Taking Company Directors to Task
Parliament is considering making it a criminal offence if a company director was in serious breach of their director’s obligations to the company. The proposed penalties are up to five years in prison or a fine of $200,000.
The first point to note is that the Companies Office has the power to ban individuals from becoming directors but, while there has been an avalanche of liquidations since 2008, less than 200 people have been banned in that time. Lack of reporting by liquidators and lack of resources at the Companies Office are two of the reasons given for the lack of action.
Secondly some of New Zealand’s leading legal firms argue that the errant directors are being held to account and that the proposed law would simply frighten off capable directors or at the very least reduce their effectiveness as the proposals will make them more risk adverse.