Contracts and company law essentials in New Zealand

One statute for contract mechanics

The Contract and Commercial Law Act 2017 consolidated New Zealand's contract statutes: privity, remedies, mistakes, frustrated contracts, sale of goods, carriage of goods and electronic transactions now sit in one Act. Contract law is otherwise common law, and parties may choose New Zealand or foreign law and forum. New Zealand courts enforce Australian judgments under the trans-Tasman regime and foreign judgments from many countries. The Fair Trading Act prohibits unfair contract terms in standard-form consumer contracts and, since 2022, in small trade contracts below a value threshold, and the Consumer Guarantees Act cannot be excluded in consumer sales.

Electronic signatures and deeds

Part 4 of the Contract and Commercial Law Act gives electronic signatures legal effect where the method adequately identifies the signatory and indicates their approval, is as reliable as appropriate and the recipient consents. Schedule 5 excludes certain documents, including wills, affidavits, statutory declarations, powers of attorney and some negotiable instruments, which keep their paper or witnessing formalities; check the authority for the current list. A company signs a deed by two directors, by one director with a witness, or as its constitution provides, and may do so electronically. Individuals signing deeds need a witness.

The Privacy Act 2020 governs personal information in commercial relationships. It requires an agency sending personal information overseas to be satisfied that the recipient is subject to comparable safeguards, by law or by contract, and it imposes mandatory notification of serious privacy breaches to the Privacy Commissioner. Services and intercompany agreements involving a New Zealand entity therefore include a privacy schedule with breach notification timelines; the Office of the Privacy Commissioner publishes model clauses for overseas disclosures.

Companies Act 1993: duties and structure

Directors must act in good faith and in the company's best interests, for a proper purpose and with reasonable care, and must not trade recklessly or agree to obligations the company cannot perform (sections 131 to 138). The reckless trading and solvency provisions are actively enforced, so boards document solvency before distributions. At least one director must live in New Zealand, or live in Australia and be a director of an Australian company, which suits trans-Tasman groups.

A constitution is optional; without one the Act's defaults apply, so a shareholders' agreement is usually paired with a constitution that sets transfer restrictions and reserved matters. Ordinary resolutions pass by majority and special resolutions by 75 per cent. Shareholders who vote against certain major transactions have minority buy-out rights, and the court can grant relief from prejudicial conduct. Shares are transferred by a signed instrument entered in the share register (section 84), the board may refuse only on constitutional grounds, and the Companies Office register, which is public and lists directors and shareholders, is updated online. There is no stamp duty, and no general capital gains tax, though share dealing can be taxable in specific cases. Companies must record their ultimate holding company, and there was no beneficial ownership register at the review date; one has been proposed.

Employment: trial periods and good faith

The Employment Relations Act 2000 imposes a duty of good faith on both sides and requires every dismissal to be substantively justified and procedurally fair. The exception is the 90-day trial period, available to all employers since 23 December 2023 (previously only those with fewer than 20 employees): if the trial is agreed in writing before the employee starts, applies to a genuinely new employee, states the period and the employer's right to dismiss, and notice is given within the trial, the employee cannot bring a personal grievance for unjustified dismissal. Other grievance rights survive. A probationary period is a different tool and does not remove the need for a fair process.

There is no statutory minimum notice; the agreement sets it and a reasonable period is implied if silent. Restraints of trade are enforceable only if reasonable, and the court may modify an unreasonable restraint rather than strike it out; three to six months is the usual range and the government has signalled a review. Employee share schemes are taxed at the share scheme taxing date under the Income Tax Act, with an optional PAYE election, and offers to employees are exempt from Financial Markets Conduct Act disclosure if they fit the employee share scheme exclusion.

Trade marks at IPONZ

IPONZ examines quickly, usually issuing a first report within about 15 working days, but registration cannot occur earlier than six months from filing to allow earlier-priority applications to surface. Accepted applications are advertised for a three-month opposition period, so approximately six to nine months in total unopposed. Registration lasts ten years from filing and is renewable; a mark unused for three continuous years is exposed to revocation. Fees are charged per class and are lower where goods and services are chosen from the pre-approved list. Applications containing Maori words or imagery are referred to the Maori Trade Marks Advisory Committee. An address for service in New Zealand or Australia is required. New Zealand is a Madrid Protocol member.

Checklist

• Pair the shareholders' agreement with a constitution; the Act's defaults are otherwise in play.
• Record solvency resolutions before dividends.
• Agree any 90-day trial in writing before the first day of work.
• Keep restraints to three to six months and support them with consideration.
• File at IPONZ at least six months before you need the registration.

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