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9 November 1995

News release

Securities Commission advises care - shareholder voting on company reregistrations

The Chairman of the Securities Commission, Mr Euan Abernethy, today issued a statement advising shareholders to exercise care when approving company reregistrations. This advice follows the Commission's consideration of a recent shareholder complaint. In that case the shareholder's rights had been altered as a result of the reregistration of the company.

Companies registered under the Companies Act 1995 have until 30 June 1997 to reregister under the Companies Act 1993. A number of reregistration will involve shareholder approval.

Shareholder approval was obtained in the case brought to the attention of the Securities Commission. The rights to share in the surplus assets of the company were redistributed as part of the reregistration process.

The complainant to the Securities Commission believed that the notice describing the changes was less than clear. The matter was drawn to the attention of the directors by the shareholder, but the notice was not amended. The reregistration was subsequently approved by shareholders' resolution.

"The complaint highlights the need for shareholders to understand the effects on shareholders of reregistration of companies where rights are being altered. In those case shareholders should obtain legal advice if they have any doubts about their rights",. Mr Abernethy said.

Despite the recent removal of the requirement under the law to send a copy of the constitution to each shareholder, the constitution remains an important document and the process of reregistration involves important issues for shareholders.

"Shareholders should be aware that their rights can be altered by the process of reregistration. In such cases it is important that the notice to shareholders clearly points out where shareholder rights are being altered, especially where rights are being diminished or cancelled. The statutory rights of shareholders to oppose the potential effects of such a reregistration are available only if immediate action is taken. It is important that shareholders should exercise their voting rights", Mr Abernethy said.

Mr John Farrell
Chief Executive
Securities Commission