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

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

Recent Posts


Trustee Duties Repayment Trust Confidentiality Legislation update Unfair contract terms Domestic Violence Act 1995 Relationship Property Undue influence Violence Credit Contracts and Consumer Finance Act 2003 (CCCFA) Family Protection Act 1955 Commercial Verbal abuse Abuse Will that do Elder Law Section 15 Anti-money laundering (AML) Commercial Property Skilled migrant points Murrell v Hamilton Lump sum Property Personal Properties and Securities Act 1999 Financial Markets Conduct Act 2013 (FMCA) Duress Interest Asset Protection De facto Invalid wills Eviction Charities Ministry Wills Act 2007 Section 8 Trust Check Up Will Expression of interest Immigration New Zealand Albany Office Interpretation of documents Wills Act 2007 Estate Administration Skilled migrant Hawkes Bay Trustee Company Limited v Judd Shareholders' Agreement Grey Power Financial products Consumer credit contracts Privacy Act 1993 Ilott v Mitson 2017 UKSC 17 Wills Income Case Study Section 182 Family Proceedings Act 1980 SMC Fair share WINZ Temper Executors duty Seperation Mortgagee Break up SN v MN [2017] NZCA 289 Protection Order Testamentary capacity Trusts Bill Administrators duty Mortgage Property (Relationships) Act 1976 Sale of Goods Trusts Companies Act 1993 Trust busting Changes Twelve years Frustration Financial Advisers Act 2008 Business Domestic violence Terms of Trade Lease Rest Home Subsidies Loss of income Offending Tenant Health and Safety Reform Bill Principal Ministry of Social Development Litigation Constructive trusts Residential Physical abuse Interpretation Act 1999 White v White Section 15A Visa application Company Law Charity Deceased's wishes Broadbent v Ministry of Social Development Zero Hour Contracts Blackwell v Hollings Fair Trading Act 1986 Amundson v Raos Acknowledgment of Debt Erceg v Erceg Financial services provider (FSP) Limitation Act 1950 Family Trusts ''Best Endeavours'' Commercial Law Validity of Wills Pattern of offending Valid wills Auckland Office Work and Income Mortgagor Tenants Claims against estates Re Estate of Campbell Intellectual Property Testamentary freedom Acknowledgment Limitation defence Wills Act 2007 Section 14 Gifts Wilson v Donnellan Economic disadvantage Employment Limitation Act 2010 Creating Trusts Marriage Division of Functions Document Disclosure Resident Contract Law Part payment Limitation period Protector Subsidies Landlord Beneficiary Rights Recovery of money Charity begins at home Lankow v Rose Gifting Tamarapa v Byerley Testamentary Promises Re Estate of Feron Reckless Trading Compensation Lease Titles Civil union Interpretation Act 1999 Section 29 KiwiSaver Wills Act 2007 Section 11 Psychological abuse Directors' Duties Living standards Contract and Commercial Law Act 2017 Due Diligence Personal Immigration Body Corporate Financial services Six years Testamentary writing Clayton case