ABSTRACT
A central issue of corporate governance is in whose interests the corporation must be run. This article explores how this tension is played out by considering directors’ good faith duty in the United Kingdom and New Zealand. The Companies Act 2006 (UK) introduced the Enlightened Shareholder Value approach to address the perennial issue of whose interests should prevail. Enforcement through subsequent reporting requirements followed, and more recently, the Supreme Court has grappled with the interests of creditors on insolvency in this context. Meanwhile in New Zealand, shareholder primacy has long been proclaimed as a defining characteristic of its company law. That is, perhaps, until 2023, when New Zealand introduced the Companies (Directors’ Duties) Amendment Act in an attempt to clarify the position of ESG factors when acting in the best interests of the company. A change of administration and political appetite means this may now be short-lived as the amendment is set for repeal in 2025. What can we learn from these developments? This paper explores how the duty in the United Kingdom and New Zealand is interpreted and applied. To do so, it critically analyses differences in theoretical approaches and language, such as ‘may’ versus ‘must’ consider, while also highlighting significant similarities in their underlying goals. Further it argues that despite the differing formulations, the unifying interest is one of shareholder prioritisation and, resultingly, profit first in each jurisdiction.
Underwood, Peter and Buckley, Lynn, Duty Calls: Good Faith and Best Interests in Company Law: New Zealand and The United Kingdom Considered (December 1, 2025), Journal of Business Law.
Leave a Reply