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Company Law — Lecture 2

Company Law — Lecture 2. Scope and operation of company law Sources of company law Regulation of companies. What is company law?. General term used to describe the legal rules governing formation and termination of companies characteristics of companies

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Company Law — Lecture 2

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  1. Company Law — Lecture 2 • Scope and operation of company law • Sources of company law • Regulation of companies

  2. What is company law? • General term used to describe the legal rules governing • formation and termination of companies • characteristics of companies • relationships between participants in companies (such as shareholders and officers) • aspects of companies’ dealings with outsiders

  3. What is the purpose of company law? • Aims/purposes include • investor protection • commercial stability and consumer confidence • balancing competing interests • efficiency • certainty (standard form rules) • Ask yourself throughout the subject: does the law achieve these aims?

  4. The operation of company law • Operates as a source of private rights between individual parties (e.g. between shareholders of a company) • Breach of provisions of the Companies Act1993 can also be a criminal offence or subject to other State sanctions

  5. Sources of company law • Where do you look for any rules that may govern a proposed corporate action? • Examples • electing new directors? • borrowing money from a bank? • bringing in new investors? • Companies Act1993 • Case law • Other sources • Companies Act 1993 Regulations1994 • Securities Act1978 • Securities Markets Act 1988 • Financial Markets Conduct Act 2013 (Note this incorporates much of the material from the Securities Act and Securities Markets Act in their previous form) • Financial Reporting Act1993 • NZX Listing Rules (for listed companies)

  6. Companies Act 1993 • New Zealand’s company law statute • Came into force 1 July 1994 in respect of new companies • Three-year transition period to 1 July 1997 for companies registered under the 1955 Act • Does not cover securities and derivatives — see Securities Act1978,Securities Markets Act1988 and the Financial Markets Conduct Act 2013

  7. Case law • In a common law system, creates binding legal rules • May apply • in interpreting rules contained in the Companies Act1993 • in imposing additional rules • Doctrine of precedent • Consider — the significance of “the facts”

  8. The Companies Office • Responsible for forming, terminating and regulating companies • Part of the Ministry of Business Innovation and Employment bureaucracy • Ministerial responsibility — Ministry of Business Innovation and Employment • Principal official is the Registrar of Companies • Regional offices in main centres

  9. The Financial Markets Authority (FMA) • The FMA was set up on 1 May 2011, after the enactment of the Financial Markets Authority Act 2011 • The FMA replaces the former Securities Commission • It derives its functions and powers from the Financial Markets Authority Act 2011 • The FMA assumes any powers possessed by its predecessor (the Securities Commission) • The FMA’s new and expanded powers (general information-gathering (search and seizure) and enforcement powers contained in Part 3 and the levy-raising power contained in Part 4 of the FMA Act)

  10. New Zealand Exchange Limited (NZX) • The New Zealand Stock Exchange (NZSE) demutualised in late 2002, enabled by the New Zealand Stock Exchange Restructuring Act2002 • As of 1 January 2003, the NZSE was a limited company with its own constitution • In May 2003, NZSE Limited changed its name to New Zealand Exchange Ltd (NZX) • The NZX listed on its own market on 4 June 2003 • Companies can choose to “list”, allowing their securities to be traded in that market • Companies contract with the NZX to comply with the NZX Listing Rules • The NZX monitors companies, enforces the Listing Rules and co-operates with the FMA which has ultimate regulatory control over NZX • Memorandum of Understanding (MOU) between the former Securities Commission and the NZX regarding co-operation signed on 27 February 2003

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