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Companies (Clarification of Dividend Rules in Companies) Amendment Bill (Consistent) [2018] NZBORARp 43 (19 April 2018)
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Companies (Clarification of Dividend Rules in Companies) Amendment Bill (Consistent) [2018] NZBORARp 43 (19 April 2018)
Last Updated: 3 January 2019
19 April 2018
Hon David Parker, Attorney-General
LEGAL ADVICE
LPA 01 01 23
Consistency with the New Zealand Bill of Rights Act 1990: Companies
(Clarification of Dividend Rules in Companies) Amendment Bill
- We
have considered whether the Companies (Clarification of Dividend Rules in
Companies) Amendment Bill (‘the Bill’), a
member’s Bill in the
name of Todd Muller MP, is consistent with the rights and freedoms affirmed in
the New Zealand Bill of
Rights Act 1990 (‘the Bill of Rights
Act’).
- The
Bill amends the Companies Act 1993 (‘the Act’) to clarify dividend
rules. Currently, s 53(2) of the principal Act
prevents the board of a company
from authorising “dry shares”, which are shares that do not carry
dividend rights in
prescribed circumstances. However, there is uncertainty about
the ability of a company constitution to provide for dry shares. The
Bill aims
to remove this doubt by providing that nothing in s 53(2) of the Act prevents
the constitution of a company from containing
a rule that some shares in a class
do not confer a right to receive dividends in specified circumstances.
- We
have concluded that the Bill appears to be consistent with the rights and
freedoms affirmed in the Bill of Rights Act.
Jeff Orr
Chief Legal Counsel Office of Legal Counsel
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