Put And Call Option Shareholders Agreement Template for New Zealand

A Put And Call Option Shareholders Agreement is a sophisticated legal instrument that establishes predetermined mechanisms for share transfers in New Zealand companies. This agreement creates contractual rights allowing shareholders to sell their shares (put options) and designated parties to purchase shares (call options) under specific circumstances, providing structured pathways for ownership transitions while maintaining corporate control.

When do you need this document?

You need this agreement when establishing a private company with multiple shareholders who require flexibility for future ownership changes. It's essential for family businesses planning succession, joint ventures between corporate partners, or startups with investor participation where exit strategies are crucial. The document is particularly valuable when shareholders need liquidity options but the company wants to control who can become owners. It's also necessary for employee share schemes where the company requires the right to repurchase shares upon employment termination, or when bringing in new investors who need guaranteed exit mechanisms.

Key legal considerations

The agreement must clearly define the circumstances triggering option rights, including employment termination, retirement, death, disability, or breach of shareholders' duties. Valuation mechanisms are critical and should specify whether shares are valued at fair market value, book value, or predetermined formulas, along with the appointment of independent valuers if disputes arise. Exercise procedures must detail notice requirements, timeframes for completion, and payment terms. The document should address transfer restrictions, ensuring options override standard pre-emption rights in the company's constitution. Consider tax implications under the Income Tax Act 2007, particularly capital gains treatment for option exercises. Include dispute resolution mechanisms and specify how options interact with existing shareholders' agreements or company constitutions.

Legal requirements in New Zealand

Under the Companies Act 1993, share transfers must be properly documented and comply with the company's constitution and any existing shareholders' agreements. The agreement must not conflict with statutory pre-emption rights unless specifically overridden. If the company is subject to the Takeovers Code, ensure option exercises don't inadvertently trigger takeover obligations. The Financial Markets Conduct Act 2013 may apply if options constitute financial products requiring disclosure. All parties must have proper authority to enter the agreement, with company resolutions authorizing directors to execute on behalf of the company. The Contract and Commercial Law Act 2017 governs formation and enforcement, requiring clear terms and proper consideration. Ensure compliance with the Fair Trading Act 1986 regarding accurate representations about share values and option terms. The agreement should be registered appropriately and integrated with the company's share register and constitutional documents.