Companies Act 1993 Checklist For Small Companies

Mia runs a small marketing agency in Auckland through a limited company. She has two shareholders, one new director, and a plan to issue shares to a senior employee. The business is going well, but her Companies Office records still show an old director, the share register is sitting in a spreadsheet, and no one can find the board decision approving last year's dividend.

If that sounds familiar, you're not alone. The Companies Act 1993 can feel like a big piece of legislation, but for many small companies the day-to-day work comes down to a manageable set of habits: record the decision, update the register, file the change, and keep the paperwork somewhere sensible.

Here's a practical checklist you can use when you're making routine company decisions and keeping your company records in shape.

What Does The Companies Act 1993 Require From A Small Company?

The Companies Act 1993 sets the core rules for New Zealand companies, including directors' duties, shareholder decisions, share issues, company records and Companies Office filings.

For a small company, the Act matters most when you:

• appoint or remove a director
• issue, transfer or buy back shares
• pay dividends or make other distributions
• change your company constitution
• approve a major transaction
• update your registered office or address for service
• file your annual return with the Companies Office
• keep minutes, resolutions, accounting records and registers

Your company's constitution can add extra rules. Some companies have the standard Companies Act position with no separate company constitution. Others have a constitution that changes decision-making thresholds, share rights, director powers or transfer processes.

So, before you make a decision, check two things:

• The Companies Act 1993, because it sets the default legal rules.
• Your constitution and shareholders agreement, because they may add approval steps or restrictions.

For example, the Act may allow your board to issue shares if the proper process is followed. Your shareholders agreement might still require investor consent first. Missing that step can create a messy internal problem, even if the Companies Office filing looks fine.

What Are Company Director Duties In New Zealand?

Company directors in New Zealand must act carefully, honestly and in the company's interests, and they can be personally exposed if they make decisions recklessly or for the wrong purpose.

The main director duties under the Companies Act 1993 include:

• Acting in good faith and in the best interests of the company. You should be able to explain why the decision helps the company, not just one shareholder or director.
• Using powers for a proper purpose. For example, issuing shares to raise capital is different from issuing shares mainly to dilute another shareholder.
• Complying with the Act and the constitution. Your board can't simply ignore required approvals because everyone is busy.
• Avoiding reckless trading. You shouldn't carry on business in a way that creates a substantial risk of serious loss to creditors.
• Not agreeing to obligations the company probably can't meet. If cashflow is tight, take extra care before signing new supplier commitments or loans.
• Exercising care, diligence and skill. You don't need to be perfect, but you do need to make informed decisions.
• Disclosing interests. If you're personally interested in a transaction, record that interest in the interests register.

A useful habit is to write down the commercial reason for important decisions. For example, if you approve a new $80,000 equipment purchase, record the quotes reviewed, expected return, funding source and why the board thinks the company can pay its debts as they fall due.

That paper trail isn't just admin. It shows you took the decision seriously and helps your future self remember what happened.

What Company Records Do You Need To Keep?

You need to keep key company records for at least the periods required by the Companies Act 1993, and several important records must be kept for the last 7 years.

Your company records should usually include:

• your company constitution, if you have one
• minutes of shareholder meetings and shareholder resolutions for the last 7 years
• minutes of director meetings and director resolutions for the last 7 years
• certificates given by directors under the Act for the last 7 years
• your interests register
• your share register
• the full names and residential addresses of current directors
• written communications to shareholders for the last 7 years
• financial statements and accounting records for the last 7 completed accounting periods

You should also keep practical business records that support those documents, such as signed contracts, board papers, cap tables, investor consents, bank approvals and tax records. Your accountant should guide you on Inland Revenue requirements.

Company Records Checklist

As a simple monthly or quarterly check, ask yourself:

• Have all director and shareholder decisions been recorded in minutes or written resolutions?
• Does the share register match what the founders, investors and Companies Office records say?
• Have new directors signed consents and been added to the Companies Office register?
• Have resigning directors been removed from the Companies Office register?
• Have any director interests been recorded in the interests register?
• Are accounting records up to date for the current financial year?
• Are records stored somewhere the company can access, not just in one person's inbox?

Electronic or cloud storage can be used if the records are easily accessible, convertible into written form and protected against falsification. The company still needs to comply with the registered office and records location rules, including having a registered office or notified physical records location in New Zealand where required, and the principal share register must be kept in New Zealand.

When Do You Need Director Resolutions?

You need director resolutions when the board is making a decision that should be formally approved, especially where the Companies Act 1993, your constitution, a contract or good governance practice requires it.

Common decisions to record by director resolution include:

• issuing shares
• approving share transfers, if the board has that role
• appointing a chairperson or company secretary, if you use one
• approving dividends or other distributions
• approving entry into significant contracts
• opening or changing bank accounts
• approving loans, guarantees or security arrangements
• noting a director's conflict of interest
• calling a shareholder meeting
• approving Companies Office filings

Some decisions need more than a basic board approval. For example, if the company is making a distribution, the board needs to consider the solvency test. That test asks whether the company can pay its debts as they become due and whether its assets are greater than its liabilities.

Director Resolution Outline

A simple director resolution usually covers the following. Treat this as a fill-in outline, not a finished legal document. A lawyer or experienced legal team should tailor it before you use it.

