Plain language law

New Zealand law explained for everyone

Companies Act 1993

Shareholders and their rights and obligations - Liability of shareholders

101: Shareholders not required to acquire shares by alteration to constitution

You could also call this:

“Company rule changes can't force you to buy more shares”

You don’t have to buy more shares in a company just because the company’s rules change. If the company changes its constitution (its main rules) in a way that would make you have to buy more shares than you already have, you don’t have to do it unless you agree in writing. This is true even if the change would increase what you owe to the company. You can agree to the change before it happens, when it happens, or after it happens, but it’s your choice. The company can’t force you to buy more shares or take on more responsibility without your written agreement.

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 It might be out of date or be missing some parts.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=DLM320475.

Topics:
Business > Industry rules
Business > Fair trading
Money and consumer rights > Consumer protection
Previous

100: Liability for calls, or

“Shareholders' responsibilities for unpaid amounts on shares”

Next

102: Liability of personal representative, or

“When a personal representative holds shares for a deceased person's estate, their liability is limited”

Part 7 Shareholders and their rights and obligations
Liability of shareholders

101Shareholders not required to acquire shares by alteration to constitution

  1. Notwithstanding anything in the constitution of the company, a shareholder is not bound by an alteration of the constitution of a company that—

  2. requires the shareholder to acquire or hold more shares in the company than the number held on the date the alteration is made; or
    1. increases the liability of the shareholder to the company—
        1. unless the shareholder agrees in writing to be bound by the alteration either before, on, or after it is made.