How To Gift Shares In New Zealand: Transferring Share Ownership

If you run a company in New Zealand, there may come a time when you want to gift shares instead of selling them.

Maybe you’re bringing a family member into the business, rewarding a long-term co-founder, or doing succession planning so the company can keep running smoothly if you step back.

Whatever the reason, gifting shares isn’t just a “handshake” decision. You’re changing who owns the company, and that comes with legal and practical steps you’ll want to get right from day one.

This guide walks you through how a share gift typically works in NZ companies, what to check before you transfer anything, and what documents and approvals you may need to protect the business (and your relationships) along the way.

What Does It Mean To Gift Shares (And Why Do Business Owners Do It)?

When you gift shares, you’re transferring ownership in your company to someone else for no payment (or sometimes for nominal payment, like $1). In practical terms, the person receiving the shares becomes a shareholder and may gain rights such as:

• the right to vote on shareholder decisions (depending on share class and company rules)
• the right to receive dividends (if declared)
• the right to share in value if the company is sold or wound up
• rights to company information in certain circumstances

From a small business perspective, the most common reasons to gift shares include:

• Succession planning (e.g. moving ownership to the next generation)
• Bringing a key person in where cash purchase isn’t realistic
• Rebalancing ownership between founders or business partners
• Estate planning and long-term family arrangements

It’s a positive step when it’s planned properly. But if it’s done informally, it can create ongoing control issues, confusion about decision-making, and disputes about “who owns what” later.

Before You Gift Shares: The Checks That Protect Your Business

Before you transfer anything, it’s worth slowing down and checking the “rules of the game” for your company. In NZ, those rules usually come from a mix of:

• your company’s constitution (if you have one)
• any shareholders agreement
• the Companies Act 1993 (default rules apply if your documents are silent)
• the terms attached to your shares (e.g. different share classes)

1) Check Whether There Are Restrictions On Transfers

Many small businesses include transfer restrictions for a reason: you don’t want shareholders changing without the other owners knowing, or without giving others a chance to buy first.

Common restrictions include:

• Pre-emptive rights (existing shareholders get first right to buy/receive the shares)
• Director approval required before a transfer is registered
• Limits on who can hold shares (e.g. only family members, or only active participants)
• Tag/drag rights that affect future sale dynamics

If you have a Company Constitution, check it carefully before you do anything else. The constitution often sets out the process and approvals for share transfers.

2) Check Any Shareholders Agreement (And Whether The New Owner Must Sign Up)

If your company has a Shareholders Agreement, it may require a new shareholder to sign a deed of accession (so they become bound by the same rules).

This matters because a shareholders agreement often covers the practical “how we run the business” issues, like:

• who controls key decisions (and what needs unanimous approval)
• how dividends will be handled
• what happens if someone wants to exit
• non-compete and confidentiality expectations
• deadlock and dispute resolution processes

Without the new shareholder being formally bound, you can end up with inconsistent rights and obligations across owners - which is where disputes tend to start.

3) Think About Control (Not Just Ownership)

Gifting shares can change control in ways that surprise people. For example:

• If you gift shares with voting rights, you may lose decision-making power.
• If you gift enough shares, certain shareholder approvals could be blocked without the other person’s consent.
• If you issue or transfer different share classes, dividend rights and voting rights can be very different.

It’s also worth remembering that directors must act in the best interests of the company. If you’re a director approving a transfer, you may need to consider your fiduciary duty and ensure the process is proper, documented, and consistent with the company’s rules.

How To Gift Shares In NZ: A Step-By-Step Process

The exact process depends on your constitution and shareholders agreement, but a typical NZ share gift (share transfer) will involve the steps below.

If you want a quick overview of the broader mechanics, the How To Transfer Shares guide is also a useful reference point.

Step 1: Confirm The Shares You’re Gifting

Start by getting clear on:

• how many shares you currently hold
• which shares you want to gift (if you hold multiple classes)
• what rights attach to those shares
• whether there are any unpaid amounts on the shares (uncommon for many small companies, but important if it applies)

It’s a good idea to check your company share register to confirm the current position.

Step 2: Follow Any Required Approval Process

Depending on your documents, you may need:

• director approval to register the transfer
• shareholder approval for certain transfers (less common, but possible)
• to offer the shares to other shareholders first (pre-emptive rights)

In many companies, this is documented with a written directors’ resolution. If you need that formality (and many companies do), a Directors Resolution helps document that the transfer was properly considered and approved.

Step 3: Prepare A Share Transfer Instrument (Share Transfer Form)

A share transfer is usually recorded in writing using a share transfer instrument (often called a “share transfer form”). Even when you gift shares, you still want a clear written record of:

• who is transferring the shares (the current shareholder)
• who is receiving them (the new shareholder)
• the number and class of shares
• the date of transfer
• the consideration (e.g. “nil” or “$1”)

Getting the paperwork right matters because the company will rely on it to update the share register and (if needed) to evidence ownership for banks, investors, or due diligence down the track.

Step 4: Execute The Documents Correctly (Including Witnessing, If Needed)

Some documents require witnessing, and others don’t - it depends on the document type and how it’s structured.

If you do need someone to witness a signature, make sure it’s done properly. A common “admin” mistake is using an ineligible witness or missing witness details, which can cause issues later if the transfer is challenged or reviewed. If you’re unsure, the Who Can Witness A Signature guide is a helpful starting point.

