Plain language law

New Zealand law explained for everyone

Companies Act 1993

Enforcement - Ratification

177: Ratification of certain actions of directors

You could also call this:

“Shareholders can approve directors' actions that were not originally authorised”

Sometimes directors or the board of a company might do things that only shareholders or other people are allowed to do. If this happens, the shareholders or the right people can say it’s okay. They do this in the same way they would normally do that action.

If the shareholders or the right people say it’s okay, then it’s treated as if it was always okay from the start. It becomes a proper and valid action.

Even if the shareholders or others say the action is okay, a court can still look at what the director or board did. The court can use its powers to decide if the action was right or not.

This part of the law doesn’t change any other rules about shareholders or other people approving what directors or the board do. Those other rules still apply.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320839.

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Part 9 Enforcement
Ratification

177Ratification of certain actions of directors

  1. The purported exercise by a director or the board of a company of a power vested in the shareholders or any other person may be ratified or approved by those shareholders or that person in the same manner in which the power may be exercised.

  2. The purported exercise of a power that is ratified under subsection (1) is deemed to be, and always to have been, a proper and valid exercise of that power.

  3. The ratification or approval under this section of the purported exercise of a power by a director or the board does not prevent the court from exercising a power which might, apart from the ratification or approval, be exercised in relation to the action of the director or the board.

  4. Nothing in this section limits or affects any rule of law relating to the ratification or approval by the shareholders or any other person of any act or omission of a director or the board of a company.