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Company Law — Lecture 2 PowerPoint Presentation
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Company Law — Lecture 2

Company Law — Lecture 2

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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