How To Pass A Shareholder Resolution In New Zealand

If you run a company in New Zealand, you'll eventually hit a "we need to decide this properly" moment.

Maybe you're bringing in an investor, approving a major purchase, paying dividends, changing your constitution, or documenting a decision you've already agreed on. That's where a shareholder resolution comes in.

For small businesses, shareholder resolutions often feel like corporate paperwork you can ignore until later. But getting them right (and keeping a clean record) can save you a lot of stress when you're dealing with banks, investors, a company sale, or a shareholder dispute.

Below, we'll walk through what a shareholder resolution is, when you need one, the different types, and how to pass one in a way that fits the Companies Act 1993 and your company's own rules.

What Is A Shareholder Resolution?

A shareholder resolution is a formal decision made by the shareholders of a company. It's usually recorded in writing (either as meeting minutes or as a written resolution), and it becomes part of the company's official records.

In practice, a shareholder resolution is how shareholders:

• approve certain major company decisions;
• give legal authority for actions that require shareholder approval under the Companies Act 1993 or the company's constitution; and
• create a paper trail showing the company acted properly.

It's worth distinguishing shareholder resolutions from director decisions. Directors manage the company day-to-day, and they often make decisions via director resolutions. Shareholders usually step in for "bigger picture" decisions about ownership, company structure, and high-impact changes.

If you have a Company Constitution, it may also list decisions that require shareholder approval (even if the Companies Act doesn't specifically require it). That's why it's important to check both the law and your constitution before you act.

Why Do Shareholder Resolutions Matter For Small Businesses?

Even if your company has only one or two shareholders, a shareholder resolution still matters because it:

• reduces ambiguity (everyone can see what was decided and when);
• helps with compliance under the Companies Act 1993;
• supports governance (especially as you add investors or co-founders); and
• makes due diligence easier if you sell the business, raise funds, or apply for lending.

If you've ever tried to reconstruct a key business decision from old emails and half-remembered conversations, you'll know why documenting decisions properly is worth it.

When Do You Need A Shareholder Resolution?

You need a shareholder resolution when:

• the Companies Act 1993 requires shareholder approval for a particular action; or
• your constitution requires it; or
• your shareholders agreement requires it; or
• you want a clean record because the decision is significant (even if it's not strictly required).

Here are some common situations where a shareholder resolution often comes up for NZ SMEs:

Changing The Company's Structure Or Rules

Shareholders usually need to approve changes that affect the fundamentals of the company, such as:

• adopting, changing, or revoking the constitution;
• approving a major transaction (depending on the circumstances and thresholds);
• approving amalgamations or other structural changes; and
• putting the company into liquidation (in certain contexts).

Because constitutions often change how voting works, how shares can be transferred, and what shareholder rights look like, it's essential to document constitution changes properly. If you're not sure what your constitution says or whether you even have one, it's a good idea to confirm sooner rather than later.

Issuing Shares Or Bringing In An Investor

Share issues can trigger shareholder approvals depending on:

• what your constitution says;
• what your shareholders agreement says (for example, pre-emptive rights); and
• whether the share issue changes control or ownership in a material way.

Often, the legal paperwork for a capital raise doesn't end with agreeing on price. You may also need to update the share register, pass resolutions, and ensure the issue is valid under your company's rules. If you're doing a share issue or changing ownership terms, a Shareholders Agreement can help prevent misunderstandings by setting out how decisions are made and what approvals are required.

Declaring Dividends

Dividends are a classic example of something that should be properly documented. In New Zealand, dividends are generally authorised by the directors (not shareholders), and the directors must be satisfied the company meets the solvency test before a dividend is paid. Shareholder approval may still be required if your constitution or shareholders agreement says so (or if the dividend forms part of a wider transaction that needs shareholder sign-off).

Even where a formal shareholder resolution isn't strictly required, it's still common to record the decision so everyone is clear on:

• how much will be paid;
• when it will be paid;
• which shares are entitled; and
• how it's calculated.

