Related Party Transactions in New Zealand: An Empirical Study of a Flawed System

Company and Securities Law Journal, Vol. 30, pp. 110-142, 2012

55 Pages Posted: 21 Mar 2012 Last revised: 19 Apr 2012

See all articles by Duncan Jessep

Duncan Jessep

University of Auckland - Business School

John Hynes Farrar

Bond University Faculty of Law

Susan Watson

University of Auckland Faculty of Law

Date Written: March 19, 2012

Abstract

Between 2006 and 2010 approximately 32 finance companies went into receivership, liquidation or were bailed out by the Government in New Zealand. The total combined outstanding debt from these failures exceeds NZD$5.3 billion. Excessive, unregulated, and in some cases, undisclosed, related party transactions have been cited by commentators as being a contributing reason for many of these failures. In light of these concerns, this article, using empirical analysis, questions whether the regulatory approach to related party transactions in New Zealand is adequate and where applicable, suggests improvements to that framework, making comparisons with Australia. It concludes that Australia has a more rigorous system but that related party transactions are inherently problematic under any circumstances.

Keywords: companies, directors, directors duties, related party transactions, self-dealing

Suggested Citation

Jessep, Duncan and Farrar, John Hynes and Watson, Susan Mary, Related Party Transactions in New Zealand: An Empirical Study of a Flawed System (March 19, 2012). Company and Securities Law Journal, Vol. 30, pp. 110-142, 2012. Available at SSRN: https://ssrn.com/abstract=2026271

Duncan Jessep

University of Auckland - Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

John Hynes Farrar

Bond University Faculty of Law ( email )

Gold Coast, QLD 4229
Australia

HOME PAGE: http://works.bepress.com/john_farrar/

Susan Mary Watson (Contact Author)

University of Auckland Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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