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Last verified: 2026-05-02 · 1,400 words · 4 government sources

Updated 2026-05-02

NZ Shareholders’ Agreement: Companies Act 1993 Framework

Quick Answer: New Zealand Company Registration: NZ Shareholders' Agreement: Companies Act 1993 Framework. Complete guide with 2026 legal requirements and procedu. Under Companies Act 1993 s.10, a New Zealand company must have one or more shareholders, one or more directors, a registered office, an address for service, and a director who lives in New Zealand or in an enforcement country (Australia, the only currently-designated enforcement country, under the Companies Act 1993 (Enforcement Country) Order 2015).
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A shareholders’ agreement is a private contract between the shareholders of a New Zealand company. It sits alongside — not in place of — the Companies Act 1993 and the company’s constitution (if any). For most multi-shareholder companies in New Zealand it is the document that governs cap-table mechanics, board control, exit rights, and dispute resolution. While the Companies Act 1993 does not require a shareholders’ agreement, it provides the structural framework within which the agreement must operate.

The Statutory Backdrop — Companies Act 1993

Under Companies Act 1993 s.10, a New Zealand company must have one or more shareholders, one or more directors, a registered office, an address for service, and a director who lives in New Zealand or in an enforcement country (Australia, the only currently-designated enforcement country, under the Companies Act 1993 (Enforcement Country) Order 2015).

Under s.27, a company may have a constitution. Under s.28, if a company does not have a constitution, the rights, powers, duties, and obligations of the company, the board, each director, and each shareholder are those set out in the Companies Act 1993. A constitution may modify default Act provisions (s.31), subject to s.30(2) — directors’ duties under ss.131–138 cannot be contracted out of.

A shareholders’ agreement is a third instrument: a private contract that supplements (and sometimes contractually overrides, among the parties) the constitution and replaceable Act provisions. It binds only the parties who sign it.

Primary source: https://www.legislation.govt.nz/act/public/1993/0105/latest/whole.html

What a Shareholders’ Agreement Cannot Do

A shareholders’ agreement cannot:

Where a shareholders’ agreement clause conflicts with the Act, the Act prevails.

Standard Clauses for NZ Shareholders’ Agreements

1. Pre-emption rights on issue of new shares — s.45

Under s.45 of the Companies Act 1993, where shares are to be issued, they must first be offered to existing shareholders pro rata (the pre-emptive right) unless the constitution disapplies this or shareholders pass a resolution under s.107(2). A shareholders’ agreement typically restates and tightens this — fixed offer period (e.g. 21 days), procedure for non-acceptance, and dilution mechanics.

2. Pre-emption rights on transfer of shares

The Companies Act 1993 does not impose pre-emption on transfers by default. The constitution or shareholders’ agreement must contract this in. The standard approach: a selling shareholder must first offer the shares to existing members at fair value (often determined by an independent valuer or an agreed formula such as net tangible assets per share); only if no shareholder accepts within the offer period may the seller approach a third party.

3. Drag-along and tag-along

Drag-along: where a majority (e.g. 75%) accepts a third-party offer for the whole company, they may compel minorities to sell at the same price. Tag-along: where a majority sells, minorities have a right to participate at the same price. Neither is implied by the Companies Act 1993; both must be contracted in.

4. Reserved matters

Matters requiring special resolution under the Companies Act 1993 (s.106) — adopting, altering, or revoking a constitution; approving a major transaction (s.129); approving an amalgamation (Part 13); changing the company’s name — already require a 75% majority. A shareholders’ agreement may add further reserved matters requiring unanimous or supermajority shareholder approval, such as:

5. Board composition and director appointments

Under s.150, a company’s board is composed of its directors. The Companies Act 1993 does not prescribe how directors are appointed beyond the original incorporation directors (s.150(1)) — the constitution and shareholders’ agreement fill the gap. A typical clause: each major shareholder (e.g. holding >20%) appoints one director; a chair is appointed by majority or rotates.

The s.10(d) New Zealand resident director requirement remains throughout — the agreement must ensure that at least one director satisfies this test at all times.

6. Information rights

Under Companies Act 1993 s.178, every shareholder has a statutory right to receive specified company documents on request (annual report, financial statements). A shareholders’ agreement enhances this — monthly management accounts, quarterly board reports, annual budget, and the right to attend (but not vote at) board meetings.

7. Vesting and leaver provisions

For founder-led companies, shares typically vest over 4 years with a 12-month cliff. The agreement defines “good leaver” (death, permanent disability, mutual termination) and “bad leaver” (resignation within vesting period, termination for cause, breach) — bad-leaver shares forfeited or repurchased at issue price. NZ law allows share repurchases under s.59 (subject to solvency test under s.52), which the agreement should contemplate.

8. Restraint of trade and confidentiality

Each shareholder undertakes not to compete with the company within a defined area for a defined period after ceasing to hold shares, and to keep company information confidential. NZ courts apply the common-law reasonableness test — overbroad restraints are unenforceable.

9. Deadlock resolution

For 50:50 companies, the agreement should provide a deadlock mechanism: chair’s casting vote, escalation to mediation, “Russian roulette” (one party offers a price; the other must buy or sell at that price), or the just-and-equitable winding-up jurisdiction under s.241(4)(d).

10. Dispute resolution

Mediation as a mandatory first step, then arbitration (Arbitration Act 1996) or jurisdiction in the High Court.

Interaction with Statutory Shareholder Protections

Section 174 — Prejudiced shareholders

Under s.174, a shareholder may apply to the court if the affairs of a company have been, are being, or are likely to be conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to the shareholder. Available remedies include:

A shareholders’ agreement cannot contract out of s.174.

Section 165 — Derivative actions

Under s.165, the court may grant leave for a shareholder to bring proceedings in the company’s name. The agreement cannot exclude this.

Section 174 vs the agreement

In Sturgess v Dunphy [2014] NZCA 235 and similar cases, NZ courts have held that breach of a shareholders’ agreement can itself be a basis for a s.174 prejudice claim, particularly where the agreement creates legitimate expectations.

Closely Held Companies — A Common NZ Profile

The most common NZ shareholders’ agreement scenario is a closely held trading company with 2–4 shareholders, often family-related or co-founder. The agreement covers:

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Foreign Shareholders and the s.10(d) Trap

Where one or more shareholders are non-resident — often the case for NZ subsidiaries of overseas companies, or for inbound investors — the agreement should ensure compliance with s.10(d). A common solution: the agreement requires the company to maintain at least one director who is a New Zealand resident (or an Australian resident director who is also a director of an Australian company).

A breach of s.10(d) does not invalidate corporate acts but exposes the company to deregistration risk and to fines under s.374.

Drafting Checklist for an NZ Shareholders’ Agreement

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐼 is operated by a licensed Gyoseishoshi (èĄŒæ”żæ›žćŁ«) office in Japan. We are not solicitors, barristers, attorneys, avocats, notaries, or licensed legal practitioners in any jurisdiction outside Japan. For binding legal advice, consult a qualified practitioner admitted in the relevant jurisdiction.

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Takayuki Sawai — Gyoseishoshi

Licensed Gyoseishoshi (Administrative Scrivener) and founder of MmowW. Making company registration clear for entrepreneurs worldwide.

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