Directors' Powers and Duties by Peter Watts
| Published date | 01 May 2010 |
| Author | Jennifer Payne |
| DOI | http://doi.org/10.1111/j.1468-2230.2010.00805-2.x |
| Date | 01 May 2010 |
PeterWatts, Directors’ Powers and Duties,Wellington: LexisNexis, 2009, 388 pp,
pb NZ$180.00.
The aim of this book is to provide a detailed treatment for lawyers and law stu-
dents of the‘company-focussed’ duties owed bydirectors of companies registered
under New Zealand’s Companies Act 1993. Directors’ duties are often regarded as
one of the most complex aspects ofcompany law.The di⁄cultyof giving broad
discretion to the directors to run the company, and yet constraining them from
exercising that discretion in their own interests rather than in the interests of the
shareholders and other stakeholders, is an ongoing problem which all jurisdic-
tions face.
In this work, ProfessorWatts provides a clear and careful analysis of New Zeal-
and law regarding directors’duties. He deals with the main duties: the duty to act
in the best interests of the company(Ch 6), liability for pro¢ting (Ch 7), con£icts
of interest (Ch 8), the duty of care and skill (Ch 9) and the proper purpose
rule (Ch 11). He also tackles more general issues such as insolvency and directors’
duties (Ch 10) and the issue of rati¢cation (Ch 12). The work is interspersed with
short summaries of signi¢cant cases, which will no doubt be of be ne¢t to law
students. Watts writes well on this subject, as you might expect from an expert
in this ¢eld. In addition to dealing with directors’ duties, he also deals with
directors’ powers. In Chapter 3 Watts compares the ability of directors and
shareholders to make key decisions on the company’s behalf. These matters are
not, on thewhole, dealt withwithin the Companies Act 1993 and soWatts’s care-
ful exposition of these issues is particularly helpful and valuable. In Chapter 4
he deals with the mechanics of the exercise of directorial power. In terms of the
attribution of liability to the company through the directors’ actions he concen-
trates primarily on liability arising in contract law, and touches on tort law issues
only brie£y (in Chapter13).The justi¢cation forthis exclusion is that theprincipal
mechanisms in play (such as vicarious liability) are largely an application of gen-
eral principles of law (although even here special company law principles can
apply and do deserve consideration: Williams vNaturalLifeHealthFoodLtd[199 8]
1WLR 830).
From the UK company lawyer’s perspective, one of the particularly interest-
ing aspects of New Zealand law on directors’ duties is that it has had to grapple
with the relationship between a statutory statement of those duties and the
underlying common law since 1993. The UK’s exposure to such di⁄culties
has of course arisen much more recently, with the codi¢cation of directors’ duties,
in Chapter 2 of Part 10 of the Companies Act2006. Some aspects of this codi¢ca-
tion are intended to be restatements of the common law (eg section 174 of the
Companies Act 2006), other sections introduce signi¢cant changes (eg section
175,and in particular section175(5) &(6) which giveboards the ability to authorise
directors to take up corporate opportunities).This codi¢cation is not comprehen-
sive: some aspects of directors’ duties are omitted from the statute altogether
(eg directors’ duty to consider the interests of creditors, which is left to the
courts to develop, even at the level of general principle). However, even where
the statute does deal with an issue the ‘corresponding common law and equit-
able principles’ will continue to be relevant in interpreting and applying the
Reviews
515
r2010The Authors. Journal Compilation r2010The Modern Law ReviewLimited.
(2010)73(3) 510^522
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