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its holding company), act in a manner which he or she believes is in the best interests
of that company‟s holding company even though it may not be in the interests of the
company.
A director of a partly owned subsidiary may also contract out of the separate legal
principle to consider the interests of the company he serves, if the constitution allows
him to do so and there is an agreement that shareholders, other than the parent
company agreed to such an arrangement. The wording in the section differs slightly
from sub-section (2), for in the former, the requirement of agreement from
shareholders other than the holding company is essential. This is because in the
partly owned subsidiary the problem of abuse of minority shareholders is more acute;
as such, in order to prevent minority shareholders from being oppressed their
agreement is necessary.
There is no equivalent provision to section 131(3) in Australia.
5.2.3.3 Lifting of the Corporate Veil in Groups of Companies
New Zealand and Australia have taken radical steps by making provisions in their
laws to permit courts to make orders as if the companies in a group are one entity.
Professor Farrar pointed out that the provision in section 271(1) is similar to the
position in the United States and suggested the possibilities of the US cases being
accepted in New Zealand‟s courts. 119 This trend has emerged in the case of
Mountfort v Tasman Pacific Airlines of NZ Limited 120 where the court has made
references to the United States cases in deciding whether it is just and equitable to
make orders under section 271.
119 Farrar Corporate Governance above n79 at 277-278; see also Lynne Taylor “Liquidation” in John
Farrar (Ed.) Company and Securities Law in New Zealand (Brookers, Wellington, 2008) 799 at
[30.7.1]; Gehan Gunasekara and Alan Toy “Lifting the Veil on Pooling Orders under Section 271 of
the Companies Act 1993” (2007) 13 NZBLQ 18; John Farrar “Legal Issues Involving Corporate
Groups” (1998) 16 C&SLJ184.
120 [2006] 1 NZLR 104.
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