A summary of the decisions made by the
New Zealand Cabinet in respect of securities law reform was published last week: see
here. An exposure draft for new legislation will be published in August this year. In the field of corporate governance it is interesting to note the Cabinet's decision that it should become a criminal offence for a director to recklessly or intentionally breach the following duties under the
Companies Act (1993):
- section 131 (act in good faith and in what the director believes to be the best interests of the company);
- section 135 (avoid carrying on the business of the company in a manner likely to create a substantial risk of serious loss to the company’s creditors);
- section 136 (not to incur an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so).
It is also proposed that these duties should be publicly enforceable by the new
Financial Markets Authority and
Registrar of Companies. For further information see the Cabinet paper available
here (
pdf).
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