Section 131: Duty of Directors to Act in Good Faith and in Best Interests of Company

Wednesday, September 20, 2017
In accordance with Section 131 of the Companies Act 1993 ("Act"), directors have a duty to act in good faith and in what they genuinely believe to be the best interests of the company.  While it may be expected that directors should always behave in such a manner, and not place their personal interests ahead of the company's, various judgments have explored the extent of this duty and provided more information about the considerations director should take account of when exercising their powers.

The Duty
As noted in the decision of Sojourner v Robb1, the duty is one of loyalty and arises out of the fiduciary relationship that directors owe to the company from their position as its agents.  Additionally, although a director must act in good faith and in the best interests of the company on most occasions, Section 131 of the Act outlines that there are a few exceptions to this duty which allow a director to act otherwise, as follows: Read more

Domestic Violence Case Law Update:

Thursday, September 07, 2017

 SN v MN [2017] NZCA 289  Read more

Reduced Limitation Periods Have Significant Consequences for Mortgagees

Thursday, September 07, 2017

 Read more

''Best Endeavours'' or ''All Reasonable Endeavours''

Monday, August 28, 2017

What's the Difference? Read more

Need a Notary Public?

Tuesday, August 08, 2017

Tony Coupe, one of the partners in the firm, is a Notary Public and is available, on appointment, to provide notary services. Read more

Changes to Skilled Migrant Category Resident Visa Immigration Instructions Effective From 14 August 2017

Thursday, July 20, 2017

Significant changes to residence class visa instructions for Skilled Migrant Category ("SMC") will come into effect on 14 August 2017.  These changes were introduced by the Government in April 2017 in order to prioritise higher-paid and higher-skilled applicants.  The announced changes have no direct effect on any other visa categories.  Read more

Residential-Care Subsidy Update - Eligibility Improved

Thursday, July 20, 2017

The High Court, in Broadbent v The Chief Executive of the Ministry of Social Development [2017] NZHC 1499 (a test case), has told the Ministry of Social Development that it is not correctly applying the means testing assessment for income when determining someone's eligibility for a residential-care subsidy. Read more

Section 135 of the Companies Act - Reckless Trading:

Tuesday, July 18, 2017

Non-Executive or Passive Directors and Directors' Duties: The Courts Take no Excuses for a "Hands Off" Approach Read more

Directors' Duties - What Directors Need to Know

Tuesday, July 18, 2017

In New Zealand, there are few prohibitions on who can become a director of a company, and no real qualification requirements.  This means that some people become directors without actually understanding what their role requires.  This can result in a company not being managed and governed as required by the Companies Act 1993 ("Act"), which in turn can lead to a breach of duty, which can have very serious consequences, up to and including personal liability for company debts or even criminal sanctions in the worst of cases. Read more

Company Law Case Summary: Mike Pero Mortgages Limited v Mike Pero [2016] NZHC 3185 per Katz J

Tuesday, July 18, 2017

Background Read more

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