Companies (Clarification of Dividend Rules in Companies) Amendment Act 2019
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Companies (Clarification of Dividend Rules in Companies) Amendment Act 2019
Public Act |
2019 No 68 |
|
Date of assent |
16 November 2019 |
|
Commencement |
see section 2 |
Contents
The Parliament of New Zealand enacts as follows:
1 Title
This Act is the Companies (Clarification of Dividend Rules in Companies) Amendment Act 2019.
2 Commencement
This Act comes into force on the day after the date on which it receives the Royal assent.
3 Principal Act
This Act amends the Companies Act 1993 (the principal Act).
4 Section 53 amended (Dividends)
(1)
Replace section 53(2) with:
(2)
The board of a company must not authorise a differential dividend unless—
(a)
the amount of the dividend in respect of a share of that class is in proportion to the amount paid to the company in satisfaction of the liability of the shareholder under the constitution of the company or under the terms of issue of the share or is required, for a portfolio tax rate entity, as a result of section HL 7 of the Income Tax Act 2004; or
(b)
the company’s constitution provides for differential dividends as permitted by subsection (2A) and the dividend is authorised in accordance with the constitution.
(2A)
The constitution of a company may provide for differential dividends in respect of the shares in a class of shares, which may be determined on any differential basis, but only if the differential basis is based on objective criteria and not on the exercise of a discretion by, or an opinion of, the board of the company.
Example
Company Z is an agricultural company whose class A shareholders are all current or former growers and suppliers to the company. The company’s constitution could confer on holders of class A shares a right to differential dividends based on whether or not they are currently growing and supplying produce to the company.
The company’s constitution could not provide for dividends based on a discretionary criterion, such as whether a shareholder had adequately upheld the reputation of the company.
(2)
After section 53(3), insert:
(4)
In this section, differential dividend means a dividend—
(a)
in respect of some but not all the shares in a class; or
(b)
that is of a greater value per share in respect of some shares of a class than it is in respect of other shares of that class.
Legislative history
5 April 2018 |
Introduction (Bill 52–1) |
|
8 August 2018 |
First reading and referral to Primary Production Committee |
|
12 April 2019 |
Reported from Primary Production Committee (Bill 52–2) |
|
26 June 2019 |
Second reading |
|
23 October 2019 |
Committee of the whole House |
|
13 November 2019 |
Third reading |
|
16 November 2019 |
Royal assent |
This Act is administered by the Ministry of Business, Innovation, and Employment.
Versions
Companies (Clarification of Dividend Rules in Companies) Amendment Act 2019
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