View/Open - Research Commons - The University of Waikato

adopted in New Zealand, Australia and Malaysia and remains until today. 257
Subsequent Acts expanded lists of circumstances of disqualification to include
directors who had committed fraud, breach of duties, having a conviction of offences
in relation to formation, promotion or management of companies. In addition,
directors were also disqualified if they persistently failed to furnish company‟s
financial documents and if proven to have been acting improperly, recklessly or
incompetently in discharging duties.
Attempts to disqualify directors on the basis of unfitness to manage a company was
firstly made in the UK Insolvency Act 1976 258 and later re-enacted in the Companies
Act 1985. 259 With the introduction of the Insolvency Act 1986, provisions on
disqualification of directors in the Companies Act 1985 and the Insolvency Act 1985
were repealed and enacted in separate legislation, the Company Directors
Disqualification Act 1986. 260 At the time of the passing of the Company Directors
Disqualification Act in 1986, the then Labour government had been promoting a free
market ideology and the passing of an Act which imposed commercial morality did
not reflect such beliefs. 261 However, the passing of the Act was seen as the response
to complaints by the public that companies have sometimes been used as instruments
of fraud by directors and as being consistent with responsibility and accountability
principles. 262 It should be noted that the Cork committee emphasised that the aim of
disqualifying directors was not to punish but to protect members of the public from
dishonest directors.
257 Section 151(2)(b) of the New Zealand Companies Act 1993, section 206B(3) of the Australian
Corporations Act 2001, section 125(1) of the Malaysian Companies Act 1965. In the UK, the
provision is in section 11 Company Directors Disqualification Act 1986.
258 Section 9 of the UK Insolvency Act 1976.
259 Section 300 of the UK Companies Act 1985.
260 Goode above n79 at [1-06]. The UK CDDA was further amended by the Insolvency Act 2000 and
the Enterprise Act 2002.
261 Sally Wheeler, Disqualification of Directors: A Broader View in Harry Rajak (ed) Insolvency Law
Theory & Practice (Sweet & Maxwell, London, 1993) 187 at 189.
262 Ibid.
70