Company / Law / Study by subject

Company Q&A: Company Law in New Zealand


Key Issues

Before answering the following questions, you should be familiar with these issues:

  • The range of organisations carrying on business in New Zealand, and in particular the distinguishing characteristics and advantages and disadvantages of each; and
  • The development of New Zealand’s company law, particularly the reasons for and philosophies underlying our present system.

Common Pitfalls

  • Questions dealing with the historical development of New Zealand’s company law typically take the form of essays requiring an evaluation of the 1993 (or some earlier) reform or of some fundamental feature of companies. Answers to such questions should include a considered assessment of the merits of the reform or feature in question, rather than simply a description of it.
  • Similarly, questions where you are asked for advice on the appropriate structure for a business should be evaluative rather than merely descriptive.

Question 1

Consider the following quotations:

-The [Companies Act 1955] is overdue for rethinking from basic principle and for a systematic reorganisation.
-(Law Commission Company Law: A Discussion Paper (NZLC PP5, 1987) at [14].)
-[The Companies Act 1993] gives effect, in substance, to what the Law Commission has proposed for the complete reform of New Zealand’s company law.
(Explanatory note to the Companies Bill.)

Was the reform to New Zealand’s company law in 1993 “basic” and “complete”? Consider the inadequacies of the 1955 Act which prompted the 1993 reform package, the content of the new regime, and the approach taken by the Law Commission to the reform process.

Answer Plan

You need to consider the following in your answer:

  • The inadequacies of New Zealand’s previous company law regime;
  • Some examples of how these deficiencies were dealt with by the 1993 reform; and
  • The approach taken to the reform process.

Question 2

The concern of the draft Act is … with what may be called a “core” Companies Act.

(Law Commission Company Law: Reform and Restatement (NZLC R9, 1989) at [16], referring to the draft Companies Act contained in that report.)

What is “core” company law? What was the rationale for confining the Companies Act 1993 to core company law?

Answer Plan

You need to consider the following in your answer:

  1. The distinction between “core” and non-core company law, and the reasons for that distinction; and
  2. The reasons for the Law Commission’s recommendation that our present Companies Act should be confined to core company law only.

For the full sample answers and more see Berkahn Questions and Answers: Company Law (3rd ed, LexisNexis, Wellington, 2014).