By Bruce McGechan, CVA — Fealty Business Valuations · Last reviewed 16 September 2026
A 50/50 buyout gets settled by the mechanism the shareholders agreed in advance. The valuation tells both parties what the shares are worth; the mechanism decides which one buys and which one sells.
Where the shareholders’ agreement carries a deadlock clause, the buyout runs on rails even after the relationship has soured. Where it carries nothing, the two owners negotiate with only the Companies Act 1993 behind them, and the Act’s answer takes months and gets paid for out of the business they’re arguing over.
Most 50/50 “partnerships” in New Zealand are two shareholders in a company, which is what this covers. A true partnership under the Partnership Law Act 2019 has the same deadlock problem and different machinery for solving it.
So the structural question comes first and the number comes second. Here’s what makes an equal split its own problem, and what breaks a deadlock once goodwill has run out.
A power reserved to shareholders is normally exercised by ordinary resolution, which section 105(2) of the Companies Act 1993 defines as a simple majority of the votes cast. Two shareholders at 50% each never produce one. Any resolution the other opposes fails.
Both of you hold a veto.
The Act’s minority buy-out rights under section 110 let a shareholder who voted against certain major decisions require the company to buy their shares. They bite only once the resolution has passed, and at 50/50 the resolution never passes, so that exit stays shut.
Liquidation by special resolution needs 75% of the votes cast, which neither of you has either. There’s no majority to appeal to, no chair with a casting vote unless your constitution gives someone one, and nobody above the two of you to escalate to.
A 50% parcel is control of nothing. Neither shareholder can pass an ordinary resolution alone, so under fair market value a discount for lack of control applies at 50%, at a lower rate than a small minority parcel attracts.
Two things override that. Where the shareholders’ agreement prescribes a pro rata basis, the agreement governs and the valuer applies it. And where a court is setting the price under section 174, the pro rata, no-discount approach is the one the courts typically take.
Standard of value, level of value and the valuation date are worked through on the sibling article, partner buyout valuation NZ. The pricing logic for internal sales generally sits on what is a fair price for an internal business sale?
Kindrik Partners’ guide to deadlock in 50-50 owned companies (worth reading in full if you’re drafting an agreement) sets out the usual menu. Three options matter for a buyout.
A shotgun clause, also called Russian roulette or a shoot-out, lets one shareholder name a price, and the other then chooses whether to buy at it or sell at it. The symmetry is in the drafting. The advantage sits with the shareholder who has cash, borrowing capacity and nerve, because a shareholder who can’t fund a purchase has only one move, which is to sell at a number somebody else picked.
Sealed bids, sometimes called a Texas shootout, have each shareholder submit a price to an independent person, who decides which bid wins. Kindrik makes the same asymmetry point about this one, that it “can also favour one party over the other” where one has deeper pockets, and adds that the element of chance puts shareholders off.
The option I’d write into a 50/50 agreement is a pre-agreed independent valuation process. It names a valuer or a method of appointing one, the standard of value (fair market value, with the definition cited), the valuation date convention, how the cost is split, and whether the result binds. I’ve set out the rest of that drafting in why buy/sell agreements fail without independent valuation.
Kindrik’s argument for having any of them is the one I’d make too. A mechanism, whichever one you pick, heads off the situation where “one shareholder effectively holds the other to ransom using the threat of winding up”.
Two routes, both through the High Court. Under section 174, a shareholder who considers the company’s affairs are being conducted in a manner that is oppressive, unfairly discriminatory or unfairly prejudicial to them can apply for relief.
The court’s powers are wide: s 174(2)(a) lets it require the company or any other person to acquire the shareholder’s shares, and s 174(2)(g) lets it put the company into liquidation. Under section 241, a shareholder can apply to have a liquidator appointed, and s 241(4)(d) lets the court appoint one where it’s just and equitable to do so.
Both are last resorts, and priced accordingly. A judge decides what the two shareholders declined to decide, the legal cost comes out of the value in dispute, and a liquidation sells a trading business in the worst circumstances available. Whether a deadlock on its own amounts to oppression is a question for your lawyer.
One valuer, jointly appointed, working to a brief both parties agreed before anything started. One report, delivered to both, with the cost split down the middle.
Joint appointment counts for more at 50/50 than anywhere else, because neither shareholder can be outvoted into accepting a number, so consent is the only route to a settled price. A valuation one side commissioned alone arrives at the table as evidence for the prosecution.
Once the worth question is answered, what’s left is terms: who pays what, over how long, with what security and what non-compete. Those are the arguments equal partners survive.
Can my 50/50 partner force me to sell? Only if your shareholders’ agreement lets them, through a shotgun clause or a similar mechanism, or if a court orders it under section 174 of the Companies Act 1993. Without one of those, neither of you can compel the other to do anything.
Does a minority discount apply to a 50% shareholding? Under fair market value, yes. Half the shares carries no control, so a discount for lack of control applies, at a lower rate than a small minority parcel attracts. Where your agreement prescribes a pro rata basis, that prescription governs instead.
What is a shotgun clause, and is it fair? One shareholder names a price and the other elects to buy or sell at it. The symmetry stops at the drafting. It favours whoever can raise the money fastest, so I’d think hard before putting one into an agreement between partners with unequal access to capital.
We have no shareholders’ agreement and we can’t agree. What now? Start with a jointly appointed independent valuation, because it’s cheap and it settles the one question evidence can settle. If that fails, the Companies Act routes above are open to you through the High Court, at a cost that makes the valuation look like a rounding error.
Who pays for the valuation in a 50/50 buyout? Half each is the common default, and it’s hard to paint as unfair. Where your agreement prescribes a split, follow it.
Fealty provides fixed-price independent valuations for shareholder and partner buyouts, with the fee published before work starts. Both parties receive the same report.
See what’s included and what it costs.
For the underlying theory, see how does a shareholder buyout valuation work?
Sources: Companies Act 1993, ss 105, 110, 174 and 241; Kindrik Partners, “Deadlock in 50-50 owned companies”.
About the Author
Bruce McGechan, CVA — Fealty Business Valuations
Bruce McGechan is a Certified Valuation Analyst (CVA), credentialled by the National Association of Certified Valuators and Analysts (NACVA), and a Certified M&A Advisor. He has valued 90 privately held New Zealand businesses across many sectors. Based in Palmerston North and working nationwide, he prepares independent valuations for shareholder buyouts, succession and pre-sale planning, and relationship property and shareholder disputes. His work applies NACVA professional standards to New Zealand conditions — local transaction evidence, NZ tax settings, and the thin-market realities of owner-operated and mid-market companies.
Talk to Bruce: 021-245-8881