What it means to be a director

What is a director?

A director is usually someone appointed to manage a company’s business and affairs. Every registered company must have at least one director.

As a director, your work may include:

• determining and implementing policies, and making decisions
• preparing and filing statutory documents with the Companies Office
• 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.

Director details are recorded on the register

The details of your company’s directors are published on the Companies Register. This includes their:

• names
• residential addresses
• dates of appointment.

The Companies Act 1993 requires these details to be published on the register.

Your responsibilities

As part of your responsibilities as a director, you must:

• hold company meetings
• keep company records
• update information on the Companies Register
• complete your company’s annual returns and if required, file financial statements.

You can delegate these responsibilities to others to do on your behalf.

Holding company meetings

You are responsible for holding shareholder meetings. Most companies must hold at least one shareholder meeting each year.

How your company holds and manages meetings is defined by law. Even if you have rules about meetings in your constitution, they must comply with the Companies Act 1993.

Keeping company records

As the director of a New Zealand company, you are legally required to keep and maintain records about your company and how it is managed. These include company records (such as meeting minutes) as well as financial records and your company's share register.

You do not have to keep multiple copies of these records – just one set at your registered office will do. But you must know where you keep these records, and whether they are up to date.

Updating information on the Companies Register

The details you need to update on the register include the following. These must be updated within the time frames stated in the Companies Act 1993:

• Company addresses - These are your company’s registered office address, address for service, and address for communication (the address we use to contact you).
• Director details - This includes each director’s name, address and contact details. This also includes their appointment status (including new appointments and resignations).
• Shareholdings - This includes shareholder details and changes to the total number of shares issued.

Learn more

Completing annual returns

It is a legal requirement that all companies complete an annual return every year on the Companies Register. Annual returns confirm the details recorded for your company are correct. They also tell us that your company is still operating. Note that an annual return is not a financial statement.

If you do not complete your annual return, the Registrar may remove your company from the register.

Filing financial statements (if required)

Some companies must submit audited financial statements or a group financial statement every year. These are mainly large New Zealand and overseas companies.

Your duties

You have certain duties as a director, which you cannot delegate to anyone else. In particular you must:

• 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. Acting in the best interest of your company may not be just about maximising profit, but may also take other factors into consideration (such as environmental, social, and governance matters).

You must not act, or agree to the company acting, in a manner that is likely to breach the Companies Act 1993, other legislation, or your company's constitution.

Acting in good faith

Acting in good faith means doing what is best for your company. If something might stop you from doing that, you should record the conflict in your register of director interests and work out how to manage it.

You must be fair, respectful and honest. Your communications must be clear and not misleading.

Conflict of interests practice guide  – Institute of Directors New Zealand

Exercising a duty of care

You must be engaged, be proactive and act prudently in the affairs of your company. You should understand how your company works, and actively participate in decisions affecting your company.

You must be careful about how you use information about your company, and who you give that information to.

Being a good director  – Business.govt.nz

Trading sensibly

You should only commit your company to what it can actually do.

Make sure your company can pay its debts. This means:

• keeping an eye on its cash flow
• not borrowing beyond its means, and
• not buying goods or services it cannot afford.

You should make sure that your company has more assets than liabilities (it owns more than it owes).

Strategic finance  – Business.govt.nz

Other duties

You must act in a way that does not create a substantial risk of serious loss to your company's creditors — sometimes called "reckless trading". Exactly what this involves will vary 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 these obligations when it is required to do so. For example, your company should not continue trading while it is insolvent. If it does, and your company goes further into debt, you may be personally liable and face prosecution.

In some situations, you may need to resolve matters regarding your company's financial position. In these situations, you should seek professional assistance from a solicitor or accountant.

If your company is unable to pay its debts as they fall due, it can be placed into voluntary administration, receivership or liquidation. This may then limit your powers as a director.

Companies Act 1993 — Part 8
New Zealand Legislation Amendment

Other guides in

Complying with the law

• Keeping company records
• Reporting to the Companies Office
• Company meetings
• Who needs to submit financial statements
• Banned directors
• What it means to be a shareholder
• How we enforce the law
• Making a complaint

Other help topics