Shadow directors, de facto directors and duties not to trade recklessly
A recent decision of the High Court, Delegat v Norman [2012] NZHC 2358 provides a useful illustration of the application of the following Companies Act 1993 provisions:
- when a person will be deemed to be the director of a company as either a ‘shadow director’ or a ‘de facto director’ under section 126 of the Act; and
- when a director will be in breach of the duties relating to reckless trading and incurring obligations under sections 135 and 136 of the Act, or be in breach of the duty to act in good faith and in the best interests of the company (under section 131) or the duty to exercise the care, diligence and skill of a reasonable director (under section 137), particularly where a company is of doubtful solvency.
- For analysis see Company Law in the Courts – Issue No. 19 of Corporate Reporter, Bell Gully’s regular round-up of corporate and general commercial matters (27 March 2013)
- http://www.bellgully.co.nz/newsletters/corporate_reporter/27mar13.asp
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