NZ Company Law News
FNZ, a global financial services company managing over US$1.7 trillion in assets, is facing potential legal action from its employee shareholders after a series of capital raises reportedly diluted their equity by US$4.5 billion.
Founded in New Zealand in 2003, FNZ now operates worldwide with over 6,000 employees and serves 24 million end users.
FNZ’s ownership is split between institutional investors, including CDPQ, CPP, Temasek, and Generation Investment Management, and employee shareholders, who hold around 35 percent of the company’s shares.
Employee shareholders claim that recent decisions by FNZ’s board, which is dominated by representatives of institutional investors, have prioritized the interests of these investors at the expense of employees.
They argue that three capital raises conducted within 12 months have significantly eroded their equity.
In 2024, the board raised US$1 billion through two rounds of preference shares issued to institutional investors, with the shares ranking higher than employee shares and reportedly caused US$3 billion in dilution for employee shareholders.
A further US$500 million raise on April 5, 2025, using a similar structure, could increase the hurdle valuation from US$6.8 billion to US$8.3 billion, resulting in an additional US$1.5 billion in dilution.
Employee shareholders claim these actions have transferred substantial value to institutional investors while undermining the equity they built over two decades.
A spokesperson for the employee shareholders expressed frustration at the board’s lack of response to formal communications and legal concerns, accusing it of exacerbating the issue by approving another capital raise.
The affected shareholders are considering legal action under New Zealand’s Companies Act 1993, alleging unfairly prejudicial conduct and improper use of directorial powers, argueing that the board’s decisions reveal significant conflicts of interest and have led to what they describe as an unjust transfer of wealth from employees to institutional investors.
The dispute could set important legal precedents regarding corporate governance and shareholder rights to properly manage conflict of interest issues.
