Ensuring compliance and transparency: Why New Zealand companies need to prepare directors and shareholders minutes
In New Zealand, companies are required by law to prepare and maintain minutes of meetings for both directors and shareholders. These minutes serve as important legal documents and fulfill several purposes. The legal reasons for preparing and maintaining these minutes are as follows:
Compliance with the Companies Act 1993 (the Act): The Act is the primary legislation governing companies in New Zealand. Various sections in the Act require companies to keep minutes of directors' and shareholders' meetings. By preparing these minutes, companies ensure compliance with the Act and avoid the financial penalties that can be imposed under s 373 and following the Act. Our DYOdocs template minutes summarise the relevant sections in the Act and their requirements.
Evidence of Decision-Making: Minutes provide an accurate record of the resolutions, and decisions made during meetings. They serve as evidence of the decision-making process and help establish the actions taken by the company's directors and shareholders. In case of any legal disputes or investigations, minutes can be presented as reliable evidence.
Corporate Governance: Minutes play a vital role in maintaining good corporate governance practices. They document the accountability and transparency of the company's decision-making processes. By recording the decisions, minutes help demonstrate that the company is being managed in accordance with its constitution, relevant laws, and regulations.
Protection of Directors and Shareholders: Minutes provide a legal safeguard for directors and shareholders. They help protect directors by documenting their adherence to their fiduciary duties and responsibilities. Shareholders' minutes ensure that their interests are represented and their rights are upheld during important decision-making processes.
Audit and Compliance Requirements: Accurate and well-maintained minutes are essential for audits and compliance reviews. External auditors and regulatory authorities may request access to these records to assess the company's compliance with legal requirements, financial reporting standards, and corporate governance practices.
Transparency and Accountability: Minutes promote transparency and accountability within the company. They ensure that all relevant decisions, resolutions, and actions are recorded and can be made available for review by stakeholders. Transparent record-keeping helps prevent potential conflicts of interest, and mismanagement.
Shareholder Communication: Minutes also serve as a means of communication with shareholders. They provide a comprehensive account of decisions made at shareholder meetings, allowing absent shareholders to stay informed about important matters affecting the company.
Specific requirements for preparing and maintaining minutes vary depending on what is being done. Therefore, it is advisable for companies to seek professional advice to ensure compliance with the applicable laws and regulations in New Zealand.
