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Companies Act 1993

Shares and debentures - Assistance by a company in the purchase of its own shares

76: Financial assistance

You could also call this:

“Rules for companies helping someone buy their shares”

You need to know about how a company can help someone buy its shares. This is called giving financial assistance. A company can do this, but only if it follows certain rules.

The company can give financial assistance if all the shareholders agree in writing, or if they follow a special process described in section 78, or if they do it according to section 80.

Before giving financial assistance, the board of directors must make a decision. They need to agree that the company should provide the assistance, that it’s best for the company, and that the terms are fair to the company. The directors must write down why they think this.

The directors who agree to give the assistance must sign a document saying why they think it’s okay. They can combine this with other documents they need to sign about the assistance.

If the board changes its mind and doesn’t think the assistance is good for the company anymore, or if the terms aren’t fair anymore, they can’t give the assistance.

Financial assistance can be things like giving a loan, promising to pay someone’s debt, or providing something valuable as security.

If a director doesn’t sign the document when they’re supposed to, they’re breaking the law and could be punished as described in section 373(1).

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320421.

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Part 6 Shares and debentures
Assistance by a company in the purchase of its own shares

76Financial assistance

  1. A company may give financial assistance to a person for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, or by its holding company, whether directly or indirectly, only if the financial assistance is given in accordance with subsection (2); and—

  2. all shareholders have consented in writing to the giving of the assistance; or
    1. the procedure set out in section 78 is followed; or
      1. the financial assistance is given in accordance with section 80.

        1. A company may give financial assistance under subsection (1) if the board has previously resolved that—

        2. the company should provide the assistance; and
          1. giving the assistance is in the best interests of the company; and
            1. the terms and conditions under which the assistance is given are fair and reasonable to the company.

              1. The resolution must set out in full the grounds for the directors' conclusions.

              2. The directors who vote in favour of a resolution under subsection (2) must sign a certificate as to the matters set out in that subsection and may combine that certificate with the certificate required under section 77 and any certificate required under section 78.

              3. A company must not give financial assistance under subsection (1) if, after the passing of a resolution under subsection (2) and before the assistance is given, the board ceases to be satisfied that—

              4. the giving of the assistance is in the best interests of the company; or
                1. the terms and conditions under which the assistance is proposed are fair and reasonable to the company.

                  1. For the purposes of this section, financial assistance includes a loan, a guarantee, and the provision of a security.

                  2. Every director who fails to comply with subsection (4) commits an offence and is liable on conviction to the penalty set out in section 373(1).