Plain language law

New Zealand law explained for everyone

Companies Act 1993

Shareholders and their rights and obligations - Interest groups

118: Shareholder may require company to purchase shares

You could also call this:

“You can ask the company to buy your shares if you disagree with major changes”

You have the right to ask the company to buy your shares if certain things happen. This can occur when a group of shareholders with the same interests (called an interest group) decides to do something that changes the rights of some shares. If this happens, and you’re part of that group but you didn’t agree with the decision, you can make the company buy your shares.

Here’s how it works: If the interest group votes to approve an action that affects share rights, and you voted against it with all the votes for your shares, you can ask the company to buy those shares. The same applies if the decision was made without a vote and you didn’t sign the agreement.

The company must buy your shares following the rules set out in section 111 of this law. This protects you if you don’t agree with a big change that most other shareholders in your group want.

Remember, this only applies to the shares you own that are affected by the decision. It’s a way to make sure you’re not stuck with shares in a company that’s doing something you don’t agree with.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320611.

Topics:
Business > Industry rules
Business > Fair trading
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117: Alteration of shareholder rights, or

“Changing shareholder rights requires approval from affected groups”

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119: Actions not invalid, or

“Company actions affecting share rights can still be valid without proper approval”

Part 7 Shareholders and their rights and obligations
Interest groups

118Shareholder may require company to purchase shares

  1. Where—

  2. an interest group has, under section 117, approved, by special resolution, the taking of action that affects the rights attached to shares; and
    1. the company becomes entitled to take the action; and
      1. a shareholder who was a member of the interest group cast all the votes attached to the shares registered in that shareholder's name and having the same beneficial owner against approving the action; or
        1. where the resolution approving the taking of the action was passed under section 122, a shareholder who was a member of the interest group did not sign the resolution,—
            1. that shareholder is entitled to require the company to purchase those shares in accordance with section 111.