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New Zealand law explained for everyone

Companies Act 1993

Shareholders and their rights and obligations - Meetings of shareholders

122: Resolution in lieu of meeting

You could also call this:

“Making company decisions without holding a meeting”

You can make decisions for your company without having a meeting. This is called a ‘resolution in lieu of meeting’. Here’s how it works:

You need to get most of the shareholders to agree in writing. At least 75% of the shareholders who can vote must sign the resolution. Sometimes, your company’s rules might say you need more than 75%. If so, you need to follow that higher number.

This written agreement is just as good as if you had a real meeting. You can use it for any decision that the law or your company’s rules say needs to be made at a meeting.

For some special decisions, like those about financial reporting, you need 95% of the shareholders to agree.

The written agreement can be on one document, or it can be on many documents. These can be letters, emails, or other types of messages. Each shareholder (or someone acting for them) needs to sign or agree to it.

If you use this method, you don’t need to have the usual yearly meeting that the law usually asks for.

After the decision is made, you need to tell any shareholders who didn’t sign within 5 working days. You need to send them a copy of the decision. If it was a special decision about changing shareholder rights, you also need to tell them about their rights to disagree.

You don’t need to tell shareholders before you ask them to sign this kind of agreement.

If your company doesn’t tell the other shareholders about the decision within 5 working days, it’s breaking the law. The company and its directors can get in trouble for this.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320619.

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Part 7 Shareholders and their rights and obligations
Meetings of shareholders

122Resolution in lieu of meeting

  1. Subject to subsections (2) and (3), a resolution in writing signed by not less than—

  2. 75%; or
    1. such other percentage as the constitution may require for passing a special resolution,—
        1. whichever is the greater, of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% or, if a higher percentage is required by the constitution, that higher percentage, of the votes entitled to be cast on that resolution, is as valid as if it had been passed at a meeting of those shareholders.

      1. A resolution in writing that—

      2. relates to a matter that is required by this Act or by the constitution to be decided at a meeting of the shareholders of a company; and
        1. is signed by the shareholders specified in subsection (3)—
            1. is made in accordance with this Act or the constitution of the company.

          1. For the purposes of subsection (2)(b), the shareholders are,—

          2. in the case of a resolution under section 207I or 207J, the shareholders who together hold not less than 95% of the votes entitled to be cast on the resolution:
            1. in any other case, the shareholders referred to in subsection (1).

              1. Any resolution in writing under this section may consist of 1 or more documents in similar form (including letters, telegrams, cables, facsimiles, telex messages, electronic mail, or other similar means of communication) each signed or assented to by or on behalf of 1 or more of the shareholders specified in subsection (3).

              2. It is not necessary for the board of a company to call, or for a company to hold, an annual meeting of shareholders under section 120 if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with subsections (2) and (3).

              3. Section 120(5) does not limit subsection (4).

              4. Within 5 working days of a resolution being passed under this section, the company must send to every shareholder who did not sign the resolution or on whose behalf the resolution was not signed,—

              5. a copy of the resolution; and
                1. if the resolution was a special resolution required by section 106(1)(a) or (b), a statement setting out the rights of shareholders under section 110.

                  1. A resolution may be signed under subsection (1) or subsection (2) without any prior notice being given to shareholders.

                  2. If a company fails to comply with subsection (5),—

                  3. the company commits an offence and is liable on conviction to the penalty set out in section 373(1):
                    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 122(1): replaced, on , by section 8(1) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).
                      • Section 122(3)(a): replaced, on , by section 28 of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).
                      • Section 122(3A): inserted, on , by section 8(2) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).
                      • Section 122(3A): amended, on , by section 8 of the Companies Act 1993 Amendment Act 2001 (2001 No 18).
                      • Section 122(4): replaced, on , by section 19 of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                      • Section 122(4A): inserted, on , by section 19 of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                      • Section 122(5): replaced, on , by section 9 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).