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Companies Act 1993

Shares and debentures - Redemption of shares

68: Meaning of redeemable

You could also call this:

“Defining when a company's shares can be bought back”

In this law, you need to understand what it means for a share to be ‘redeemable’. A share is redeemable if two things are true:

First, the company’s constitution must say that the company can issue redeemable shares. This means the company is allowed to create shares that can be bought back later.

Second, the company’s constitution or the terms of the share issue must explain how the share can be redeemed. This means the share can be bought back by the company. The redemption can happen in different ways:

The company might choose when to redeem the share. Or, the person who owns the share might get to decide. There might also be a specific date when the share will be redeemed.

The price for redeeming the share can be set in different ways too. It might be a fixed price, or it might be worked out using a formula. Sometimes, a person who knows a lot about this kind of thing (but isn’t connected to the company) might set the price.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320409.

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Part 6 Shares and debentures
Redemption of shares

68Meaning of redeemable

  1. For the purposes of this Act, a share is redeemable if—

  2. the constitution of the company makes provision for the company to issue redeemable shares; and
    1. the constitution or the terms of issue of the share makes provision for the redemption of that share by the company—for a consideration that is—
      1. at the option of the company; or
        1. at the option of the holder of the share; or
          1. on a date specified in the constitution or the terms of issue of the share—
            1. specified; or
              1. to be calculated by reference to a formula; or
                1. required to be fixed by a suitably qualified person who is not associated with or interested in the company.

                Notes
                • Section 68: replaced, on , by section 2 of the Companies Amendment Act 1998 (1998 No 31).