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Share Cancellation Agreement

Share Cancellation Agreement Template for New Zealand

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Key Requirements PROMPT example:

Share Cancellation Agreement

"I need a Share Cancellation Agreement for our New Zealand private company to cancel 10,000 ordinary shares held by a departing founder, with the cancellation to take effect from March 1, 2025, in exchange for a cash payment of NZD 500,000."

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Document background
The Share Cancellation Agreement is a crucial document used in New Zealand corporate transactions when a company needs to reduce its share capital or facilitate a shareholder's exit. It is commonly used in situations such as share buy-backs, capital restructuring, or implementing employee share scheme arrangements. The agreement must comply with the New Zealand Companies Act 1993 and typically includes details of the shares being cancelled, consideration (if any), necessary corporate approvals, and mechanisms for executing the cancellation. This document is essential for maintaining proper corporate governance and ensuring compliance with regulatory requirements, particularly regarding capital maintenance rules and shareholder rights. The agreement should be carefully drafted to address tax implications and any specific requirements of the company's constitution or shareholders' agreement.
Suggested Sections

1. Parties: Identifies the company and the shareholder(s) whose shares are being cancelled

2. Background: Sets out the context of the share cancellation, including details of the existing shareholding and reason for cancellation

3. Definitions: Defines key terms used throughout the agreement

4. Agreement to Cancel: Core provision setting out the agreement to cancel the specified shares

5. Cancellation Details: Specifies the number and class of shares being cancelled and any consideration

6. Conditions Precedent: Lists any conditions that must be met before the cancellation takes effect

7. Completion: Details the timing and mechanics of the cancellation process

8. Company Obligations: Sets out the company's obligations including updating the share register and filing necessary documents

9. Shareholder Warranties: Warranties from the shareholder regarding ownership and authority to cancel shares

10. Company Warranties: Warranties from the company regarding corporate authority and compliance

11. General Provisions: Standard contract clauses including governing law, notices, and execution requirements

Optional Sections

1. Consideration: Required if the cancellation is not gratuitous, detailing payment or other consideration for the cancelled shares

2. Tax Provisions: Include when the cancellation has specific tax implications that need to be addressed

3. Confidentiality: Include for private companies or when confidentiality is particularly important

4. Non-Competition/Restraint: Include when the shareholder is exiting the business completely

5. Director Resignation: Include if the shareholder is also a director who will be resigning

6. Mutual Release: Include when parties wish to release each other from future claims

7. Shareholder Approval: Include specific provisions when other shareholders' approval is required

Suggested Schedules

1. Share Details: Schedule detailing the specific shares being cancelled, including share certificate numbers and class rights

2. Board Resolution: Copy of board resolution approving the share cancellation

3. Shareholder Resolution: Copy of shareholder resolution (if required) approving the cancellation

4. Payment Details: Schedule specifying consideration and payment terms (if applicable)

5. Share Certificates: Copies of relevant share certificates to be cancelled

6. Companies Office Forms: Required forms for filing with the New Zealand Companies Office

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Clauses
Interpretation
Agreement to Cancel
Consideration
Conditions Precedent
Completion Obligations
Warranties and Representations
Corporate Authority
Share Details
Regulatory Compliance
Tax Provisions
Confidentiality
Mutual Release
Further Assurance
Costs and Expenses
Notices
Assignment
Severability
Entire Agreement
Variation
Waiver
Governing Law
Dispute Resolution
Force Majeure
Counterparts
Third Party Rights
Time of Essence
Company Records
Board Approval
Shareholder Approval
Share Certificate Cancellation
Companies Office Filing
Relevant Industries

Financial Services

Professional Services

Technology

Manufacturing

Retail

Healthcare

Real Estate

Mining and Resources

Agriculture

Construction

Transportation and Logistics

Education

Telecommunications

Relevant Teams

Legal

Finance

Corporate Secretariat

Compliance

Corporate Governance

Executive Leadership

Board of Directors

Investor Relations

Corporate Advisory

Share Registry

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Corporate Lawyer

Legal Counsel

Finance Director

Corporate Governance Manager

Share Registry Manager

Board Director

Financial Controller

Compliance Officer

Corporate Advisory Manager

Investment Manager

Commercial Director

Business Development Manager

Industries
Companies Act 1993: Primary legislation governing company operations in New Zealand, including specific provisions for share cancellations (sections 58-66), capital reduction procedures, and shareholder rights.
Financial Markets Conduct Act 2013: Regulates financial markets and financial products, potentially relevant if the shares are in a listed company or constitute regulated financial products.
Income Tax Act 2007: Contains provisions regarding the tax treatment of share cancellations, including potential dividend implications and capital gains considerations.
Contract and Commercial Law Act 2017: Governs general contract law principles applicable to the agreement, including formation, interpretation, and enforcement of commercial contracts.
Takeovers Act 1993: May be relevant if the share cancellation could affect control of the company or trigger takeover provisions, particularly for listed companies.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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