Status: In progress
Project overview
Te Aka Matua o te Ture | Law Commission is reviewing the duties and potential liabilities of company directors.
The review focuses on two main areas:
- Directors’ core duties and liabilities under the Companies Act 1993.
- Whether directors’ duties and liabilities under other legislation can be approached in a more consistent and principled manner in future legislative reform.
The Law Commission will consult publicly in 2027 and aims to complete its Final Report in 2027.
Directors of a company are responsible for its management or supervising its management. They are subject to a range of statutory duties which, if breached, can result in personal liability.
The main directors’ duties are imposed by the Companies Act 1993. These duties have never been comprehensively reviewed since they were enacted. Recently, the courts have highlighted issues with directors’ duties at the time a company is at risk of insolvency. The Law Commission will review the main directors' duties under the Companies Act, including the way they are enforced and directors’ liability for breaching them. If the Commission concludes reforms are necessary, it will recommend amendments in its Final Report.
The Law Commission will not consider all provisions of the Companies Act relevant to directors’ obligations or their enforcement. For example, a large number of “administrative” obligations will not be reviewed in this project. Instead, the Commission will focus on the “core” duties under sections 131 to 145 of the Act.
Beyond the Companies Act, company directors have responsibilities under a range of legislation. For example, directors have duties in relation to health and safety at work matters, financial markets regulation, the Building Act, and the Fair Trading Act. This legislation has developed in a piecemeal manner. It approaches directors’ duties and liabilities in a variety of ways.
The Law Commission will consider whether, and if so how, future legislation can assign duties and liabilities to company directors in a more consistent and principled way.
The Government asked the Law Commission to undertake a review of directors' duties and liabilities.
A review of company directors’ duties and liabilities is timely. Some duties have never been comprehensively reviewed. Recent court decisions have highlighted concerns with some duties when a company is at risk of insolvency.
The Law Commission’s review ties into a series of other company law reforms the Government has signalled it intends to introduce. See the website of Ministry of Business, Innovation & Employment for further information.
The Law Commission is an independent state agency that provides law reform advice to the Government.
Our independence makes us different from many public sector agencies. The Government does not direct how we carry out our work or the recommendations we make.
We approach each law reform task with an open mind, undertake research and engagement, and consider the broader policy context. We then make recommendations to Government to improve the law. These recommendations are published in a report to the Minister responsible for the Law Commission – currently, the Minister of Justice.
The Minister must present our report to Parliament. The Government decides whether and how it will change the law.
The Law Commission launched this review with the publication of the terms of reference in August 2025.
The Commission is now researching the law and identifying what issues may require reform.
The Commission will publish an Issues Paper in 2027 on which it will consult publicly. The feedback received during consultation will help the Commission develop recommendations for reform.
The project will conclude when the Commission submits its Final Report to its Minister and then publishes it.
The word “haemata” means “growing strong” or “vigorous”. It can also refer to a great leader (such as “he tōtara haemata”). The word “haepapa” means “responsibility”. Taken together, the phrase “haemata haepapa” means “responsible leadership”. It emphasises growing strong and great leaders. The phrase also denotes that leadership roles come with great responsibility.
The name for this project in te reo Māori was developed for the Law Commission by Aatea Solutions.
Status: In progress
Terms of Reference
Scope of the review
Te Aka Matua o te Ture | Law Commission will review the law concerning company directors’ duties and liabilities. The review will address two areas.
- The directors’ duty provisions under the Companies Act 1993
The Companies Act 1993 sets out general duties that apply to company directors. These provisions have never been comprehensively reviewed. Recently, the courts have highlighted issues with them. The Law Commission will review these duties, with a particular focus on the duties under sections 131 to 145. The Commission will also consider the associated liabilities and issues of enforcement. - The principles that should govern company directors’ duties and liabilities in other legislation
A broad range of legislation imposes duties on company directors and exposes them to potential liability. The development of this legislation has occurred piecemeal. The duties are framed in a variety of ways and the nature of the liabilities differs. The Law Commission will consider whether, and if so how, directors’ statutory duties and liabilities might be approached in a more consistent and principled manner in future legislative reform.
Process and timing
The Law Commission intends to consult publicly in 2026.
The Law Commission intends to submit its report to the Minister responsible for the Law Commission in 2027.