New Zealand Legislation: Bills

7 New sections 112 to 112C substituted

• Section 112 is repealed and the following sections are substituted:

  “112 Valuation of shares to be purchased by company

  • “(1) Within 5 working days of giving notice under section 111(2)(e) that the board agrees to the purchase of shares by the company, the board must give to the holder of those shares written notice of—

    • “(a) the price it offers to pay for those shares; and

    • “(b) how the matters in subsection (2)(a) and (b) were calculated.

    “(2) That price must be an honest estimate of the value (on the date that the board gave notice under section 111(2)(e)) of the shares held by the shareholder, calculated as follows:

    • “(a) first, the value of the total shares in each class to which the shares belong must be calculated (the class value):

    • “(b) secondly, each class value must be adjusted to exclude any fluctuation (whether positive or negative) in the class value that has occurred (whether before or after the resolution was passed) that the board reasonably considers was due to, or in expectation of, the event proposed or authorised by the resolution (see subsection (7)):

    • “(c) thirdly, a portion of each adjusted class value must be allocated to the shareholder in proportion to the number of shares he, she, or it holds in the relevant class.

    “(3) However, if the resolution approved an amalgamation of the company under section 221, no adjustment of value may be made under subsection (2)(b) in respect of any shares (whether comprising part, or the whole, of a class of shares) that—

    • “(a) will not be converted into shares of the amalgamated company; and

    • “(b) the board reasonably considers increased in value due to, or in expectation of, the amalgamation proposed or authorised by the resolution.

    “(4) The shareholder may object to the price offered by the board for the shares by giving written notice to the company no later than 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

    “(5) If the company does not receive an objection to the price in accordance with subsection (4), the company must purchase all the shares at the nominated price no later than 10 working days after—

    • “(a) the date on which the board’s offer under subsection (1) is accepted; or

    • “(b) if the board has not received an acceptance, the date that is 10 working days after the date on which the board gave written notice to the shareholder under subsection (1).

    “(6) The time periods in subsection (5) do not apply if there is a written agreement between the board and the shareholder that specifically sets a different date for purchase of the shares.

    “(7) In this section, resolution means the resolution referred to in section 110 or 118 that, due to it having been passed, entitles the shareholder to require the company to purchase the shareholder’s shares in accordance with section 111.

  “112A Share valuation referred to arbitration if shareholder objects to price

  • “(1) If a company receives an objection to the price offered for shares in accordance with section 112(4), the company must—

    • “(a) refer the following issues to arbitration for determination:

      • “(i) the value of the shares, on the basis set out in section 112(2) and (3); and

      • “(ii) the remedies available to the holder of the shares or the company in respect of any share valuation that differs from that determined by the board under section 112; and

    • “(b) within 5 working days of receiving the objection, pay to the shareholder a provisional price in respect of each share equal to the price offered by the board under section 112(1).

    “(2) If the price determined for the shares—

    • “(a) exceeds the provisional price paid, the arbitral tribunal must order the company to pay the balance owing to the shareholder:

    • “(b) is less than the provisional price paid, the arbitral tribunal must order the shareholder to pay the excess to the company.

    “(3) Except in exceptional circumstances, an arbitral tribunal must award interest on any balance owing or excess to be paid under subsection (2).

    “(4) If a balance is owing to the shareholder, an arbitral tribunal may award to the shareholder, in addition to or instead of an award of interest, damages for loss (whether foreseeable or not) attributable to the shortfall in the initial payment.

    “(5) Any sum that must be paid in accordance with this section must be paid no later than 10 days after the date of the arbitral tribunal’s determination, unless the arbitral tribunal specifically orders otherwise.

    “(6) A reference to arbitration under this section is an arbitration agreement for the purposes of the Arbitration Act 1996.

    “(7) Clause 6 of Schedule 2 of the Arbitration Act 1996 may not be excluded from the arbitration agreement, and the term ‘costs and expenses of an arbitration’ in that clause includes, where a balance is owing to the shareholder,—

    • “(a) the reasonable legal costs of the shareholder on a solicitor-and-client basis; and

    • “(b) the reasonable costs of expert witnesses.

  “112B Interest payable on outstanding payments

  • “(1) Interest is payable on any sum that must be paid under section 112 or 112A that is outstanding after the date on which it falls due—

    • “(a) on a daily basis until the date of full payment; and

    • “(b) at the prescribed rate (within the meaning of section 87(3) of the Judicature Act 1908) on the date the outstanding payment is made.

    “(2) The sum on which interest is payable under subsection (1) includes any interest or damages for loss awarded under section 112A.

  “112C Restrictions on, and timing of, transfer of shares

  • “(1) The legal title to, and the beneficial ownership of, shares purchased by a company in accordance with section 111(2)(a) pass to the company,—

    • “(a) if the company does not receive an objection to the price offered for the shares in accordance with section 112(4), when that price has been paid in full; or

    • “(b) if the company receives an objection to the price offered for the shares in accordance with section 112(4),—

      • “(i) when the balance owing to the shareholder in accordance with section 112A(2)(a) has been paid in full; or

      • “(ii) if an arbitral tribunal agrees with the board’s valuation of the shares, on the date of the tribunal’s determination; or

      • “(iii) if an order is made under section 112A(2)(b), upon the making of that order.

    “(2) After a shareholder has given notice under section 111(1) requiring a company to purchase the shareholder’s shares, purported dispositions of the legal title to, or the beneficial ownership of, those shares (other than dispositions in favour of the company) have no effect.”