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fraudulent purpose.” 201 Although section 213 of the UK Insolvency Act 1986
deals with civil liability, while section 380 of the New Zealand Companies Act
2006 and section 993 of the UK Companies Act 2006 refer to criminal offences,
the components to be proven under both Acts are the same. The courts in the UK
have referred to cases under section 213 for the purpose of establishing liability
under section 993.
Due to this, it is submitted that there is a likelihood that the New Zealand courts
will interpret section 380(1) in the same way as their UK counterparts. The
distinguishing factor between civil and criminal liability is the standard of proof
for proving intention. In the former, it is on a balance of probabilities, while for
the latter it is proof beyond reasonable doubt. Both sections 380 of the New
Zealand Companies Act 1993 and 993 of the UK Companies Act 2006 apply
throughout the life of the company and are not limited to when the company has
been wound up, as required under section 213 of the UK Insolvency Act 1986.
Unlike subsection (1) which applies to any person who "knowingly becomes a
party to the carrying on of the business,” offences under subsections (2) and (3)
are imposed only on directors of the company. Section 380(2) sets out the
circumstances when directors of the company who have the intention to defraud
creditors commit the offence. 202 The situations mentioned in the subsection deal
mostly with the company‟s property being put out of the reach of the creditors.
It is not necessary for the directors in question to have obtained a personal
advantage themselves. It is sufficient if, by deceit and fraud, they cause the
201
See section 380(1) of the New Zealand Companies Act 1993-“Every person who is knowingly
a party to a company carrying on business with intent to defraud creditors of the company or
any other person or for a fraudulent purpose commits an offence and is liable on conviction to
the penalties set out in section 373(4)”. See also the section 213 of the UK Insolvency Act 1986
and section 993 of the UK Companies Act 2006.
202
Section 380(2) of the New Zealand Companies Act 1993 –“ Every director of a company
who,a)
by false pretense or other fraud induces a person to give credit to the company; or
b) with intent to defraud creditors of the company,
(i) gives, transfers or causes a charge to be given on, property of
the company to any person; or
(ii) causes property to be given or transferred to any person; or
(iii) caused or was a party to execution being levied against property
of the company."
275