How to Transfer Shares in a New Zealand Company
Shares in a New Zealand company can be transferred to a new owner, but the process requires proper documentation and register updates. Here is what founders need to know.
When share transfers happen
Share transfers in New Zealand companies occur when a shareholder sells or gifts their shares to another person or entity. Common situations include bringing in a new business partner, buying out a co-founder, rewarding a key employee, or restructuring ownership before a sale.
The legal framework
Share transfers are governed by the Companies Act 1993 and, where one exists, the company’s constitution or shareholders agreement. Most NZ companies use the model articles (no constitution), which means the board has discretion to decline a transfer if it is not in the company’s best interests.
Step-by-step process
- Check the shareholders agreement (if one exists): pre-emption rights, right of first refusal, and drag-along provisions may apply.
- Agree the price: the transfer price must be agreed between buyer and seller. Get a valuation if the amount is significant.
- Complete a share transfer form: both transferor (seller) and transferee (buyer) sign the form. No standard NZCO form exists; your lawyer or accountant can provide one.
- Board approval: the directors must resolve to approve the transfer. This is a formal board resolution.
- Update the share register: the company’s share register must be updated within 10 working days of the transfer. The register records the name, address, and shareholding of every shareholder.
- Update the Companies Office: if the transfer results in a change of shareholder, notify the Companies Office within 10 working days via your online account.
Tax implications
New Zealand does not have a capital gains tax on most share transfers. However, if shares are held as part of a business activity or if the share dealing rule applies, the gain may be taxable. Get advice from your accountant before completing a significant transfer.
Employee share schemes
If you are transferring shares as part of an employee share scheme (ESS), different rules apply including the employee share scheme regime under the Income Tax Act. See our article on employee share schemes.
Need help?
A commercial lawyer can prepare the transfer documentation and ensure the process is legally sound. Use FreshFirms Connect to find a commercial lawyer in your region.