Forum Archive Index - May 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi redredwine,


-----------

Disclaimer:  I am not a lawyer and these remarks are only my 
opinions.   I strongly suggest you take legal advice before acting on 
any of my answers to your questions.

----------


> 
>I need to know the definition/description of/for an investor.
> 
>Questions:
> 
>Is an investor an owner in the company?
>
>



Not necessarily.   Banks put money into many companies,
but are they regarded as owners of those companies?  No.



>
>
>Can a person invest (financially) in a company without being a
>shareholder? 
>
>



Yes they can.  They can invest in the form of a debenture 
(i.e. a loan with a negotiated rate of interest payable on the 
capital invested)



>
> 
>Scenario:
> 
>If there are 100 shares in a company divided between 4 directors 33,
>33, 34, 0... do these holdings signify percentage of capital
>investment (could be thousands of dollars) or simply $1.00 per share
>as stated in the minutes?
>
>


First point.   A director in a company need not be an investor.  
These days most public companies expect their directors to have some 
shareholding in the company which they direct.  It may be written in 
to the company constitution that they should.   But as far as I am 
aware there is no law of the land that says they must.

BTW, I would doubt if having something 'stated in the minutes' means 
anything on its own.  A matter would need to be in the company 
constitution or articles of association to carry legal weight.

Next I believe that the notion of having a par value for shares, such 
as $1, has been abolished in New Zealand.  Have you not brought your 
company articles of association up to modern legal requirements?

Finally a given shareholding level does not specify your level of 
capital investment



>
> 
>If each shareholder has contributed thousands of dollars for their
>percentage of shares, are they entitled to that percentage of
>disbursements/profits? (Logically, I would say so and this is the
>point that I need clearing up)
>
>



Since when did logic ever correspond to legal reality ;-)?  

A shareholder is legally entitled to a percentage of the profits 
equivalent to the shareholding they have in the company.  This may or 
may not reflect the capital they have contributed to the company.   
For instance some companies are set up along the lines of one 
shareholder supplying the expertise and the other supplying the 
money.   Profits are split equally, but the capital contributed to 
the business may not be equal at all.

Disbursements are another matter entirely.  You can't just lump them 
in with profits and say 'one rule for all'.  You'd have to be more 
specific on what you mean by a 'disbursement' before I could attempt 
to answer.


>
> 
> Is a written agreement between the directors for altered
> shareholdings legal enough to be permanant; must it go through the
> Companies Office?
> 
> 


Ouch!  I wouldn't like to answer that one.  You may find that sort of 
thing is covered in the articles of association of the company.   
Certain aspects of the articles of association are required 
by New Zealand company law.   Other company rules may be at the whim 
of what the original shareholders put into the articles of 
association.


>
> 
> Disclosure: I hold no shares and no financial contributions in my
> own company!
> 
> 


In that case it's not 'your' company is it.  You are allowed to be a 
director with no shares in a the company you direct.   But I don't 
think that means you can call it 'your' company any more.


SNOOPY




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