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Extending corporate liability in New Zealand

Gillman, Maxim C. R. and Hogan, Barry James 1999. Extending corporate liability in New Zealand. International Journal of Social Economics 26 (4) , pp. 487-500. 10.1108/03068299910215951

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New Zealand’s 1993 Companies Act defines reckless trading as when a director/manager induces a “substantial risk of serious loss to the company’s creditors”. The definition contrasts with international common and statutory law that holds managers personally liable only under circumstances of moral failing. It also allows for managers to be found liable for bad investments during the continued existence of a firm. Replacing the standard of moral failing with a standard of objective risk evaluation and allowing culpability beyond bankruptcy proceedings extends liability in a way that indirectly taxes corporations. This extension of liability stands contrary to the evolutionary development of the corporation as based on an efficient redistribution of property rights. It biases investment towards lower risk, lower yield ventures, and is expected to decrease New Zealand’s innovation-driven economic growth

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
J Political Science > JA Political science (General)
Uncontrolled Keywords: Common law; Efficiency; Liability; Risk; Taxation
Publisher: Emerald
ISSN: 0306-8293
Last Modified: 04 Jun 2017 04:28

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