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


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