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Directors' Duties - Online CPD

NZ $195.00
FENTON Nick KERSEY Matthew WALKER Nathaniel
Nick Fenton
Senior Solicitor, Russell McVeagh
Matthew Kersey
Partner, Russell McVeagh
Nathaniel Walker
Partner, Russell McVeagh

Package includes:

Online CPD Module  l  Electronic booklet  l  PowerPoint Presentation

Package Fee (incl GST)

  • $145 - NZLS members and Associate members
  • $195 - Non-members

Note: Access to the online files is via your "My CPD" page. If you would like to purchase multiple packages, please contact us here.

Online CPD Module

Presentation time: 120 minutes

It is a challenging time to be a company director in New Zealand, particularly in light of the unprecedented (at least for the modern day) global economic turbulence. The task is complicated further by uncertainty in the legal and governance communities regarding the acceptable levels of risk-taking by directors of companies in financial strife. Recent decisions of the Supreme Court and Court of Appeal have prompted debate amongst governance professionals, legal advisors and academics regarding the proper application of the insolvent trading regime contained in New Zealand's companies legislation. While a forthcoming decision of the Supreme Court may provide greater clarity, many participants in the sector have long called for legislative reform. This module will survey recent developments in the insolvent trading space, consider what the future may hold for the law governing duties of directors in the "twilight zone", and provide practical guidance for professionals and their advisors.

This module will include:

  • A brief outline of the challenges facing company directors in New Zealand at present as a result of surging global economic uncertainty
  • A detailed discussion of the legal ambiguity regarding the responsibilities of those charged with navigating New Zealand companies through turbulent times
  • An analysis of two recent, high-profile decisions of the Supreme Court and Court of Appeal regarding the application of New Zealand's insolvent trading regime, which have given rise to significant consternation and debate in the legal and governance communities regarding the degree of risk-taking by directors that our companies legislation should tolerate
  • Some practical tips for company directors facing difficult trading conditions (and the practitioners who advise them)
  • A discussion of where to next for the law governing companies in financial crisis in Aotearoa.

Learning objectives

By completing this module you will gain:

  • An improved understanding of the operation of New Zealand's insolvent trading regime contained in ss 135 and 136 of the Companies Act 1993.
  • Greater awareness of the Mainzeal litigation – a high-profile example of the perils for company directors of continuing to trade in the "twilight zone". If released in time, the seminar will also provide a detailed overview of the Supreme Court's hotly anticipated decision.
  • Insight into potential options for reform of New Zealand law regarding insolvent trading, including the possibility of safe harbour provisions, revised protections against fraudulent trading, or more wholesale reform.

Electronic paper 

Authors: Nick Fenton, Matthew Kersey, Nathaniel Walker
Published: 1 November 2022
Pages: 20


In October 2021, we (Matt and Nathaniel) presented a session on directors’ duties in the face of financial turbulence at the NZLS CLE Corporate Governance Intensive. Our presentation was entitled “Governance in financial crisis – directors’ duties in the twilight zone”.

In that seminar, we addressed the decisions of the Supreme Court and Court of Appeal, respectively, in Madsen-Ries v Cooper (Debut Homes) and Yan v Mainzeal Property and Construction Ltd (in liq) (Mainzeal). We focused on the directors’ duties in ss 135 (reckless trading) and 136 (duty in relation to obligations) of the Companies Act 1993 (Companies Act), which are at the heart of the Debut Homes and Mainzeal decisions.

Sections 135 and 136 are set out in full in the schedule annexed to this paper in Chapter 6. In short, s 135 prohibits a director of a company from trading “in a manner likely to create a substantial risk of serious loss to the company’s creditors” – and s 136 prohibits a director from agreeing to a company incurring an obligation without reasonable grounds to believe that the company will be able to perform that obligation when required to do so. (continued...)

PowerPoint Presentation

These are the slides included in the presentation.

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