Due Diligence Archives | Edmonds Judd

To Share and Share alike

April 15, 2026

Business Law, Contracts and Agreements, Due Diligence, Legal Guidance, Shareholder Agreements

It was just another Monday, as Simon entered his law office, looking forward to slaking his thirst with a comforting cup of tea. He shrugged off his suit jacket and hung it up. While he waited for his computer to wake itself for the day ahead, he made himself a cup of tea.

He was just about to have a sip, when the phone rang. He put the tea down. Reception told him that someone was here to see him, no appointment in place, but it was apparently urgent. Taking a last look at his untouched drink, he went downstairs and shook hands with Reggie, who was flustered, Sally’s cousin.

“I’m joining someone in an engineering business, it’s all got to be done by tomorrow for some reason, and I’ve got all this paperwork to sign. In fact, I’ve already signed it and was going to hand it over, but Lory said I better come and see you first. Well, she demanded it.”

Simon sat Reggie down in an office, and had a look at the papers provided. Reggie was joining two other people in a company which ran the engineering business, he was going to take over from a current owner, and this all had to happen by 31 March for tax reasons. Simon went back to his room, grabbed his favourite pen, ignored the cold cup of tea on his desk, and returned to an expectant Reggie, who said: “We’re all good to go, aren’t we, can I just pay the money and get on with it?”

Simon put down the documents, looked at Reggie, and took a deep breath. “Reggie, there are some really important things to think about first:

Due Diligence – how well do you know the people you are going into business with? Do they have experience in the industry, in this company, do they have a good reputation? Are they financially sound, can they help bail the company out of trouble if necessary, have they had money problems in the past?

Shareholder Agreement – it is essential that you and the other owners sign an agreement which sets out expectations of each other, whether you will need to put more money into the business, who makes decisions, and when do you all have to agree.

You should commit to a timeframe where no one can pull out of the business, and if they do they must offer the shares to each other.”

Reggie’s eyes were wide open. “Thanks for this, I’ll have a good chat with the others, I won’t sign anything, and I’ll come back and see you shortly.”

Simon waved him goodbye, and poured himself a cup of tea. He knew that was not the end of this story.

Simon Brdanovic

Property briefs

November 11, 2025

Buying & Selling Property, Due Diligence, Legal Updates, Property & Conveyancing

Proposed reform to the Overseas Investment Act – the ability for overseas buyers to purchase or build property in New Zealand

The government recently announced a reform to the Overseas Investment Act 2005 that would allow overseas residents with a New Zealand investor residence visa to buy or build a property to the value of $5 million-plus. Applicants must satisfy the national interest test and pass the risk assessment required by the proposed legislation. After passing its first reading in June, the reform bill is currently before the select committee to receive submissions.

Currently, overseas residents and investors are largely restricted from purchasing or building property in New Zealand.

Granny flat legislation just passed

The Building and Construction (Small Stand-alone Dwellings) Amendment Bill was passed into law on 23 October 2025. This law change will allow small stand-alone dwellings or ‘granny flats’ of up to 70m² to be built without a council building consent provided that certain conditions are met. These changes will roll out in the first quarter of 2026 (1 January to 31 March).

The conditions are:

The building must be of a simple design and comply with the Building Code
The work must be undertaken or supervised by a licensed building professional, and
The local council must be notified before the build begins and at its completion.

It will be interesting to see how this law change plays out and whether any issues arise in the future. There are also penalties for those who do not satisfy the above conditions required by the legislation.

Please do not hesitate to talk with us for advice if you are interested in building a granny flat and you want to ensure you are complying with the new requirements.

No further restrictions on sunset clauses in sale and purchase agreements

In our last edition (Winter 2025), we discussed the Property Law (Sunset Clauses) Amendment Bill which was introduced into Parliament in April 2025. The bill was aimed at restricting sellers developing vacant plots of land from using ‘sunset clauses’ to cancel sale and purchase agreements and to add an extra layer of protection for buyers.

