Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
172: Actions by shareholders to require company to act
or “Shareholders can ask the court to make the company's board take action”
You could also call this:

“How shareholders can group together to take legal action against a company or director”

If you’re a shareholder in a company and you want to take legal action against the company or one of its directors, you might not have to do it alone. If other shareholders have the same or very similar concerns as you, the court can choose you to represent all or some of these shareholders. This is called a representative action.

When the court appoints you as a representative, they can make decisions about how the legal case will be managed. They can decide who will be in charge of the case and how it will be run. They can also make choices about who will pay for the legal costs. If the case is successful and the company or director has to pay money, the court can decide how that money will be shared among all the shareholders you’re representing.

This process helps to make things simpler when many shareholders have the same problem with a company or its director. Instead of everyone bringing their own case to court, one person can represent the group.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: 174: Prejudiced shareholders

or “Seeking court help for unfair treatment as a shareholder”
Next

Part 9 Enforcement
Personal actions by shareholders

173Representative actions

  1. Where a shareholder of a company brings proceedings against the company or a director, and other shareholders have the same or substantially the same interest in relation to the subject matter of the proceedings, the court may appoint that shareholder to represent all or some of the shareholders having the same or substantially the same interest, and may, for that purpose, make such order as it thinks fit including, without limiting the generality of this section, an order—

  2. as to the control and conduct of the proceedings:
    1. as to the costs of the proceedings:
      1. directing the distribution of any amount ordered to be paid by a defendant in the proceedings among the shareholders represented.