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Companies Act 1993

Directors and their powers and duties - Transactions involving self-interest

146: Meaning of relevant interest

You could also call this:

“What counts as having control over a company's shares”

You have a ‘relevant interest’ in a company’s share if you’re a director of that company and you:

Own the share, or can vote with it, or control how someone votes with it. You also have a relevant interest if you can buy or sell the share, or control how someone else buys or sells it.

You might have these powers because of an agreement or understanding about the share, even if you’re not part of that agreement.

Your relevant interest isn’t affected by things like whether your power is direct or indirect, legal or not, or if it depends on something happening first.

If you’re not a director, but you always do what a director says about voting or buying and selling shares, that director has a relevant interest in those shares.

A director also has a relevant interest if they control 20% or more of another person’s shares, and that person would have a relevant interest if they were a director.

When the law talks about ‘power’, it includes power that comes from breaking agreements, even if those agreements can’t be enforced by law.

Remember, if you want to know more about how this applies to specific situations, you should look at section 148 of the Companies Act 1993.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320681.

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Part 8 Directors and their powers and duties
Transactions involving self-interest

146Meaning of relevant interest

  1. For the purposes of section 148, a director of a company has a relevant interest in a share issued by a company (whether or not the director is registered in the share register as the holder of it) if the director—

  2. is a beneficial owner of the share; or
    1. has the power to exercise any right to vote attached to the share; or
      1. has the power to control the exercise of any right to vote attached to the share; or
        1. has the power to acquire or dispose of the share; or
          1. has the power to control the acquisition or disposition of the share by another person; or
            1. under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share (whether or not that person is a party to it)—
              1. may at any time have the power to exercise any right to vote attached to the share; or
                1. may at any time have the power to control the exercise of any right to vote attached to the share; or
                  1. may at any time have the power to acquire or dispose of, the share; or
                    1. may at any time have the power to control the acquisition or disposition of the share by another person.

                    2. Where a person would, if that person were a director of the company, have a relevant interest in a share by virtue of subsection (1) and—

                    3. that person or its directors are accustomed or under an obligation, whether legally enforceable or not, to act in accordance with the directions, instructions, or wishes of a director of the company in relation to—
                      1. the exercise of the right to vote attached to the share; or
                        1. the control of the exercise of any right to vote attached to the share; or
                          1. the acquisition or disposition of the share; or
                            1. the exercise of the power to control the acquisition or disposition of the share by another person; or
                            2. a director of the company has the power to exercise the right to vote attached to 20% or more of the shares of that person; or
                              1. a director of the company has the power to control the exercise of the right to vote attached to 20% or more of the shares of that person; or
                                1. a director of the company has the power to acquire or dispose of 20% or more of the shares of that person; or
                                  1. a director of the company has the power to control the acquisition or disposition of 20% or more of the shares of that person,—
                                      1. that director has a relevant interest in the share.

                                    1. A person who has, or may have, a power referred to in any of paragraphs (b) to (f) of subsection (1), has a relevant interest in a share regardless of whether the power—

                                    2. is expressed or implied:
                                      1. is direct or indirect:
                                        1. is legally enforceable or not:
                                          1. is related to a particular share or not:
                                            1. is subject to restraint or restriction or is capable of being made subject to restraint or restriction:
                                              1. is exercisable presently or in the future:
                                                1. is exercisable only on the fulfilment of a condition:
                                                  1. is exercisable alone or jointly with another person or persons.

                                                    1. A power referred to in subsection (1) exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.

                                                    2. A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them, whether or not it is legally enforceable.

                                                    Notes
                                                    • Section 146(2): amended, on , by section 13 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).