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SCE06

Business Structuring and Operation

NZ $65.00
incl GST

Author(s): Brett Gould, Peter Missingham
Published: 11 September, 2006
Pages: 171

Introduction

As we are all aware companies come in all shapes and sizes and are one of several options for trading entities.
After

  • considering the alternative trading structures; and
  • noting why companies remain the popular choice,

we will focus on the practical issues that face the majority of registered companies (426,232 as at 1 May 2006, 95% of which had five or fewer shareholders) in New Zealand, including:

  • considering the key preliminary issues
  • capital and funding
  • governance and management
  • entry and exit of shareholders
  • directors/employee/shareholder issues
  • deadlock and default
  • dealing with conflict issues.

The paper includes a non-exhaustive checklist that can be used in such circumstances to assist yourselves and your clients to ensure that the relevant issues are considered and if appropriate addressed.

In completing this paper we acknowledge the valuable material previously presented in the following NZLS Seminars:

  • J Crengle, M Russell and G Shirtcliffe Company Law Update (May, 2000);
  • J Blake, P Foley, D Patterson and G Smaill Practical Company and Tax Law Issues (June, 2002);
  • P O’Regan and J McCay Structuring Relationships Between Shareholders (August, 2003).

The last mentioned paper whilst addressing shareholder issues noted “intellectual property concerns” as limiting the availability of samples or precedents for shareholder agreements. We have taken a more robust view. Whilst we agree with the presenters of that seminar that the provisions of a 50/50 joint venture company agreement will differ from a multi-party agreement, we do not consider that such differences should materially detract from the benefits of making a precedent available.

Accordingly, we provide a precedent shareholders’ agreement along with some sample precedent clauses that attempt to address the various issues in the context of a shareholder agreement. As with any precedents they need to be used with caution, ensuring that the provisions are relevant and adequately deal with the parties’ priorities. It is also impossible to provide for all eventualities in such agreements. Our role as legal advisors is to ensure that the relevant issues are raised and properly considered and let the parties determine how they wish to address those matters. Any gaps in an agreement will most often have to be addressed by the parties in the context of a process prescribed by the relevant agreement or against a background of commercial necessity.

During the presentation we will consider case studies that we intend to be of practical value.

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