Urgent Injunctions in Shareholder and Director Disputes
Are you dealing with a shareholder dispute, director dispute or urgent company dispute in New Zealand? An interim injunction may protect company assets, bank accounts, confidential information, customers and business goodwill until the High Court determines the case.
Applications for an urgent injunction in New Zealand often arise where a director or shareholder threatens to transfer assets, change bank access, divert customers, misuse confidential information or establish a competing business. Acting quickly can prevent company value from being lost before a final hearing.
What is an interim injunction?
An interim injunction is a temporary Court order preserving the position until the underlying dispute can be resolved. It might prevent an asset transfer, restrain misuse of confidential information, or stop a disputed transaction from proceeding.
When might an injunction be needed?
Warning signs include:
unusual transfers of company money or assets;
changes to bank mandates or accounting access;
exclusion of a director from company records or premises;
diversion of customers, contracts or corporate opportunities;
threatened disclosure of confidential information; or
establishment of a competing business using company resources.
Not every disagreement justifies urgent relief. There must be a sufficiently immediate risk that damages or a later judgment would not adequately address.
What does the Court consider?
The Court generally asks:
Is there a serious question to be tried? The claim must be genuinely arguable.
Where does the balance of convenience lie? The Court compares the likely harm from granting or refusing relief.
Where does overall justice lie? The proposed order must be fair, workable and proportionate.
Delay, the adequacy of damages and effects on employees or third parties may also matter.
What evidence is required?
An urgent application usually needs affidavit evidence establishing what happened, the threatened conduct, why the risk is imminent, and the harm likely to follow. Helpful documents may include board minutes, bank correspondence, shareholder agreements, emails, messages, accounting reports and transaction documents.
Applicants should act promptly. Delay can undermine the claim that Court intervention is urgent.
What is an undertaking as to damages?
An applicant will ordinarily promise to compensate the respondent for losses caused by the injunction if the claim ultimately fails. The Court may consider whether the applicant has the resources to honour that undertaking.
What should shareholders or directors do first?
Preserve the evidence lawfully.
Prepare a clear chronology.
Identify the precise transaction or conduct at risk.
Check the constitution, shareholders’ agreement and relevant contracts.
Request suitable written undertakings where time permits.
Seek advice before the position becomes difficult to reverse.
What is the key takeaway?
An urgent injunction can protect a company from irreversible harm, but the application must be prompt, evidence-based and carefully targeted. Early action is often critical where company assets, confidential information or business goodwill are at risk.
Who do I talk to?
Our dispute resolution team at Young Hunter Lawyers is well equipped to help you navigate this process.
Call us on (03) 379 3880 or email Info@younghunter.co.nz to discuss with one of our experienced lawyers.
