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similar to section 6 of the UK CDDA in which only the director‘s unfit conduct in
relation to the company is considered. The second situation which may warrant a
Registrar to issue a disqualification notice is in a situation similar to Australia and
Malaysia, by being a director of two or more companies which had failed. The
burden of proof lies on the person to be disqualified that the manner the companies
or company were managed did not contribute to the company‘s condition 280 or that it
would not be just or equitable for the Registrar to exercise the power under the
section. 281
In order to utilize the disqualification provision in the statute, the most important
criterion is to determine the conduct of the person in question in relation to the
company. Although in this context different terms are employed, they generally refer
to similar conduct. The UK CDDA 1986 and the Malaysian Companies Act 1965 use
‗unfit to be concerned for the management of a company‘ while in Australia both
sections 206C and 206D are applicable if the court is satisfied that the
‗disqualification is justified.‘ The provision of section 206D is similar to the New
Zealand section 385, in that it involves the manner the company is conducted which
contributed either wholly or partly to the company‘s failure.
11.4.2 Courts’ Approach to Disqualification of Directors
When interpreting the phrase ‗unfit to be concerned with the management of the
company,‘ case law in the UK seems to suggest that a distinction has to be made
between conduct due to ordinary misjudgment in the course of business 282 and
280 Section 385(4)(b) (i) of the New Zealand Companies Act 1993: ―that the manner in which the
affairs of all, or all but one, of those companies were managed was not wholly or partly responsible
for them being companies in relation to which this section applies.‖
281 Section 385(4)(b)(ii) of the New Zealand Companies Act 1993: ―that it would not just or equitable
for the power to be exercised.‖
282 Re Lo-Line Electric Motors Ltd [1988] Ch 477 at 492, the Court regarded ―Ordinary commercial
misjudgment is in itself not sufficient to justify disqualification.‖
380