Prohibited company directors
In the 2017 financial year, the Registrar of Companies prohibited 38 people from being directors of limited liability companies.
The Registrar, Ross van der Schyff comments, ‘Companies are vehicles for people to do business, and just as some people should not be behind the wheel of a car, these people have shown they should not be directors, each having been involved in companies that failed due to their mismanagement.’
Under the Companies Act, directors can be prohibited from being involved in the management of a company for up to 10 years meaning they can’t take advantage of the limited liability status of a company. Collectively, the 38 people prohibited from being directors of limited liability companies are banned for 209 years, with 3 directors receiving particularly lengthy bans of between 8 and 10 years.
When directors fail in their duties it can … jeopardise New Zealand’s reputation as a great place to do business.
By banning these people from being directors, the Companies Office provides protection for the public from directors and managers of companies who have been unscrupulous, incompetent or irresponsible.
‘Limited liability companies create an opportunity for people to open businesses and take risks, which is crucial to helping New Zealanders bring their innovative ideas to market. However, being a director comes with important responsibilities. We take breaches of the Companies Act very seriously,’ says Mr van der Schyff.
The World Bank ranks New Zealand as the best place in the world for both ease of doing business and starting a business. The Companies Office understands the need to ensure that the ease of incorporating a company in New Zealand is balanced with appropriate regulatory action to ensure that those people who have demonstrated they are not fit to manage companies are prohibited from being directors.
‘When directors fail in their duties it can cause losses for creditors, create a level of distrust in the community and jeopardise New Zealand’s reputation as a great place to do business,’ concludes Mr van der Schyff.