Agreement Between Directors Of A Company Template for New Zealand

An Agreement Between Directors Of A Company is a crucial governance document that formalises the working relationship between directors of a New Zealand company. This agreement establishes clear expectations, responsibilities, and procedures that govern how directors interact with each other and fulfil their statutory duties under New Zealand law. Unlike informal arrangements, this document provides legal certainty and helps prevent disputes by clearly defining each director's role and obligations.

When do you need this document?

You need this agreement when establishing formal governance structures for your company, particularly during times of change or growth. It's essential when appointing new directors to an existing board, as it ensures all directors understand their collective and individual responsibilities. The document is also valuable when transitioning from a small, informally-run company to one requiring more structured governance, such as when seeking investment or expanding operations. If your company is experiencing director disputes or unclear decision-making processes, this agreement can help clarify roles and establish proper procedures. Companies preparing for regulatory compliance reviews or those operating in regulated industries particularly benefit from having these formal director arrangements in place.

Key legal considerations

The agreement must align with statutory director duties under the Companies Act 1993, including the duty to act in good faith, exercise care and diligence, and avoid conflicts of interest. Key clauses should address confidentiality obligations, as directors often have access to sensitive company information that must be protected. Decision-making procedures are crucial, including how board meetings are conducted, voting requirements, and the process for resolving deadlocks. The agreement should clearly outline each director's specific responsibilities and any limitations on their authority. Indemnification clauses are important to protect directors from personal liability when acting within their proper authority. Consider including provisions for director remuneration, expense reimbursement, and access to company records. The document should also address what happens when directors resign or are removed, including any restraint of trade provisions.

Legal requirements in New Zealand

Under the Companies Act 1993, directors have statutory duties that cannot be excluded by agreement, but additional obligations and procedures can be established. The agreement must not conflict with the company's constitution or any shareholders' agreement already in place. Directors must still comply with disclosure requirements under the Financial Markets Conduct Act 2013 if applicable to your company. The Privacy Act 2020 may impose obligations regarding the handling of personal information accessed through directorial duties. If any directors are also employees, the Employment Relations Act 2000 provisions must be considered to avoid conflicts between employment and directorial obligations. The Contract and Commercial Law Act 2017 governs the agreement's formation and enforceability, requiring proper consideration and clear terms. All directors should receive independent legal advice before signing to ensure they understand their obligations and rights under the agreement.