Major Transactions Or High-Risk Decisions

"Major transaction" is a term that can have a specific meaning under the Companies Act 1993. In general terms, it can involve significant asset sales, purchases, or commitments that are large relative to the company's value.

If you're about to do something that could materially change the company's position, it's smart to:

• check if it's a major transaction requiring shareholder approval;
• check what your constitution requires; and
• document the decision properly.

If you're in growth mode and signing bigger deals, it can also help to tighten up your contract process and governance. Sometimes that includes having clear internal approvals and using properly drafted business contracts (rather than trying to piece terms together later).

Selling The Company Or Buying Out A Shareholder

If you're selling shares, changing ownership, or restructuring holdings, shareholder resolutions are often part of the process (alongside sale documents and updates to the company register).

Depending on how the deal is structured, you might also need:

• approvals for share transfers;
• waivers of pre-emptive rights;
• updates to governance documents; and
• director approvals as well.

Where a share transfer is involved, you may also need to complete and file relevant documentation correctly. If you're dealing with share movements, the process often overlaps with transfer of shares requirements and your internal company records.

Types Of Shareholder Resolutions In New Zealand (Ordinary vs Special)

In New Zealand, you'll usually hear about two core types of shareholder resolution:

• Ordinary resolutions
• Special resolutions

Which one you need depends on what you're approving. The Companies Act 1993 and your constitution will guide this.

Ordinary Resolution

An ordinary resolution is the "standard" shareholder decision type. Generally, it requires a simple majority of votes cast (unless your constitution sets a higher threshold).

Ordinary resolutions are often used for routine shareholder approvals where the law doesn't require a special resolution.

Special Resolution

A special resolution has a higher voting threshold. Under the Companies Act 1993, it generally requires approval by not less than 75% of the votes of those entitled to vote and voting on the question (again, subject to any different rules in the constitution).

Special resolutions are typically required for "big ticket" company decisions, such as:

• adopting, altering, or revoking the company constitution (in many cases);
• approving certain major transactions; or
• other decisions that the Act specifically designates as needing a special resolution.

If you're unsure whether a decision needs an ordinary or special resolution, it's worth getting advice before you proceed. If the resolution threshold is wrong, you may end up with a decision that's invalid or open to challenge.

How Do You Pass A Shareholder Resolution?

Passing a shareholder resolution isn't just about agreeing in principle. You need to follow a process that's consistent with:

• the Companies Act 1993;
• your constitution (if you have one); and
• any shareholder arrangements you've agreed to (like a shareholders agreement).

There are two common ways to pass a shareholder resolution:

• at a shareholder meeting; or
• by written resolution (without a meeting).

Option 1: Passing A Resolution At A Shareholder Meeting

If you're holding a meeting, your key steps usually include:

1. Check voting rights: Confirm who is entitled to vote, and how many votes they have (often linked to share classes).
2. Give notice properly: Shareholders need notice of the meeting in the way and timeframe required by the Act and your constitution (and, if you don't have a constitution, the Act sets default notice rules).
3. Confirm quorum: A meeting generally needs a minimum level of shareholder participation to be valid. Your constitution may set this, and if it doesn't, the Companies Act 1993 has default quorum settings (commonly based on a majority of voting rights being represented).
4. Put the resolution to a vote: The resolution should be clearly stated, and the voting method should match your company rules.
5. Document the result: Keep minutes and store them with your company records.

This is the more "traditional" approach, and it's often used when:

• there are multiple shareholders with different views;
• you need discussion on the record;
• the decision is contentious; or
• you're holding an AGM or other formal meeting anyway.

Option 2: Passing A Written Shareholder Resolution (No Meeting)

For many small companies, especially where shareholders are aligned, a written resolution is the simplest option.

A written shareholder resolution is a document that sets out:

• the resolution text (what is being approved);
• whether it's an ordinary or special resolution (and the threshold);
• the shareholders voting in favour (and sometimes against); and
• the date the resolution is passed.

