When a company director is prohibited by the Registrar of Companies under section 385 (3) of the Companies Act 1993 from taking part in any matter relating to the directing or management of any company for four years , the Registrar must take action when such a director publicly disregards this prohibition and brazenly flouts the law. Such a director “commits an offence and is liable on conviction to the penalties set out in section 373(4) of this Act…. A person convicted of an offence for failure to comply with the Act… is liable to imprisonment for a term not exceeding 5 years or to a fine not exceeding $200,000.”
The names of directors banned by the Ministry of Economic Development are published in the Gazette and can be accessed on the Companies Office website (www.companies.govt.nz) by searching under their full legal names. Those banned under s. 385(3) are banned to protect the New Zealand public from such persons who have demonstrated a history of unsuccessful business ventures and are unfit to be directors.
When a banned director presents himself in a formally constituted meeting – such as an Extraordinary General Meeting of an Incorporated Society – as speaking on behalf of a company of which he is not a director and proceeds to document company financial records and correspondence that was addressed specifically to legitimate company directors, and not him, he has failed to comply with the law. Even if he gets a wink, nudge or thumbs up from the legitimate director present – in the course of his delivery – that might be intended to inform the meeting that he has been ‘authorised’ to speak on behalf of the company, the banned director remains in breach of the law. When he is challenged to shut up by the chairman who points out the well-known fact that he is a banned director and he persists in prattling on as if he was a director, its time to physically remove him from the meeting and report his behaviour to the Companies Office.
Furthermore, if he corals a bevy of reporters to his bosom after the meeting and insists on sharing his financial appraisal of the company he purports to be speaking for, he commits a serious offence under the Companies Act 1993. He has failed to comply with the banning order every time he publicly deals with the media and speaks on management issues involving the company. It is not relevant whether or not he holds 50% of the shares of the company and/or is genetically related to the current director. Banned directors are prone to hold grudges against business parties they have had dealings with. They are prone to exhibit hubris, speak humbug and a degree of hooliganism when given free reign to pontificate and posture at public meetings or in the presence of media. This can lead to deplorable one-sided media reporting and even sensationalism.