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found in the area of wrongful trading and fraudulent trading. 11 The courts, however,
play an important role in interpreting the provisions and ensuring they are consistent
with the intention of the Parliament. 12
At first, as a result of British Colonisation, many companies in New Zealand and
Australia were branches of UK companies and later they became subsidiaries. Due to
the similar structures of companies, as well as close economic ties with the
motherland, it was convenient to follow the UK model. However, dependence on the
UK legislation began to waver once the countries began to shape their own
economies and trade in accordance with their needs. 13
2.2.2 New Zealand
Until 1993, New Zealand company law was largely based on UK legislation. In 1989,
the Law Commission had been given the task of looking into the then current
legislation and suggesting reforms. When the report was published, the Law
Commission rejected harmonization with Australian law on the basis that Australian
legislation was not very much in advance of the then current New Zealand statute. 16
The Commission shifted its focus to North America for direction. As a result, the
majority of its provisions are based on the Canadian and American models. 17
11 Also referred to insolvent trading in Australia and reckless trading in New Zealand.See John Farrar
“Corporate Personality” in John Farrar (ed) Companies and Securities Law (Brookers, Wellington
2008) 69 at 75.
12 Niall F Coburn “Insolvent Trading in Australia: The Legal Principles” in Ian Ramsay(ed) Company
Directors’ Liability for Insolvent Trading (CCH Australia Centre for Corporate Law and Securities
Regulation, University of Melbourne,2000) 73; Chris Noonan and Susan Watson “Rethinking the
Misunderstood and Much Maligned Remedies for Reckless and Insolvent Trading” (2004) 24
NZULR 26 .
13 The UK’s membership in the European Union signalled the departure of dependency of these two
countries on the UK legislation. They began to look elsewhere, particularly to North America, as a
model for their company law legislation- see John Farrar Corporate Governance Theories,
Principles and Practice (3rd ed., Oxford University Press, South Melbourne, 2008) at 15-19.
16 Law Commission Company Law Reform and Restatement (NZLC R9,1989) at [31].
17 Ibid.
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