To recap, a ‘sunset clause’ is a provision in an agreement enabling the seller or buyer to cancel the agreement if the development is not completed by the specified or intended date. The bill was debated at its first reading in Parliament before being voted down by a majority of 68 to 54.

The majority argued that the passage of the bill would ultimately deter developers from entering into these sale and purchase agreements, and therefore reduce the availability of off-the-plan housing when there is already a shortage of housing in New Zealand.

It was also pointed out that there are already some existing protections afforded to buyers in legislation, specifically in section 225(2b) of the Resource Management Act 1991. This clause enables buyers to give notice to the seller to cancel an agreement if, two years after the granting of a resource consent or one year after the date of the agreement, the seller has not made reasonable progress in obtaining or depositing a survey plan.

Changes to the assessment of earthquake-prone buildings

The government recently announced its intention to introduce the Building (Earthquake-prone Building System Reform) Amendment Bill into Parliament soon. The proposed reform focuses on increasing the threshold and implementing strict criteria that must be met to condemn a building as earthquake-prone and uninhabitable.

The proposed new regime will only capture buildings that pose a genuine risk to human life in medium to high-risk zones. Consequently, the government believes that around 55% of earthquake-prone buildings (about 2,900 buildings) will be removed from the system.

We look forward to reading the draft bill once it is introduced into Parliament; it has implications for many building owners.

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Copyright, NZ LAW Limited, 2022. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Big Opportunities, Big Decisions: Bob Learns About Business Partnerships

September 1, 2025

Business Growth, Business Partnerships, Due Diligence, Edmonds Judd Stories, Family Business, Investments, Protecting Your Business

Bob saw that it was his brother calling. “Hey Luke, what’s up?”

“Bob, I think I have some crazy good news for you”, said Luke excitedly. “This is going to take you to the next level, the sky is the limit, oh wow, brother, this is amazing!”

“Luke, you gotta tell me what’s going on. Just calm down and explain.”

“Ok, sorry” said Luke, taking a few deep breaths. “You know how I’m connected to the rugby club, and how I used to play rep rugby. Well, I was speaking with these rugby players who are looking to invest in businesses once their professional sporting career ends, and they said they’re very excited about your business, and the potential it’s got. There’s three brothers, Beauden, Jordie, and Scott, and they reckon that with their profile, and your products and growing brand recognition, they can make this the best known burger business in the country.”

Bob was stunned. He recognised that his business seemed to be getting bigger and better all the time, but he really hadn’t been sure what to do next.

Luke interrupted his thoughts: “I’ve got some papers that they’ve prepared, all you need to do is sign, it gives them some of your shares, and then they’ll put some money into your bank account. Then you can nut out the details after that.”

Bob remembered what his lawyer at Edmonds Judd had said – Never sign anything without getting it checked out first. So he told Luke to send the paperwork through, and he’d have a look at it.

After receiving the documents he made an appointment at Edmonds Judd and sat down with his lawyer, explain the background, and providing him with all the documentation.

His lawyer told him that it might be a wonderful opportunity, but there were a lot of checks to do before this could go any further. “First,” he told Bob, “you have to do your due diligence on the people you’ll be working with. This is a relationship that you will have for some time, and you need to know that they are the sort of people that you are comfortable with, that aren’t under financial pressure, that have some business understanding themselves, and that share the same vision as you, because you will all need to be in sync.

Bob nodded slowly – this was good advice.

“Secondly,” his lawyer went on, “whatever arrangements are agreed on, they should be recorded in some documents before any shares in your company are transferred, or money paid. This will set out what happens with decision making within your business, what you as the operator are able to do without checking with anyone else, what happens if someone wants to exit the business, or dies, or if you aren’t able to personally operate it anymore. Who has the final say? What if you’re deadlocked? How much of the profits should be paid out, and what should be re-invested? What if the business needs more money – do you all have to contribute? And thirdly – your accountant needs to be involved, because there can be some tricky tax issues arising out of selling shares, and you need to know what these could be.”

While there was a lot to take on board, Bob was pleased he had such good advisers on board. He left with a checklist of tasks he’d been given, thanking his lawyer, “I know I’ve got a pretty good team behind me too.”