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New Zealand law explained for everyone

Building Societies Act 1965

Management and administration - Liability of officers

107: Officers and auditors not to be exempted from liability

You could also call this:

“Rules can't protect building society leaders from getting in trouble for their mistakes”

You can’t make rules or agreements that protect directors or officers of a building society from being responsible for their mistakes or bad actions. This means that if a director or officer is careless, doesn’t do their job properly, or breaks the rules, they can’t avoid getting in trouble for it.

If there are any rules like this in a building society’s rulebook or in any agreements, they won’t work. The law says these kinds of rules are not allowed.

However, there was a short time after this law started when old rules like this could still work. This was only for the first six months after the law began.

The building society can help pay for a director or officer’s legal costs if they go to court and win their case or are found not guilty.

If a director or officer makes a mistake or breaks the rules, they can ask the court for help. The court might decide not to punish them if it thinks that’s fair.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM372092.

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Part 7 Management and administration
Liability of officers

107Officers and auditors not to be exempted from liability

  1. This section applies to any provision for—

  2. exempting any director or other officer of a society from any liability which, by virtue of any rule of law, would otherwise attach to him or her in respect of any negligence, default, breach of duty, or breach of trust of which he or she may be guilty in relation to the society; or
    1. indemnifying any such director or officer against any such liability.

      1. Subject to the provisions of this section, any provision to which this section applies, whether the provision is in a society's rules or in any contract with a society or otherwise, shall be void.

      2. In respect of anything done at any time before the expiry of a period of 6 months from the commencement of this Act, nothing in subsection (2) shall deprive any person of any exemption or right to be indemnified by virtue of any such provision, if that provision was in force at the commencement of this Act.

      3. This section shall not prevent a society from indemnifying a person against any liability incurred by him or her in defending any proceedings, whether civil or criminal, in which judgment is given in his or her favour or in which he or she is acquitted.

      4. Section 468 of the Companies Act 1955 (which empowers the court to grant relief in certain cases of negligence, default, breach of duty, or breach of trust) shall apply (as if that section were still in force) in relation to directors and other officers of a society as it applied in relation to officers of a company.

      Compare
      • Building Societies Act 1962 ss 92, 130, Eighth Schedule (para 10) (UK)
      Notes
      • Section 107(5): amended, on , by section 14 of the Companies Amendment Act 2013 (2013 No 111).