ESG and Directors: The Companies (Directors’ Duties) Amendment Act 2023 becomes Law

The Companies (Directors’ Duties) Amendment Act 2023 was passed on 3 August 2023 and is now in force.

The legislation clarifies that company directors may consider matters other than profit maximisation when assessing what is in the best interests of the company such as, for example, environmental, social and governance matters.

The Act has attracted criticism from, amongst others, the Ministry of Business, Innovation and Employment; the New Zealand Law Society; and the Institute of Directors, with many arguing the new legislation will have a marginal impact, if any.

In any event, it acts as a signpost to directors clarifying that profit maximisation is not the only consideration when discharging their duties to act in the best interests of the company.

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