In view of the growing numbers of New Zealand company directors, MPs and business leaders who have been convicted in the Courts for fraud, financial mismanagement, reckless trading and bribery; it is important that the penalties imposed by Judges on those convicted of such offences, be regularly reviewed, particularly in view of the financial suffering and social upheaval caused to shareholders, creditors and investors etc. by those responsible for such crimes.
Under s. 385 (1) of the Companies Act 1993, “the Registrar [of Companies] may, by notice in writing given to a person, prohibit that person from being a director or promoter of a company, or being concerned in, or taking part, whether directly or indirectly, in the management of, a company during such period not exceeding 5 years after the date of the notice as is specified in the notice. Every notice shall be published in the Gazette.”
Under S 373(4) of the Act, a person convicted of acting in contravention of a banning order notice issued under s. 385, is liable to imprisonment for a term not exceeding 5 years or to a fine not exceeding $200,000. Furthermore s. 386 sets out “Liability for contravening section 385 or section 385AA”
A person who acts in contravention of a notice under s. 385 or 385AA is personally liable to –
(a) a liquidator of the company for every unpaid debt incurred by the company; and
(b) a creditor of the company for a debt to that creditor incurred by the company—
while that person was so acting [against the banning order].
Breaching a s. 385 banning order relates to a person acting as a director of a company or taking part in the management of a company while prohibited by the Registrar of Companies or the Financial Management Authority (FMA).
The Society contends that the Registrar of Companies is duty bound to seek for the maximum penalties being imposed on those convicted of knowingly and deliberately ‘giving the fingers’ to a Court imposed order designed to protect the public good.
Tough sentencing acts as a deterrent to those who would seek to flout the law. White collar crime is a scourge on New Zealand communities creating far-reaching financial devastation and it must be dealt to in a just and fair manner.
To have community standards properly upheld we look in large part to the Judicial system, Police and other enforcement agencies, simcerely and effectively carrying out the intentions of parliament as embodied in legislation.
Maximum fines should be sought when breaches of banning orders by compsany directors involve more than one company and can be demonstrated to involve person(s) who demonstrate prolonged and arrogant disregard for the rule of law.
NOTE: This Article was first published on the SPCS blog on Nov 27, 2010 @ 21:35