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New Zealand law explained for everyone

Companies Act 1993

Shares and debentures - Transfer of shares

85: Transfer of shares under approved system

You could also call this:

“Rules for transferring company shares through an approved system”

When you want to transfer shares in a company using an approved system, the company can sometimes say no or take longer to register the transfer. This can happen if the board makes a decision within 30 working days to refuse or delay the transfer. They need to give reasons for this decision and tell you and the person you’re transferring to within 5 working days.

The company can only refuse or delay if the law or the company’s rules allow it, or if there’s a problem with the identification number for the shares. If the transfer is done through a special financial system, the company can also refuse or delay if their rules allow it.

If the company doesn’t put the new owner’s name in the share register after a transfer, they’re breaking the law. The company and its directors can get in trouble for this. They might have to pay a fine or face other punishments.

Remember, these rules are there to make sure share transfers are done fairly and properly. If you’re transferring shares, it’s important to follow the right steps and be aware that sometimes there might be delays or issues.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320443.

Topics:
Business > Industry rules
Business > Fair trading
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Part 6 Shares and debentures
Transfer of shares

85Transfer of shares under approved system

  1. Where shares in a company are transferred under a system of transfer approved under section 376 of the Financial Markets Conduct Act 2013, the company may refuse to complete or delay the registration of the transfer of the shares if—

  2. the board resolves, within 30 working days of such date as may be specified for the purpose in the Order in Council approving the system, to refuse or delay registration of the transfer, and the resolution sets out in full the reasons for doing so; and
    1. notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and
      1. either—
        1. the Act or the constitution expressly permits the board to refuse or delay registration for the reasons stated; or
          1. any identification number assigned to the shares or issued to the holder of the shares under a system of transfer approved under section 376 of the Financial Markets Conduct Act 2013 is not recorded on the form of transfer of the shares or otherwise communicated in writing to the company by or on behalf of the transferor.

          2. If shares in a company are transferred in accordance with the rules of a designated FMI, the company may refuse to complete or delay the registration of the transfer of the shares if—

          3. the board of the company resolves, within 30 working days of the date on which the settlement was effected, to refuse or delay registration of the transfer, and the resolution sets out in full the reasons for doing so; and
            1. notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and
              1. this Act or the constitution of the company expressly permits the board to refuse or delay registration for the reasons stated.

                1. Subject to subsections (1) and (1A), if a company fails to enter or cause to be entered the name of the transferee on the share register on a transfer of shares effected in accordance with the rules of a designated FMI, or under a system approved under section 376 of the Financial Markets Conduct Act 2013,—

                2. the company commits an offence and is liable on conviction to the penalty set out in section 373(1); and
                  1. every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1).

                    Notes
                    • Section 85(1): amended, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                    • Section 85(1)(c): replaced, on , by section 5 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).
                    • Section 85(1)(c)(ii): amended, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                    • Section 85(1A): inserted, on , by section 17(1) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).
                    • Section 85(1A): amended, on , by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
                    • Section 85(2): amended, on , by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).
                    • Section 85(2): amended, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                    • Section 85(2): amended, on , by section 17(2)(a) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).
                    • Section 85(2): amended, on , by section 17(2)(b) of the Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53).