Directors of a company have key duties, roles and responsibilities they must carry out.
While Directors set the goals of the company, provide leadership and supervision to management, and report to the shareholders, there are also other legislated duties in the Companies Act 1993 that apply to directors. It is critical that directors are aware of, and carry out, these duties.
The fundamental duty of a director is to always act in the best interests of the company and with reasonable care. As a minimum, a director must ensure that he or she:
- acts in good faith and in the best interests of the company;
- exercises his or her power as a director for a proper purpose;
- not allow the company to be carried on in a manner to create a substantial risk of serious loss to the company’s creditors, or cause the business of the company to be carried on in a manner likely to create a substantial risk of loss to its creditors;
- not agree to a company incurring an obligation unless he or she believes on reasonable grounds the company will be able to perform the obligation when it is required to do so;
- exercises the care, diligence, and skill that a reasonable director would exercise in the circumstances; and
- complies with the Companies Act, the company’s constitution and other relevant legislation.
A director’s duties also include:
- decision making and implementation of policies;
- calling meetings;
- record keeping and preparing and filing statutory documents; and
- binding the company to contracts.
This article focusses solely on the requirement of Directors for record keeping and preparing and filing statutory documents.
What are the requirements relating to record keeping and preparing and filing statutory documents?
- Hold and maintain at the Registered Office:
- an up-to-date Shareholders Register;
- an up-to-date Directors Register;
- an up-to-date Directors Interest Register;
- an up-to-date a minute book and Resolutions Register for all major transactions;
- accurate minutes in relation to salaries and the approval thereof;
- accurate and material accounting records readily available at the Registered Office;
- Ensuring the Address for Communication is accurate and correct on the Companies Office;
- Ensuring the Registered Office’s address is accurate on the Companies Office; and
- Ensuring there is no misleading or inaccurate information on the Companies Office register that doesn’t reconcile with the Companies’ minute book and internal Companies Office administration records.
What are consequences of not carrying out these requirements?
The above is far more complex than simply filing an online Annual Return each year. Not complying can carry serious consequences, with the fine for a Director for failing to hold correct Companies Office administration records being up to $10,000 per offence. Failure to keep accounting records accurately and readily available at the Registered Office is up to $50,000. The Act also gives the Companies Office the power to remove a company from the register, meaning you would not be protected by the corporate veil of a company (limited liability) and the assets of the company will be exposed to any creditors.
While the requirements may seem onerous, they are designed to ensure the integrity of the overall environment for operating in business in New Zealand.
How can Pathfinder Solutions help?
Due to the consequences of non-compliance as well as moving with industry best practice, Pathfinder Solutions offers a Registered Office and Company Administration service. Please get in touch to find out more.
The information provided in this blog is of a general nature and are not intended to be personalised advice, nor are they intended to be a substitute for professional advice.
Get in contact with us for appropriate personalised specific advice relevant to your individual circumstances.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
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