The Companies (Directors Duties) Amendment Act 2023 is now law
The controversial Companies (Directors Duties) Amendment Act 2023 took effect on 7 August 2023. The Act adds an additional section to clarify section 131 of the Companies Act 1993, saying that directors may consider a wide number of factors other than financial gain while making decisions.
The original bill listed five non-exhaustive environmental, social and governance (ESG) factors:
(a) recognising the principles of the Treaty of Waitangi (Te Tiriti o Waitangi);
(b) reducing adverse environmental impacts;
(c) upholding high standards of ethical behaviour;
(d) following fair and equitable employment practices; and
(e) recognising the interests of the wider community.
However, the select committee removed the reference to the ESG factors and the final wording is “To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit (for example, environmental, social, and governance matters).”
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