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A company director is in charge of managing your company’s business and affairs. To function effectively, you must have a director or directors in charge to do this duty properly. To achieve this, you may wish to appoint a new director or remove a current one. This article will outline:

  • who is eligible to be a director of a company in New Zealand;
  • how you appoint a director; and 
  • how you remove a director.

Who Is Eligible to Be a Company Director?

In New Zealand, you may appoint any natural person as a company director, so long as they are not subject to certain disqualifications. For example, you cannot appoint a private or public organisation. All New Zealand companies must have at least one director who lives in New Zealand or Australia (and is a director of a company incorporated in Australia).

Additionally, certain factors will disqualify a person from being a director. These factors include if they are:

  • under the age of 18;
  • an undischarged bankrupt (an individual will be an undischarged bankrupt if they are still in the bankruptcy process);
  • prohibited from becoming a director, general partner or promoter under certain statutory provisions;
  • prohibited from being involved in the management of a company or limited partnership under certain statutory provisions;
  • subject to a property order; 
  • convicted of a crime involving dishonesty in the last five years (offences disqualify an individual from being appointed because directors must act in good faith and the best interests of the company); or
  • prohibited from managing a company or limited partnership by the Registrar of Companies or the Financial Markets Authority.

Likewise, your company can also place further restrictions on who is eligible to be your director. Your company’s constitution should specify these restrictions or qualifications. 

How Do You Appoint a Company Director?

The appointment of a director is typically by an ordinary resolution of your company’s shareholders. However, exceptions may exist if your company’s constitution or shareholders’ agreement specifies otherwise.

An ordinary resolution is a resolution approved by a simple majority of the shareholders entitled to vote on such matters. 

You cannot appoint an individual as a director unless they have:

  • provided their consent in writing to be a director; and 
  • certified that they are not disqualified from being appointed as a director of a company. 

Once you appoint an individual, their acts are valid as the director of your company. This is still the case, regardless of whether their appointment was defective or if they were not qualified for appointment. Therefore, you must take immense care when looking for and appointing a director as their actions will be immediately valid upon appointment. 

How Do You Remove a Company Director?

You may remove a director before the termination of their period of office by an ordinary resolution passed by the company’s shareholders. Again, this is subject to the company’s constitution and shareholders’ agreement. 

If you are to remove your director by an ordinary resolution, you must:

  • call a meeting for the purpose, or for purposes that include, the removal of the director;
  • ensure that the notice of this meeting states this purpose; 
  • provide the director of the company with notice of this resolution;
  • let others hear the director at this meeting; and
  • allow the director to make written submissions to the company, and supply each shareholder with a copy of these written submissions. 

Further, if you remove a director, you must notify the Companies Register within 20 working days from the date of removal (via the Companies Office website). 

Key Takeaways

A company director has an array of important responsibilities and roles. Thus, it is crucial that you have the right person or people in place to fulfil these obligations. Throughout your company’s lifetime, you will need to appoint and remove directors to ensure that these responsibilities are upheld. Additionally, there are statutory procedures that you must follow when appointing or removing a director. However, you may also outline alternative procedures for appointing and removing directors in your company’s constitution or shareholders’ agreement. 

If you need assistance appointing or removing a company director, get in touch with our corporation lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

How are company directors appointed?

Unless the constitution or shareholders’ agreement provides otherwise, you can appoint a director by the shareholders of a company voting on a resolution to appoint a director.

Does the director own the company?

The director is in charge of managing a company’s business and affairs. However, they do not own the company in his or her capacity. A director, in conjunction with these obligations, may own shares in the company.

Who can be a director in New Zealand?

In New Zealand, you can appoint any natural person who is not subject to certain disqualifications.

Who cannot be a director of a company?

Many disqualifications limit who can be a director in New Zealand. These disqualifications include:
– those under age of 18;
– undischarged bankrupts;
– those prohibited from becoming a director under certain statutory provisions;
– those prohibited from being involved in the management of a company under certain statutory provisions. 

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