Do you understand your responsibilities and liabilities as a company director? Are you aware of the potential jail time if found guilty of (seriously) breaching those duties?
There are some 600,000 limited companies in New Zealand, all of which have at least one director ultimately responsible for the conduct of the company. Not many I guess understand what being a director means, in legal terms. I don’t really have a clear idea, so I did a bit of research….
In general, directors must:
- always act in good faith and in the best interests of the company
- not let any obligations to others, or personal interest, conflict with the interests of the company
- ensure that the company at all times passes the solvency test, to ensure it can meet its debts as they come due
- not take advantage of their position as a director to make personal profit
There have been some changes to the Companies Act recently that have sought to tighten up on the duties and liabilities of directors. These were driven in large part from the fall-out from the collapse of several high profile finance companies, and in typical government fashion, the crimes of the few result in the rest of us innocent directors suffering more rules and regulations.
I just received an invite to a breakfast seminar from Waterstone Insolvency about breaching directors’ duties. The seminar is at 7:30am on Wednesday 17 September at the Spencer on Byron, Takapuna. I can’t go, but I’m sure they wouldn’t mind me re-gifting the invite (but I will double-check). Email me at andy@tradescoach.co.nz if you are a company director and want to learn more about this subject.
Andy Burrows – The Trades Coach