.

  4. Nothing in this section affects the need to obtain the approval of an interest group in accordance with section 117 (which relates to the alteration of shareholders' rights) if the issue of shares affects the rights of that interest group.

  5. A failure to comply with this section does not affect the validity of an issue of shares.

  6. If the board of a company fails to comply with subsection (3), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).