1. Company Details. Insert the company name, NZBN and date of the decision.
2. Decision Method. State whether the directors met or signed a written resolution.
3. Background. Briefly explain why the decision is being made.
4. Conflicts And Interests. Record any director interests and how they were handled.
5. Resolution. Set out the exact decision being approved.
6. Solvency Statement. Include this if the Act requires the board to consider solvency.
7. Authority To Act. Name who can sign documents or file Companies Office updates.
8. Signatures. Include the directors' names, signatures and signing date.

For everyday low-risk decisions, minutes may be enough. For share issues, dividends, major contracts and related-party transactions, a properly drafted resolution is much safer.

When Do You Need Shareholder Resolutions?

You need shareholder resolutions when the Companies Act 1993, your constitution or your shareholders agreement says shareholders must approve the decision.

Some decisions can usually be made by directors. Others sit with shareholders because they change the company's structure or affect shareholder rights.

Shareholder decisions commonly include:

• adopting, altering or revoking a company constitution
• approving a major transaction
• approving certain share rights changes
• approving an amalgamation
• appointing or removing directors, depending on your constitution
• approving actions that your shareholders agreement reserves for shareholders

An ordinary resolution is usually passed by a simple majority of votes. A special resolution generally needs at least 75% of the votes of shareholders entitled to vote and voting on the matter. Your constitution can set a higher threshold, so check it before you rely on the standard position.

A major transaction is one to watch. Broadly, it can include the company acquiring or disposing of assets, rights or obligations worth more than half the value of the company's assets. If you're selling a key product line, committing to a large acquisition or taking on a very large obligation, pause and check whether shareholder approval is needed.

Worked Example: Approving A Major Contract

Say Mia's agency has assets worth about $300,000. The company wants to commit to a long-term software and services contract with total obligations of $180,000. Because that amount is more than half the value of the company's assets, Mia should check whether the major transaction rules apply.

If they do, the board shouldn't just sign and hope for the best. The company may need a special resolution of shareholders before committing.

How Do You Issue Shares And Keep The Share Register Right?

You can issue shares if the board has authority and follows the Companies Act 1993, the constitution, any shareholders agreement and the company's existing share rights.

For small companies, share issues often happen when you bring in a co-founder, investor, adviser or key employee. This is where informal shortcuts can create long-term problems.

Before issuing shares, check:

• whether the constitution allows the issue
• whether existing shareholders have pre-emptive rights
• whether investor or shareholder consent is needed
• what class of shares will be issued
• what price or consideration the company will receive
• whether the issue is fair and reasonable to the company and existing shareholders
• whether any tax, accounting or employee share scheme advice is needed

The board should record the decision clearly. Directors may need to sign a certificate stating the consideration and confirming their opinion that the issue is fair and reasonable to the company and existing shareholders.

You also need to update the company's share register. The share register must record the shares issued, the names and latest known addresses of current shareholders, and the names and latest known addresses of anyone who has been a shareholder in the last 10 years. It also needs to show the number of shares held in each class by each of those shareholders during the last 10 years. For each issue, repurchase, redemption or transfer, record the date and the details of what changed. For transfers, include who the shares were transferred to or from. If there are restrictions or limitations on share transfers, record them in the share register and note where the relevant documents can be inspected.

After a share issue, the Companies Office should be updated within the required Companies Act timeframe. The Act sets a 10 working day period for notice of a share issue to be delivered to the Registrar. If you're unsure how the filing applies to your company, check the current Companies Office process before you complete it.

Share transfers are different from share issues. A transfer moves existing shares from one person to another, while an issue creates new shares. The paperwork, approvals and Companies Office consequences can differ, so don't treat them as the same thing.

What Companies Office Updates Should You Put In Your Calendar?

You should calendar your annual return and any event-based Companies Office updates, because many company changes need to be filed promptly rather than once a year.

Your annual return isn't the same as your tax return. It confirms key company details on the Companies Register, including directors, addresses and share information. New Zealand companies generally file an annual return once each calendar year during their allocated filing month. You can confirm your filing month on the Companies Office register.

Separate from the annual return, you may need to update the Companies Office when there's a change to:

• directors, including appointments and resignations
• director names or residential addresses
• registered office
• address for service
• share issues
• ultimate holding company details, if relevant
• company name or constitution

Director changes must generally be notified to the Registrar within 20 working days. A registered office change usually needs notice before the change takes effect, so don't leave it until after you've moved your records.

A simple compliance calendar can save a lot of hassle. Add reminders for:

• your annual return filing month
• board meeting or written resolution dates
• share issue and register update dates
• director appointment or resignation dates
• financial year-end and accounting record checks
• shareholder meeting dates, if you hold annual meetings

If your company has shareholders, investors or lenders, good company secretarial records also help build trust. When someone asks for your cap table, resolutions or Companies Office history, you can respond confidently instead of piecing it together under pressure.

Key Takeaways

• The Companies Act 1993 is manageable if you turn it into repeatable habits: approve, record, register and file.
• Directors should record the reasoning behind important decisions, especially where solvency, conflicts or major commitments are involved.
• Keep minutes, resolutions, accounting records and shareholder communications for the required periods, and make sure electronic records still meet New Zealand records location rules.
• Share issues need careful approval, detailed share register updates and Companies Office filings. Don't confuse them with share transfers.
• Shareholder approval may be needed for major transactions, constitution changes and other reserved decisions.
• A compliance calendar for annual returns and event-based Companies Office updates can prevent small admin issues becoming bigger problems.

If you'd like help with company resolutions, share register updates, Companies Office filings and director decision documents, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.