What are my obligations as a Company Director?

What are my obligations as a Company Director?

Every company in New Zealand has at least one director. Most of these companies run small to medium sized businesses. Usually company ownership is recommended by a lawyer or accountant. But do all of these directors understand their obligations? Do these directors know that the Companies Act 1993 (“the Act”) places very specific duties as well as more wide ranging and general obligations on Directors? We have summarised these specific and general duties as follows: 1.  Participation A director in a company must perform the duties and obligations of a director. There is no option to be a “passive” director. You are obliged to perform your role and will be liable for the decisions made by the other director(s) even if you haven’t actually been involved in the decision. 2.  Governance and Management The director(s) govern the company. That means they supervise the management of the company. In most New Zealand companies the directors or one or two of the directors will also manage the company. That means overseeing the day to day activities of the company. A director has a duty to act with the care, diligence and skill that a reasonable director would in the circumstances. The question may be asked whether the director has complied with this standard when making a decision. Therefore a genuinely held but clearly stupid and reckless belief that a transaction was in the best interest of the company will not satisfy this standard. 3.  Good Faith A director has the duty to “act in good faith” and in what the director believes to be “the best interests of the company”. This...
Improvements Rent Percentage: When is it chargeable?

Improvements Rent Percentage: When is it chargeable?

It is not only in Christchurch that local authorities are coming under renewed pressure to identify and address the issue of earthquake-prone buildings. These efforts by local authorities, however, are having ramifications not only in terms of expense for building owners, but also in terms of the relationship between landlord and tenant. In respect of that relationship, two key questions consistently arise: Is a landlord able to enter a tenant’s premises to undertake structural improvements? When does the Improvements Rent Percentage become chargeable? This article addresses only the second of these questions. For more information on the first please see “When can a Landlord make structural repairs or improvements to a tenanted building?”. What is an Improvements Rent Percentage? The Improvements Rent Percentage concept allows a landlord to charge an amount additional to the agreed rent if improvements, additions or alterations are required by law to be made to the property. The specific amount a landlord is able to charge should be agreed at the outset between the parties, but is usually in the range of 8-12% of any expenditure incurred. The clause dealing with Improvements Rent Percentages in the most recent Auckland District Law Society (ADLS) Deed of Lease (fifth edition, 2008(2)) states (emphasis added): If the Landlord is obliged by any such legislation or requirement to expend moneys on any improvement addition or alteration to the property then the Landlord shall be entitled to charge up to the next rent review date in addition to the rent an annual sum equal to the Improvements Rent Percentage of the amount so expended by the Landlord and the monthly...
When can a Landlord make structural repairs or improvements to a tenanted building?

When can a Landlord make structural repairs or improvements to a tenanted building?

This article addresses the provisions of the Auckland District Law Society (ADLS) Deed of Lease (5th edition, 2008 (2)), which is the most common commercial lease. The current form and version makes no express provision for a landlord to enter into tenanted premises and undertake structural improvements. Given the renewed pressure upon local authorities and building owners to bring earthquake prone buildings up to strength, this omission has caused some problems. So when can a landlord make structural repairs to a tenanted building? Relevant Clauses 14.1 IF default shall be made by the Tenant in the due and punctual compliance with any repair notice given by the Landlord pursuant to this lease, or if any repairs for which the Tenant is responsible require to be undertaken as a matter of urgency… the Landlord may by the Landlord’s employees and contractors with all necessary equipment at all reasonable times enter upon the premises to execute such works… 15.1 THE Tenant shall permit the Landlord and the Landlord’s employees and contractors at all reasonable times to enter to premises to carry out repairs to the premises or adjacent premises and to install inspect renew or replace any services where the same are not the responsibility of the Tenant all such repairs inspections and work to be carried out with the least possible inconvenience to the Tenant. Prima facie, these clauses authorise a Landlord to enter a tenant’s premises and undertake structural repairs. However: The ADLS Deed of Lease specifically excludes structural repairs from the list of outgoings for which the tenant is responsible. Neither is a tenant responsible for structural improvements...
Earthquake Prone Buildings: Health and Safety Obligations of Landlord and Tenant

Earthquake Prone Buildings: Health and Safety Obligations of Landlord and Tenant

It is not only in Christchurch that local authorities are coming under renewed pressure to identify and address the issue of earthquake-prone buildings. These efforts by local authorities, however, are having ramifications not only in terms of expense for building owners and inconvenience for tenants, but also in terms of the relationships between landlords, tenant employers, and employees. While health and safety obligations are largely outside the realm of most forms of lease, there are implications when a tenanted building is registered as earthquake prone or potentially earthquake prone. Obligations of Tenant Employer Most leases require a tenant to comply with the provisions of all statutes, ordinances, regulations and by-laws relating to the use of the premises by the tenant. Most leases also, however, provide that the tenant does not have obligations to make any structural repairs or improvements, especially when those structural repairs or improvements are necessary through no fault of the tenant. These obligations are imposed on the Landlord, even when structural repairs or improvements are required due to a law, bylaw or change of other compliance issue. Nevertheless, a tenant employer has obligations outside the four corners of the lease document. In particular, employers are required to “take all practicable steps to ensure the safety of employees while at work”. The Health and Safety in Employment Act 1992 (the “Act”) obliges employers to provide and maintain a safe working environment for their employees. While there is no case law confirming this position under the Act, it seems likely that tenant employers are subject to obligations only their landlord can protect against. Obligations of Landlord As well...
Changes to civil debt enforcement

Changes to civil debt enforcement

From 14 April 2014 there will be a change in how the collection of civil debt can be enforced through the District Court, Tenancy Tribunal and Disputes Tribunal. The key changes include: The ability to apply for an attachment order without a financial assessment or hearing taking place, Attachment orders will be able to be agreed between the parties at hearings in the District Court, Tenancy Tribunal (including tenancy mediation) and the Disputes Tribunal, Either the debtor or creditor can file a financial statement as to the debtor’s financial means, and Financial means assessments can be completed over the telephone with Court staff, without the need for the creditor to be present or a formal hearing. Please contact Mark von Dadelszen to discuss your civil debt enforcement options in further...