The unfitness of directors insolvency and the consequences: Some comparisons
Interim status: Citation only.
Farrar, J. and Tennent, D. (2005). The unfitness of directors insolvency and the consequences: Some comparisons. Canterbury law review, (11), 239-249.
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© Copyright Canterbury Law Review, 2005
The Long Title to the Companies Act 1993 states that its object inter alia is '(d) to encourage efficient and responsible management by allowing directors a wide discretion in matters of business judgment while at the same time providing protection for shareholders and creditors against abuse of management power'. A key concept is the maintenance of solvency which is defined in s 4(1) of the Act in terms of commercial solvency and balance sheet solvency and there are in addition specific responsibilities to keep proper accounting records in accordance with the terms of the Financial Reporting Act 1993. Apart from this there is no test of fitness for directors and directorship is not a profession or calling. The problem for the law is to determine what level of unfitness justifies intervention and the imposition of personal liability.
John Farrar and Doug Tennent. "The unfitness of directors insolvency and the consequences: Some comparisons" Canterbury Law Review.11 (2005): 239-249.
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