As a director of a registered company, you have duties to your company and shareholders, and responsibilities under the Companies Act 1993.
What is a director?
A director is ordinarily someone appointed to manage a company’s business and affairs. Every registered company must have at least one director. Who a company’s directors are, and key information about them, is recorded on the Companies Register.
Your role as a director
A director's role can include:
- determining and implementing policies and making decisions
- preparing and filing statutory documents with the Companies Office or other agencies
- calling meetings, including an annual meeting of shareholders
- maintaining and keeping records
- binding the company to contracts with suppliers, lenders and others dealing with the company.
Your company constitution, if you have one, may set out additional duties and responsibilities.
These include 3 responsibilities which you can delegate.
- Update information on the Companies Register
- Keep company records
- File annual returns and financial statements.
These include 3 duties which you cannot delegate.
- Act in good faith and in the best interests of the company
- Exercise a duty of care
- Trade sensibly
As a director you must act honestly, in the best interests of the company, and with reasonable care at all times.
You mustn't act, or agree to the company acting, in a manner that's likely to breach the Companies Act 1993 or other legislation or your company's constitution.
Your company's board of directors is responsible for calling meetings of shareholders as required by the Companies Act and your company's own constitution, if it has one. This includes calling an annual meeting of shareholders.
You're responsible for meeting your company's filing obligations to the Companies Office.
Accounting and company records
All NZ companies need to keep and maintain certain records including:
- the constitution, if it has one
- minutes of shareholder and director meetings for the past 7 years
- a director interests register
- certificates given by directors
- communications to shareholders or all holders of the same class of shares over the past 7 years
- the share register
- accounting records.
Your financial responsibilities
You're responsible for acting in a way that doesn't create a substantial risk of serious loss to your company's creditors — sometimes called reckless trading. Exactly what this involves varies from company to company.
You must not agree to your company incurring an obligation unless you believe on reasonable grounds that the company will be able to perform its obligations when it is required to do so. If your company continues to trade while it's insolvent, and goes further into debt, you may be personally liable and face prosecution.
Seek professional assistance from a solicitor or accountant on how best to resolve your company's financial position.
Voluntary administration, receivership and liquidation
If your company is unable to pay its debts as they fall due, it can be placed into voluntary administration, receivership or liquidation — limiting your powers as director.