Step 5: Update The Company Share Register

In NZ, the share register is a key legal record of who owns shares in the company. After the transfer is approved and documented, the company should update its share register to record the new shareholder.

This step matters because, under the Companies Act 1993, the company’s share register is primary evidence of legal ownership (and a person generally exercises shareholder rights once their name is entered in the register). If the share register isn’t updated, you can end up with a situation where:

• the parties believe ownership changed, but the company’s records don’t reflect it
• dividends or shareholder communications go to the wrong person
• future investors or purchasers see inconsistencies during due diligence

Step 6: Issue A New Share Certificate (If Your Company Uses Them)

Not all NZ companies issue share certificates now, but some still do as a practical record.

If your company uses share certificates, you may need to cancel the old certificate and issue a new one to the incoming shareholder (consistent with the share register).

Step 7: Get The New Shareholder “On The Same Page” Legally

This is where many small businesses get caught out. Transferring shares is one thing - running a business together is another.

Depending on your setup, you may need to put in place (or update):

• a deed of accession to the shareholders agreement
• updated reserved matters / voting thresholds
• confidentiality and restraint expectations
• what happens if the new shareholder stops working in the business

If the share transfer is part of broader succession planning or restructuring, it’s also worth thinking about the bigger picture of changing company ownership so your governance, bank arrangements, and commercial contracts stay aligned with the new structure.

Do You Need To Pay Tax When You Gift Shares In NZ?

This is a common question, and it’s one you’ll want to approach carefully because tax outcomes depend heavily on your specific facts (and Inland Revenue’s approach can change over time).

At a high level:

• NZ doesn’t currently have gift duty, so there isn’t usually a standalone “gift tax” just because you gifted shares.
• However, there may still be income tax consequences in certain scenarios (for example, if shares are held on revenue account, or the transfer is connected to remuneration, services, or business arrangements).
• There may be accounting and valuation implications (e.g. for shareholder equity, financing, or future sale planning).

There are also real-world “commercial” issues that feel like tax issues, even if they aren’t. For example, if you gift shares to someone who later receives dividends, that changes how profits are distributed and taxed at the shareholder level.

Sprintlaw doesn’t provide tax advice. Because these issues are fact-specific, it’s best to speak with your accountant or a specialist tax adviser before you finalise the transfer - especially if:

• the company has significant retained earnings or valuable assets
• there are multiple share classes
• the recipient is connected to you (family, trust structures, related companies)
• the transfer is tied to performance, services, or employment

Common Mistakes When You Gift Shares (And How To Avoid Them)

Gifting shares is often done with good intentions. The problems usually come from skipping the “boring” legal steps.

1) Ignoring Pre-Emptive Rights Or Consent Requirements

If your constitution or shareholders agreement says you must offer shares to existing shareholders first (or get director consent), and you skip that step, the transfer could be disputed.

Even if everyone is “fine with it” today, it can become an issue later if relationships change or the company becomes more valuable.

2) Not Updating The Share Register

This is one of the most common admin gaps we see.

If the share register isn’t updated promptly and correctly, you can end up with messy due diligence later (for example, when selling the business or bringing in an investor), or disagreements about who is entitled to vote or receive dividends.

3) Gifting Shares Without Clarifying Roles And Expectations

A shareholder isn’t automatically a director, employee, or contractor - but in small businesses, people often assume shares come with a “role” (or control) in the company.

To avoid misunderstandings, it helps to document things like:

• Whether the new shareholder will work in the business (and on what terms)
• Whether they’ll become a director (and what decisions they can make)
• How dividends will be decided
• What happens if they want to leave (or you want them to exit)

4) Forgetting About Future Exit Scenarios

When you gift shares, you’re also creating a future exit question: how do you “undo” things if circumstances change?

For example:

• If you gift shares to a family member and later the business is sold, what happens to sale proceeds?
• If you gift shares to a key person and they resign, can you buy the shares back?
• If there’s a dispute, is there a clear dispute resolution process?

This is exactly why a tailored constitution and shareholders agreement can be so valuable - it gives you a roadmap before a problem happens.

5) Assuming “It’s A Gift” Means “No Legal Risk”

Even when no money changes hands, the legal risk can be significant because ownership is powerful. Once someone owns shares, they may have rights that are difficult to unwind without their agreement (or without a formal process).

That’s why it’s worth treating a share gift with the same care you’d use for a sale, even if the paperwork looks simpler.

Key Takeaways

• When you gift shares, you’re transferring company ownership - which can affect control, dividends, and future sale outcomes.
• Before gifting shares, check your constitution, shareholders agreement, and any transfer restrictions like pre-emptive rights or director consent requirements.
• A proper share gift usually involves a written share transfer instrument, any required approvals (often by directors’ resolution), and updating the company share register.
• Even without gift duty in NZ, there can be tax, valuation, and structuring considerations - it’s worth getting tailored advice before you transfer.
• The biggest avoidable risks come from informal transfers: missing approvals, failing to update the share register, and not documenting how the new shareholder relationship will work.
• Getting the legal foundations right from day one makes it much easier to manage growth, succession, and exits later.

If you’d like help gifting shares, updating your company documents, or making sure a share transfer is done properly, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.