When You Need A Special Resolution Of Shareholders In New Zealand

If you run a company in New Zealand, there’ll be moments where a “normal” shareholder decision just isn’t enough.

That’s where a special resolution comes in. It’s the higher-threshold vote you’ll usually need for big, structural, or high-impact decisions - the kind that can permanently change ownership rights, the company’s rules, or the future of the business.

The tricky part is that many small businesses don’t realise they need one until they’re already in the middle of a transaction (like bringing in an investor, changing share rights, or signing off on a restructure). By then, delays and shareholder disputes can get expensive fast.

Note: This article provides general information only and doesn’t take into account your specific circumstances. It isn’t legal advice. If you’re unsure whether a special resolution is required for your situation, it’s worth getting tailored advice.

Below, we’ll break down what a special resolution is, when you need one, and how to pass it properly - in a way that works for real-world small business owners.

What Is A Special Resolution Of Shareholders (And Why Does It Matter)?

A special resolution of shareholders is a formal decision made by shareholders that requires a higher level of approval than an “ordinary” resolution.

In practice, it’s used for decisions that are considered fundamental to the company - like changing the company’s constitution, approving certain major transactions under the Companies Act, or altering shareholder rights.

How Is A Special Resolution Different From An Ordinary Resolution?

For most day-to-day decisions, shareholders can pass an ordinary resolution (often a simple majority, depending on your governing documents).

A special resolution generally requires 75% approval of the votes cast by shareholders entitled to vote and voting on the resolution (unless your constitution requires a higher threshold).

That extra threshold matters because it:

• forces real consensus for major changes;
• protects minority shareholders from sudden fundamental shifts; and
• gives third parties (investors, banks, buyers) comfort that the decision has been properly authorised.

Where Do Special Resolutions Come From In NZ?

The key legal framework is the Companies Act 1993. Your company’s governing documents also matter - especially your constitution and any shareholders’ agreement.

If your company has a Company Constitution, it may:

• add extra situations where a special resolution is required;
• change the voting thresholds (for example, requiring 90% for certain matters); or
• create separate voting rules for different share classes.

Separately, a Shareholders Agreement often sets out “reserved matters” that require special approvals (sometimes unanimous consent), even if the Companies Act wouldn’t otherwise require it.

When Do You Need A Special Resolution Of Shareholders In New Zealand?

There isn’t one single list that fits every company, because the answer depends on:

• the Companies Act 1993;
• your constitution (if you have one); and
• any shareholder arrangements you’ve agreed privately (like a shareholders agreement).

That said, there are several common situations where small businesses frequently need a special resolution and don’t realise it until the last minute.

1) Changing Or Adopting A Company Constitution

If you’re adopting a constitution for the first time, or amending an existing one (for example, to add investor-friendly provisions), a special resolution is commonly required.

This comes up a lot when you:

• bring in a new investor and they want stronger governance rights;
• want to restrict share transfers; or
• need clearer rules around director appointments.

It’s worth getting the document right because your constitution and shareholder arrangements often work side-by-side. In many cases, you’ll update both the constitution and a Shareholders Agreement so the rules are consistent and enforceable.

2) Changing Share Rights Or Issuing Different Share Classes

If your company has (or plans to have) different share classes - for example, shares with different voting rights, dividend rights, or rights on liquidation - then changes to those rights can trigger special resolution requirements.

This is particularly common in startups and growth companies when they:

• issue shares to founders with different voting rights;
• bring in investors on preferred shares; or
• introduce employee equity plans.

Because changing rights can materially affect shareholders (especially minorities), the legal process and documentation need to be handled carefully.

3) Major Transactions Or Restructures

Some “major transactions” under the Companies Act 1993 require shareholder approval by special resolution (for example, where the value threshold for a major transaction is met). In other cases, shareholder approval may still be required because your constitution or shareholders agreement treats the deal as a reserved matter.

