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also be enforced by the company. 117 This is because, under section 169(3), duties
under sections 135 and 136 are owed to the company and not to shareholders. This
suggests that the company can bring direct action against directors for remedies and
is not limited to the liquidator‘s proceeding under section 301. In addition,
shareholders could enforce these duties under a derivative action stated in section
165. 118 In contrast, only a liquidator can bring an action under section 214 of the UK
Insolvency Act because the section is only applicable when the company is wound
up.
Section 301 provides for a series of circumstances where a liquidator, a creditor or a
shareholder can apply for relief. Reckless trading and duty relating to obligation fall
under the ‗breach of duty or trust in relation to the company‘ in section 301. 119
Under this heading, the appropriate order a court can make is given in section
301(1)(b)(ii)- ―to contribute such sum to the assets of the company by way of
compensation as the Court thinks just‖ because the general damage has been caused
to the company. 120
As such, the civil remedies provided in both the UK and the New Zealand statutes
are the same; the court has discretion to order directors to make a contribution to the
assets of the company. However, the UK statute is silent as to the aim of making
contributions while in New Zealand it is clearly stated that compensation is the
117 Chris Noonan and Susan Watson ―Rethinking the Misunderstood and Much Maligned Remedies
for Reckless and Insolvent Trading‖ (2004) 24 NZULR 26 at 29.
118 Ibid.
119 Section 301(1) of the New Zealand Companies Act 1993 states: ―If, in the course of the
liquidation of a company, it appears to the Court that a person who has taken part in the formation
or promotion of the company, or a past or present director, manager, liquidator, or receiver of the
company, has misapplied, or retained, or become liable or accountable for, money or property of the
company, or been guilty of negligence, default, or breach of duty or trust in relation to the
company, the Court may, on the application of the liquidator or a creditor or shareholder,-
(a)….
(b)…."
120 See the decision of Master Venning in Mitchell v Hesketh (1998) 8 NZCLC 261,559 at 261562
(HC). See also Noonan and Watson above n114 at 30.
335