In New Zealand, the Companies Act 1993 has specific rules about when a written shareholder resolution is valid (including how it must be approved and how non-signing shareholders must be treated). In practice, that means you should check the Act and your constitution carefully before relying on a written resolution-especially where you don't have 100% shareholder alignment.

Written resolutions are particularly useful when:

• your shareholders are in different locations;
• you want speed and simplicity;
• you're documenting a decision already agreed; or
• you're a sole shareholder and need a formal record.

Even when things feel straightforward, the details matter. If you're not careful about wording, thresholds, or record-keeping, you can create confusion later (especially if ownership changes or there's a dispute).

Do Shareholder Resolutions Need To Be Witnessed?

Often, shareholder resolutions don't require witnessing in the same way deeds do. That said, some businesses prefer witnessed signatures as a best practice, and certain documents connected to the resolution (or related transactions) may have their own signing requirements.

If you're ever unsure about signing formal documents and who can act as a witness, it's worth checking who can witness a signature so you don't accidentally invalidate an important document.

Common Mistakes With Shareholder Resolutions (And How To Avoid Them)

Most shareholder resolution problems aren't caused by bad intentions. They happen because people move fast, assume "it'll be fine", and only discover issues later when someone asks for evidence.

Here are some of the most common mistakes we see in small companies:

1. Confusing Shareholder Decisions With Director Decisions

A company can only act through the proper decision-makers. If something requires shareholder approval, a director-only decision (or an informal agreement between directors) may not be enough.

To avoid this, be clear on:

• who has authority to approve the decision; and
• what format is needed (meeting vs written resolution).

2. Not Checking The Constitution Or Shareholders Agreement

The Companies Act 1993 is not the only rulebook. Your constitution (and any shareholders agreement) can add extra approval steps, higher voting thresholds, or restrictions on share transfers.

If you've got multiple shareholders (especially with unequal stakes), these documents are where many disputes start and finish. Keeping them aligned with how the business actually operates is key.

3. Getting The Threshold Wrong (Ordinary vs Special)

If a special resolution is required but you pass an ordinary resolution instead, you could end up with a decision that's vulnerable to challenge.

This can become a major headache when you're:

• raising capital;
• selling the business;
• getting audited; or
• in a shareholder dispute.

4. Poor Record-Keeping

Even if a decision was properly made, you need to be able to prove it later.

Good record-keeping includes:

• keeping signed resolutions and meeting minutes;
• storing them securely with company records;
• updating the share register where needed; and
• keeping supporting documents (for example, key contracts and approvals).

5. Not Updating Related Documents After The Resolution

A resolution is often only one part of the job. For example:

• if you approve a share transfer, you still need to update the share register and potentially lodge updates;
• if you adopt a constitution, you need to ensure the correct version is stored and used going forward; and
• if you approve a major transaction, you may need signed agreements, updated delegations, and internal processes.

If you're also dealing with company administration tasks (like updating officers or director details), you may need to coordinate those steps carefully so your records stay consistent.

Key Takeaways

• A shareholder resolution is a formal decision by shareholders that should be properly documented and stored with your company records.
• You may need a shareholder resolution if the Companies Act 1993 requires it, your Company Constitution requires it, or your Shareholders Agreement requires it.
• Common scenarios include adopting or changing a constitution, approving major transactions, issuing shares, paying dividends, or documenting ownership changes (including transfer of shares).
• Shareholder resolutions are typically either ordinary (simple majority) or special (usually 75% approval), depending on the decision and your company rules.
• You can usually pass a shareholder resolution either at a meeting (with proper notice, quorum and minutes) or as a written resolution (which is common for SMEs, but has specific validity rules under the Companies Act 1993).
• Common mistakes include using the wrong approval process, ignoring constitution/shareholder rules, getting voting thresholds wrong, and failing to keep good records.
• If signatures or execution requirements apply to related documents, make sure you understand who can witness a signature so your paperwork is valid and enforceable.

If you'd like help preparing a shareholder resolution, reviewing your company governance documents, or setting up your company structure properly from day one, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.