New Zealand Legislation: Acts

383 Court may disqualify directors

• (1) Where—

  • (a) A person has been convicted on indictment of an offence in connection with the promotion, formation, or management of a company, or has been convicted of a crime involving dishonesty as defined in section 2(1) of the Crimes Act 1961; or

  • (b) A person has committed an offence for which the person is liable (whether convicted or not) under this Part of this Act; or

  • (c) A person has, while a director of a company and whether convicted or not,—

    • (i) persistently failed to comply with this Act or the Companies Act 1955, the Securities Act 1978, the Securities Markets Act 1988, the Takeovers Act 1993, or the takeovers code in force under that Act or, if the company has failed to so comply, persistently failed to take reasonable steps to obtain compliance with those Acts or the code; or

    • (ii) Been guilty of fraud in relation to the company or of a breach of duty to the company or a shareholder; or

    • (iii) Acted in a reckless or incompetent manner in the performance of his or her duties as director; or

  • (ca) a person has been prohibited in a country, State, or territory outside New Zealand from carrying on activities that the Court is satisfied are substantially similar to being a director or promoter of or being concerned or taking part in the management of a body corporate; or

  • (d) [Repealed]

  • (e) A person has become of unsound mind,—

  the Court may make an order that the person must not, without the leave of the Court, be a director or promoter of, or in any way, whether directly or indirectly, be concerned or take part in the management of, a company for such period not exceeding 10 years as may be specified in the order.

  (2) A person intending to apply for an order under this section must give not less than 10 days' notice of that intention to the person against whom the order is sought, and on the hearing of the application the last-mentioned person may appear and give evidence or call witnesses.

  (3) An application for an order under this section may be made by the Registrar, the Official Assignee, or by the liquidator of the company, or by a person who is, or has been, a shareholder or creditor of the company; and on the hearing of—

  • (a) An application for an order under this section by the Registrar or the Official Assignee or the liquidator; or

  • (b) An application for leave under this section by a person against whom an order has been made on the application of the Registrar, the Official Assignee, or the liquidator,—

  the Registrar, Official Assignee, or liquidator must appear and call the attention of the Court to any matters which seem to him or her to be relevant, and may give evidence or call witnesses.

  (4) An order may be made under this section even though the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made.

  (4A) If conduct by a person constitutes grounds for making an order under any 1 or more of this section, section 43F of the Securities Markets Act 1988, section 44F of the Takeovers Act 1993, and section 60A of the Securities Act 1978, proceedings may be brought against that person under any 1 or more of those provisions, but no person is liable to more than 1 order under those provisions for the same conduct.

  (5) The Registrar of the Court must, as soon as practicable after the making of an order under this section, give notice to the Registrar that the order has been made and the Registrar must give notice in the Gazette of the name of the person against whom the order is made.

  (6) Every person who acts in contravention of an order under this section commits an offence and is liable on conviction to the penalties set out in section 373(4) of this Act.

  (7) In this section, company includes an overseas company.

  Compare: 1955 No 63 s 189; 1988 No 236 s 4

  Subsection (1)(c)(i) was substituted, as from 25 October 2006, by section 25 Securities Amendment Act 2006 (2006 No 46).

  Subsection (1)(ca) was inserted, as from 22 November 2006, by section 14 Companies Amendment Act (No 2) 2006 (2006 No 62).

  Section 383(1)(d): repealed, on 29 February 2008 by section 25 of the Securities Amendment Act 2006 (2006 No 46).

  Subsection (1)(d) was amended, as from 1 December 2002, by section 30 Securities Markets Amendment Act 2002 (2002 No 44) by substituting the word “Markets” for the word “Amendment”.

  Subsection (4A) was inserted, as from 25 October 2006, by section 25 Securities Amendment Act 2006 (2006 No 46).