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Companies Act 1993

Shareholders and their rights and obligations - Minority buy-out rights

112: Price for shares to be purchased by company determined

You could also call this:

“How the company decides the price when buying your shares”

When the company agrees to buy your shares, they must tell you the price they want to pay within 5 working days. They’ll explain how they worked out this price.

The price should be fair and reasonable. To work it out, the company will:

  1. Calculate the value of all shares in your share class.
  2. Adjust this value to ignore any changes caused by the event that made you want to sell your shares.
  3. Give you your share of this adjusted value based on how many shares you own.

Sometimes, the company might use a different way to set the price if this method would be unfair to you or the company.

You can disagree with the price if you tell the company in writing within 10 working days.

If you don’t object to the price, the company must buy your shares at that price within 10 working days after you accept their offer or after 10 working days have passed since they told you the price.

The company might agree with you in writing to buy the shares on a different date.

These rules apply when a decision has been made that allows you to make the company buy your shares.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320498.

Topics:
Business > Industry rules
Business > Fair trading
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111: Notice requiring purchase, or

“How to tell a company you want them to buy your shares”

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Part 7 Shareholders and their rights and obligations
Minority buy-out rights

112Price for shares to be purchased by company determined

  1. Within 5 working days of giving notice under section 111(2)(e) that the board agrees to the purchase of shares by the company, the board must give to the holder of the shares written notice of—

  2. the price it offers to pay for those shares; and
    1. how—
      1. the matters in subsection (2) were calculated; or
        1. the price was calculated under subsection (3) and why calculating the price using the methodology set out in paragraphs (a) to (c) of subsection (2) would be clearly unfair.

        2. That price must be a fair and reasonable price (as at the close of business on the day before the date on which the resolution was passed) for the shares held by the shareholder, calculated as follows:

        3. first, the fair and reasonable value of the total shares in each class to which the shares belong must be calculated (the class value):
          1. secondly, each class value must be adjusted to exclude any fluctuation (whether positive or negative) in the class value that has occurred (whether before or after the resolution was passed) that was due to, or in expectation of, the event proposed or authorised by the resolution:
            1. thirdly, a portion of each adjusted class value must be allocated to the shareholder in proportion to the number of shares he, she, or it holds in the relevant class.

              1. However, a different methodology from that set out in paragraphs (a) to (c) of subsection (2) may be used to calculate the fair and reasonable price for the shares if using the methodology set out in those paragraphs would be clearly unfair to the shareholder or the company.

              2. The shareholder may object to the price offered by the board for the shares by giving written notice to the company no later than 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

              3. If the company does not receive an objection to the price in accordance with subsection (4), the company must purchase all the shares at the nominated price no later than 10 working days after—

              4. the date on which the board’s offer under subsection (1) is accepted; or
                1. if the board has not received an acceptance, the date that is 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

                  1. The time periods in subsection (5) do not apply if there is a written agreement between the board and the shareholder that specifically sets a different date for purchase of the shares.

                  2. In this section, resolution means the resolution referred to in section 110 or 118 that, due to it having been passed, entitles the shareholder to require the company to purchase the shareholder’s shares in accordance with section 111.

                  Notes
                  • Section 112: replaced, on , by section 7 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).