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Building Societies Act 1965

Conversion to company

113I: Preservation of rights of terminating shareholders

You could also call this:

“Rules for protecting certain shareholders when a building society becomes a company”

When a building society changes into a company, there are special rules to protect the rights of certain shareholders. If you owned shares in the society that were meant to end after a set time or when something specific happened, you’ll get debt securities in the new company. These debt securities will be worth the same as your old shares and have similar rights and responsibilities.

However, these new debt securities won’t let you do some things that company shareholders usually can. You won’t be able to vote at company meetings, get notices about meetings, choose directors, or have other rights that shareholders typically have.

There’s an exception to this rule. If you get a special notice explaining your options and you agree in writing to change your shares into something else, you might not get the debt securities. This notice must give you enough information to understand what you’re agreeing to. It should tell you about your right to get debt securities and explain what else you could get instead if you agree to the change.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM372331.

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113H: Prohibition on issue of terminating or bonus balloting shares in company to which society converts, or

"New company from building society can't give out special or prize-winning shares"

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113J: Terms and conditions of bonus balloting securities not to be substantially different from terms and conditions of bonus balloting shares, or

"Bonus shares must stay similar when a building society becomes a company"

Part 7A Conversion to company

113IPreservation of rights of terminating shareholders

  1. Subject to subsection (3), and notwithstanding anything to the contrary contained in any scheme for conversion in relation to a society, every person who, immediately before the conversion date, was a holder of 1 or more shares in a society which becomes converted into a company pursuant to this Part, being a share or shares that was or were to terminate at the end of a given period or on the attainment of a specified result, shall be issued with debt securities of the company into which the society becomes converted corresponding in value to, and, subject to subsection (2), carrying the same rights and liabilities as, the shares of that class held by that person in the capital of the society.

  2. No debt securities issued pursuant to subsection (1) shall confer on the holder of those securities—

  3. any right to vote at any meeting of the company:
    1. any right to receive notice of any meeting of the company:
      1. any right to appoint any director of the company:
        1. any other rights ordinarily only conferred on shareholders of a company.

          1. Subsection (1) shall not apply to any person—

          2. who has received a notice that complies with subsection (4); and
            1. who has consented in writing to the conversion of that person's shares into any interest other than those specified in subsection (1).

              1. Every notice referred to in subsection (3) shall inform the person to whom it is addressed, in sufficient detail as to enable that person to make an informed assessment as to the nature of the interests into which his or her shares may be converted,—

              2. of that person's entitlement under subsection (1):
                1. of the nature of the interest into which that person's shares may be converted if that person so consents.

                  Notes
                  • Section 113I: inserted, on , by section 26 of the Building Societies Amendment Act 1987 (1987 No 175).
                  • Section 113I(1): amended, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                  • Section 113I(2): amended, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
                  • Section 113I(2)(a): amended, on , by section 6 of the Building Societies Amendment Act 1993 (1993 No 111).
                  • Section 113I(2)(b): amended, on , by section 6 of the Building Societies Amendment Act 1993 (1993 No 111).