Changes to Bill will clarify directors’ duties

  • Craig Foss
Commerce

Commerce Minister Craig Foss has today tabled a supplementary order paper (SOP) to the Companies and Limited Partnerships Amendment Bill.

“This Bill will further progress the Government’s Business Growth Agenda by lifting confidence in our capital markets. The SOP amends provisions criminalising certain directors’ duties,” says Mr Foss.

The SOP includes two changes to the offence that criminalises the duty to not trade recklessly:

  • A defence in a situation where a company enters into a formal work-out arrangements with creditors (as provided for under the Companies Act) will be outside the scope of the offence.  
  • A defence for a director who believes on reasonable grounds that all creditors who will suffer serious loss have been identified and believes they have consented to the business being carried on in the manner that will cause serious loss.

“These changes have been made after consultation and further work to strike the right balance between holding directors to account and not criminalising legitimate risk-taking,” says Mr Foss.

The SOP consolidates a previously tabled SOP with additional amendments including new powers of the Registrar of Companies to enquire about ultimate controllers and directors of companies and technical changes to the Limited Partnerships Act.

“The Companies and Limited Partnership Amendment Bill will address the misuse of New Zealand’s registration scheme by overseas entities and tightens the criteria for company registration,” says Mr Foss.

To view the SOP visit http://legislation.govt.nz/bill/government/2011/0344/latest/versions.aspx