Yesterday the Law Commission Te Aka Matua o te Ture announced that the Minister of Justice, Hon. Paul Goldsmith, had asked it to undertake a review of directors’ duties and liabilities. 

The review is likely to examine duties in the Companies Act 1993, the overall burden of liability on directors and the enforcement of directors’ duties, including whether the current modes of enforcement are effective and who should be responsible for that enforcement. 

You can read the Law Commission’s announcement here. 

The review will be led by Commissioner Geof Shirtcliffe, who commented: “The law relating to directors’ duties and liabilities has been causing concern for some time and a review is timely.” 

It has been over 30 years since the Companies Act 1993 was introduced and there have been a number of calls for the Government to review the framework for directors’ duties. In 2023, the Supreme Court in Mainzeal^[1] endorsed the view expressed by the Court of Appeal that directors’ duties relating to insolvent trading needed to be reviewed “to ensure they are coherent and practically workable”.^[2] Other stakeholders, including the Institute of Directors have similarly endorsed the Court of Appeal’s view.^[3]

We welcome the Law Commission’s review. It is critical that directors have clarity and certainty in relation to their duties.

The Law Commission’s project is expected to begin in the first half of 2025. 

To read our articles on the Mainzeal decision, click here. 

We will continue to watch this space closely and bring you updates. In the meantime, if you would like to discuss what the potential implications of the review may be on your business, please get in touch with one of our experts.