You, as a director of a company, have a special job. You must be careful about what you agree to for your company. Before you say “yes” to the company taking on a new task or responsibility, you need to think hard. You should only agree if you truly believe the company can do what it’s promising. This belief should be based on good reasons, not just a guess. You need to be sure that when the time comes for the company to do what it promised, it will be able to do it. This rule helps make sure companies don’t make promises they can’t keep.
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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320667.
A director of a company must not agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so.
