Responding to shareholder activism: practical steps for New Zealand companies

As shareholder activism continues to attract attention in New Zealand, companies should have a clear plan for responding. In this article, we explore shareholder rights under New Zealand law, and the practical steps companies can take to prepare for and respond to the exercise of those rights.

 

The rise of shareholder activism in New Zealand

Globally, and increasingly in New Zealand, shareholder activism is on the rise. Since 2025, key publicly recorded activist campaigns in New Zealand include:

• NZME – In early 2025, a minority shareholder, holding approximately 10% of shares, proposed to remove all existing NZME directors and appoint four new directors. Ultimately, the matter was resolved with a change to the board chair and the activist shareholder gaining a seat on the board.
• Bremworth – In March 2025, a minority bloc of shareholders, representing approximately 12% of shares, proposed to replace all existing directors with four new independent directors. The activists were successful despite opposition from the single largest shareholder.
• Rakon – In late 2025, a minority bloc of shareholders, representing approximately 32% of shares, refused to support the appointment of three independent directors, including a new chair, required under the NZX Listing Rules. The activist was successful – the board withdrew its preferred candidates, and the activist was later appointed chair.
• EROAD – In May/June 2026, a US-based minority shareholder, holding approximately 15% of shares, proposed to remove two existing directors, including the CEO, and nominate three new directors. The activist was only partially successful – only one of the proposed director appointments was approved at the annual shareholder meeting.

Publicly reported examples are unlikely to capture the full picture. Many activist campaigns in New Zealand are resolved privately before they become the subject of market announcements or media coverage.

 

The activist playbook

Shareholder activism is typically triggered by dissatisfaction with corporate decision-making, governance, strategy, or perceived financial underperformance.

While the facts differ from case to case, the underlying aim of the activist is generally the same: to persuade the board to change course and adopt a strategy supported by the activist shareholder. To execute this objective, the activist typically attempts to use shareholder rights, for example under the Companies Act 1993 or the company’s constitution, to remove existing board members and/or appoint one or more directors to the board who are supportive of the activist’s strategy. Other common activist activity includes “vote no” campaigns, shareholder litigation, and social media pressure.

Artificial intelligence (AI) has democratised access to complex financial and governance analysis tools and is likely to become an increasingly important part of the modern activist’s playbook. These AI tools allow shareholder activists to identify corporate weaknesses or underperformance, craft targeted shareholder proposals, and coordinate campaigns with precision and speed. For companies, AI adds further complexity to the challenge posed by shareholder activism and raises the bar for preparedness.

 

How should companies respond to shareholder activism?

In responding to shareholder activism, directors need to conduct themselves consistently with their overarching legislative and fiduciary duties to act in good faith and in the best interests of the company. Depending on the circumstances, this may involve constructive engagement with the activist and the full or partial adoption of the activist’s requests.

General counsel must likewise remain mindful that their role in supporting the board is subject to their overriding fiduciary duties to the company. Counsel will be acutely aware of the potential for interests to diverge and should remain alert to circumstances in which a director’s conduct is under scrutiny, such that their interests may no longer align with those of the company.

In those situations, independent legal advice may be required. Prompt engagement of external legal counsel can help in-house counsel navigate the legal, strategic, and interpersonal complexities that frequently arise in disputes involving internal stakeholders.

 

Preparing a response and legal privilege

Despite the underlying legal and fiduciary duties owed, directors and general counsel in New Zealand may now be increasingly comfortable that legal advice provided to a company may be withheld from shareholders on grounds of legal privilege, including in response to shareholder activism or litigation.

A recent decision of the Privy Council clarified when companies can assert privilege against their shareholders. While the decision is not binding on New Zealand courts, we expect it to be highly influential.

However, the dual legal and commercial functions often performed by in-house counsel can give rise to challenges in establishing legal privilege. It is therefore essential that legal advice is carefully framed, communicated and documented to ensure that any claim to privilege can be maintained. This is often an area where external counsel can assist.

 

What can companies do to prepare?

1. Prepare early

Boards and general counsel should treat shareholder activism as a foreseeable and ongoing governance risk, rather than a remote possibility. Companies should prepare a response policy that sets out a clear process to be followed in relation to an activist approach – including contact details for trusted legal and other advisers, internal escalation steps, and expectations around media engagement and confidentiality.

Companies should also identify potential strategic, governance, or personnel issues that an activist may focus on, and stress-test how the board would respond. This preparatory work should be revisited regularly to reflect changes in the company’s performance, strategy and shareholder base.

2. Consider the composition of the board

Companies can stay ahead of activist campaigns by maintaining a strong pipeline of potential director candidates. A board should be able to show that it has the skills and expertise needed to oversee the company’s strategy and performance.

3. Know your share register

Companies should actively monitor their share register for unusual trading patterns or signs of stake-building. Companies should also monitor public commentary, media coverage and market disclosures that may indicate emerging shareholder concerns or activist positioning.

4. Understand and engage with your shareholders

Companies should engage regularly and constructively with major shareholders to ensure they understand and support the company’s strategy and management. This includes maintaining a strong investor relations programme and providing regular market updates.

Effective engagement can help to surface concerns early and may reduce the likelihood of those concerns escalating into an activist campaign. Institutional shareholders are increasingly active in their approach, so companies should minimise the risk that they support an activist or use a live public dispute to raise broader concerns.

5. Consider the company’s constitution

Boards may consider building protections against shareholder activism into the company’s constitution. This may include assessing quorum requirements, director appointment mechanisms, and other procedural rules that may influence how shareholder campaigns are conducted.

However, these mechanisms must be carefully balanced to ensure they remain consistent with shareholder rights and market expectations, and do not fall foul of the prohibition on defensive tactics in New Zealand’s Takeovers Code or, where relevant, listing rule requirements.

The Takeovers Code’s prohibition on defensive tactics generally prohibits directors of a company from taking or permitting any action that would effectively result in a bona fide takeover offer being frustrated, or shareholders of that company being denied the opportunity to decide on the merits of an offer.

6. Prepare a shareholder communications strategy

Companies should be prepared to communicate clearly with shareholders if activist proposals are put forward. A clear and disciplined shareholder communications strategy can be decisive.

In 2025, several multinational corporates successfully ran their own campaigns in response to activist activity, leveraging effective shareholder communication strategies. For example, Rio Tinto shareholders rejected Palliser Capital’s proposal to move Rio Tinto’s primary listing from London to Australia, after the board characterised the proposal as “value destructive” to other shareholders in its own defensive campaign.

7. Prepare for the long game

Even after resisting an initial campaign, companies should remain alert to the risk of prolonged activist pressure. In recent years, there have been numerous examples of activists pursuing sustained campaigns that place pressure on senior management and create significant disruption.

Companies should therefore treat activism preparedness as an ongoing governance discipline, not a one-off response exercise.

 

Conclusion

The activism landscape in New Zealand is dynamic. We expect activist activity to continue and the activist playbook to evolve. Companies will be better placed to respond to and navigate activist challenges if they remain vigilant and prepare for activist activity.

DLA Piper advises companies, general counsel and directors on shareholder activism across a range of sectors. For assistance preparing for, managing, or responding to a shareholder campaign, please contact the authors of this article.