Liability of Directors in New Zealand

DIRECTORS' PERSONAL LIABILITY FOR CORPORATE FAULT, H. Anderson, ed., Wolters Kluwer, 2008

31 Pages Posted: 21 Mar 2012

See all articles by Susan Watson

Susan Watson

University of Auckland Faculty of Law

Chris Noonan

University of Auckland - Faculty of Law

Date Written: March 19, 2008

Abstract

The risk of company directors in New Zealand being found liable for corporate fault has expanded in recent years. An increasing number of statutory provisions provide for liability for directors. When the Companies Act 1993 was introduced, it was accompanied by howls of outrage from those who felt the duties of directors set out in that Act would make directorship unattractive and those who became directors hamstrung and excessively risk-adverse. A decade and a half on, such fears have proven to be largely unfounded. The increased risk of liability for directors does not appear to reflect any considered policy on imposing liability on directors for corporate actions. Instead, the provisions have been enacted on an ad hoc basis, with existing models adapted to new regulatory issues. While a number of individual provisions, especially section 135 of the Companies Act 1993, have received not inconsiderable judicial and academic comment, there has not been a systematic study of either the approach or the consequences of imposing liability on directors in New Zealand.

The chapter begins with a brief account of the New Zealand legal system. It then provides an overview of New Zealand company law and the relationship between directors and their companies. The following section discusses the principles of the general law under which directors may be found liable for the acts or omissions of their companies. The next section examines the liability of directors for corporate fault in the most important legal areas.

Suggested Citation

Watson, Susan Mary and Noonan, Chris, Liability of Directors in New Zealand (March 19, 2008). DIRECTORS' PERSONAL LIABILITY FOR CORPORATE FAULT, H. Anderson, ed., Wolters Kluwer, 2008. Available at SSRN: https://ssrn.com/abstract=2026226

Susan Mary Watson (Contact Author)

University of Auckland Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

Chris Noonan

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

Register to save articles to
your library

Register

Paper statistics

Downloads
150
Abstract Views
862
rank
200,080
PlumX Metrics