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This article is focused on New Zealand law and explains issues from a Common law perspective.
How to maintain a NZ company share register
The NZ COMPANIES ACT 1993 requires all companies to maintain a share register, and sets out some requirements for the way in which this must be done (see below).
The share register is of particular importance as it is deemed to be evidence of the named shareholder's legal title to the shares, subject to any evidence to the contrary. The company treats the person named in the share register as the registered holder of the relevant shares, and the only person entitled to exercise the voting rights that attach to the shares, to receive notices, to receive distributions in respect of the shares, and to exercise any other rights and powers that attach to the shares.
What information must be included in the share register?
The share register must:
- record the shares issued by the company
- state whether the company's constitution (if there is one) or the terms of issue of the shares restricts or limits the transferring of these shares
- state where any document containing any such restrictions or limitations can be inspected
The register must also include the following information for each class of share:
- the names, in alphabetical order, and the last known address of each person who currently is, or has been within the last 10 years, a shareholder
- the number of shares of that class held by each shareholder within the last 10 years
- the date of any issue of shares to each shareholder within the last 10 years
- the date of any repurchase or redemption of shares from each shareholder within the last 10 years
- the date of any transfer of shares by or to each shareholder within the last 10 years, including the name of the other party to the transfer
Register can be divided
If the constitution expressly permits it, the share register may be divided into two or more registers kept in different places, so long as the company's principal register is kept in New Zealand. (In this context, the "principal register" means the register described as the principal register in the most recent notice sent to the Registrar.)
The Registrar of Companies must be notified of the division of the register within 10 working days. Further, if the register has been divided a copy of every register must be kept at the same place as the principal register.
Register may be maintained by an agent
An agent of the company may maintain the share register on the company's behalf.
Trusts may not be entered on register
No notice of a trust (whether express, implied or constructive) may be entered on the share register.
Can a company be fined for not maintaining a register?
Yes. A company commits an offence if it fails to maintain a share register as required by the Act, and it will be liable to a fine of up to $10,000. Every director will also be liable for a fine up to the same maximum amount.
Directors must supervise the register
Each director must take reasonable steps to ensure that the register is properly kept and that share transfers are recorded promptly. It is an offence for a director to fail to comply with these duties, punishable by a fine of up to $10,000.
Court may order correction of register or compensation
If the name of a person is wrongly entered in or omitted from the share register, the person aggrieved or a shareholder may apply to the court for it to order that the register be rectified, or that compensation be paid for any loss caused, or both.
- Because of the substantial penalties that apply if the share register is not properly maintained, it would be advisable that you seek the services of a lawyer experienced in company law to ensure that your register does in fact comply with the legal requirements.
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