Examples include:

• selling the company’s key business assets;
• buying a large business or entering a joint venture;
• restructuring the company group (like moving assets into a different entity); or
• entering significant long-term commitments that change the direction of the company.

If you’re considering a sale process, it’s also important to align shareholder approvals with the deal documents, due diligence, and completion timeline. Otherwise, the transaction can stall at the worst possible time.

4) Share Buybacks Or Capital Changes

Share buybacks and other capital structure changes can require shareholder approval and careful compliance with the Companies Act, but the exact requirements depend on the type of transaction, the company’s constitution, and how the buyback or capital change is structured.

This is an area where DIY approaches can cause real issues - not just internal disputes, but also problems later if you sell the company or raise funding and someone scrutinises your company records.

Where relevant, it can be worth having the paperwork properly prepared (for example, via a Share buyback agreement) so you can show clear authority and compliance.

5) “Reserved Matters” In Your Shareholders Agreement

Even if the Companies Act doesn’t strictly require a special resolution, your shareholders agreement might.

Common reserved matters include:

• appointing or removing a director;
• issuing new shares;
• taking on significant debt;
• changing the nature of the business;
• entering related party transactions (like paying a shareholder-owned entity); and
• approving a business sale.

That’s why it’s not enough to only think “what does the Act require?” You also need to check what you’ve agreed with your shareholders.

What Voting Threshold Applies To A Special Resolution?

In New Zealand, a special resolution is typically passed if it is approved by at least 75% of the votes of those shareholders entitled to vote and voting on the resolution.

Two key points often get missed:

• It’s a percentage of votes cast, not necessarily 75% of all shareholders in existence (unless your constitution says otherwise).
• Your constitution can change the threshold, including requiring a higher level of approval for certain matters.

Do All Shares Have The Same Voting Rights?

Not always. Some companies have:

• non-voting shares;
• shares with enhanced voting rights; or
• different voting rights depending on the type of resolution.

If you’re unsure, check your constitution and any shareholders agreement before you rely on a “75% should do it” approach.

What If You Have A 50/50 Company?

This is a classic small business scenario - two founders, 50/50 ownership.

In a 50/50 company, a special resolution can’t pass unless both shareholders agree (because neither can reach 75% alone). That means deadlocks are a real risk if you don’t have:

• a deadlock clause;
• clear reserved matters; and
• a dispute resolution pathway in your shareholder documentation.

If you’re in this position, it’s usually worth tightening your governance documents early, while everyone’s still on good terms.

How Do You Pass A Special Resolution Of Shareholders? (Step-By-Step)

Passing a special resolution of shareholders isn’t just about getting the votes - you also need to follow the correct process and keep proper records.

Here’s the practical step-by-step approach most small companies follow.

1) Check Your Constitution And Shareholder Documents First

Before you draft anything, confirm:

• whether a special resolution is actually required (or if another approval threshold applies);
• who is entitled to vote (e.g. different classes of shares);
• whether notice requirements apply; and
• whether any additional steps are required (for example, separate class approvals).

This is where having a clear Company Constitution and a well-drafted Shareholders Agreement can save you a lot of time.

2) Decide Whether You’ll Use A Meeting Or A Written Resolution

Special resolutions can often be passed either:

• at a shareholder meeting, with proper notice and voting; or
• as a written resolution signed by the required majority.

For many owner-operated companies (especially where shareholders are directors and everyone is aligned), written resolutions are quicker and more practical.

But if there’s disagreement, or you need to ensure procedural fairness, holding a meeting with clear minutes can be the safer option.

3) Draft The Resolution Clearly (Don’t Be Vague)

This is where people get caught out. A special resolution should be specific enough that:

• shareholders understand what they’re approving;
• the company can rely on it later (e.g. if audited or sold); and
• third parties can see the authority behind the decision.

For example, “approve a restructure” is usually too vague. Better wording might include:

• what exactly will happen (issue shares, amend constitution, buy back shares, sell assets);
• key commercial terms (where appropriate); and
• authority for directors to sign documents and do anything needed to implement it.

