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In New Zealand, the law on disqualification is contained in section 385 of the
Companies Act 1993. Section 385 empowers a Registrar to prohibit a person from
managing the company in relation to a company which is in insolvent liquidation:
a) has ceased carrying on business due to its inability to pay its debts when they
become due;
b) has execution return unsatisfied in whole or in part;
c) is in receivership; or
d) has entered into arrangement or compromise with creditors.
The conditions that must be satisfied before a Registrar can exercise a
disqualification order are provided in section 385(4) Companies Act 1993. The
Registrar can invoke the section if within five years prior to the notice of
disqualification, the person is a director or took part in the management of the
company and is satisfied that the person is wholly or partly responsible for the
company being in a state referred to in section 385(1) above. 264
Alternatively, a Registrar can issue a notice of disqualification if he or she is satisfied
that within five years before the notice given, the director is a person who took part
in the management of two or more companies to which the section applies. 265 The
director or the person responsible for the management of the company has a defence
under the section if he or she can satisfy the Registrar that the mismanagement did
not cause the failure 266 or that it would not be just and equitable to exercise the
disqualification order. 267
(i) the manner in which the corporation was managed was wholly or partly responsible for the
corporation failing; and
(ii) the disqualification is justified."
264 Section 385(4)(a) of the New Zealand Companies Act 1993.
265 Section 385(4)(b) of the New Zealand Companies Act 1993.
266 Section 385(4)(a)(i) of the New Zealand Companies Act 1993.
267 Section 385(4)(a)(ii) of the New Zealand Companies Act 1993.
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