New Zealand: criminalising certain breaches of directors' duties (and other reforms)

The Commerce Committee published its report regarding the Companies and Limited Partnerships Amendment Bill earlier this month: see here (pdf). One of the main aims of the Bill is to amend the Companies Act 1993 with regard to the rules applying to the governance, registration, and reconstruction of companies (the explanatory note accompanying the Bill is available here). The Committee recommended that the Bill should be passed with amendments.

Clause 4 of the Bill provides that certain serious breaches of the duties owed by directors under sections 131 and 135 of the Companies Act 1993 will be criminal offences. This provision received the Committee's support with only drafting amendments proposed. The Committee recommended, however, that further consideration should be given to the drafting of clause 4 to ensure that directors are provided with clear guidance and to avoid the new provisions having a chilling effect on legitimate business risk-taking.