4) Provide The Required Notice (If You’re Holding A Meeting)

If the resolution will be voted on at a meeting, you generally need to give shareholders notice of:

• the meeting time and place (or virtual details, if applicable);
• the text of the proposed resolution; and
• any supporting documents or explanations that shareholders need to make an informed decision.

Notice rules can be set out in the Companies Act 1993 and your constitution. If you don’t follow the proper notice process, there’s a risk the resolution could be challenged later.

5) Pass The Resolution With The Correct Voting Threshold

At the meeting (or via written resolution), you need to confirm that at least the required majority approves.

Keep an eye on:

• voting rights (especially if there are different share classes);
• proxy votes (if relevant); and
• conflicts (for example, related party transactions where governance documents might restrict voting).

6) Record It Properly (This Step Is Not Optional)

Once passed, the resolution should be:

• entered into the company records;
• kept with minutes and/or written resolutions; and
• stored in a way that can be easily produced for due diligence, a bank, or a future buyer.

If you’re also passing director decisions to implement the shareholder approval, you may also need a director resolution (or signed minutes) as part of your records. Getting these governance steps right becomes especially important if you later raise funding, sell shares, or sell the business.

Common Mistakes Small Businesses Make With Special Resolutions

Most issues we see aren’t because business owners are trying to do the wrong thing - it’s usually because the legal process feels “administrative”, so it gets rushed or left until later.

Here are some of the most common pitfalls.

Using The Wrong Approval Threshold

Some companies assume a simple majority is enough, or they forget their constitution requires a higher threshold than 75% for certain decisions.

This is a big deal because if you don’t pass the resolution properly, the underlying transaction may be unauthorised - which can create disputes between shareholders and even trigger problems with third parties.

Passing A Resolution That’s Too Vague

If the resolution doesn’t clearly authorise what you’re doing, you can end up with:

• directors unsure of what they can sign;
• shareholders arguing later about what was approved; or
• buyers/investors flagging it as a red flag in due diligence.

Forgetting That Your Shareholders Agreement Might Require More Than The Companies Act

Your shareholders agreement may require:

• unanimous consent for certain actions;
• approval of specific shareholders (e.g. founders or investors); or
• a separate process before the vote can be taken.

This is one reason it’s helpful to keep your governance documents updated as your business grows and new shareholders come on board.

Not Aligning The Resolution With The Transaction Documents

Imagine you’re issuing new shares to an investor. Your term sheet, share subscription documents, constitution updates, and special resolution all need to match.

If they don’t, you’ll get delays - and sometimes the investor will lose confidence (which can be fatal in a funding round).

Not Keeping Proper Company Records

For small businesses, it’s easy to treat governance paperwork as something you’ll “tidy up later”.

But later is usually when you’re:

• selling the business;
• raising money;
• bringing in a new shareholder; or
• dealing with a shareholder dispute.

At that point, messy records become an immediate commercial problem.

Key Takeaways

• A special resolution of shareholders is a higher-threshold shareholder decision (commonly 75% of votes cast) used for major company changes.
• You may need a special resolution for decisions like adopting or changing a Company Constitution, changing share rights, certain major transactions (depending on whether the Companies Act threshold is met), or capital changes such as buybacks (depending on how they’re structured).
• Your Shareholders Agreement and constitution can add extra approval requirements, so it’s not enough to only rely on the Companies Act 1993.
• You can usually pass a special resolution via a shareholder meeting or written resolution, but you must follow correct notice, voting and record-keeping processes.
• Common mistakes include using the wrong threshold, drafting vague resolutions, and failing to keep proper company records - all of which can create major issues during funding rounds or business sales.
• If you’re planning a restructure, investment, or ownership change, getting the special resolution and supporting documents right upfront can save you serious time and cost later.

If you’d like help preparing or reviewing shareholder resolutions, updating your Company Constitution, or putting a Shareholders Agreement in place, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.