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A New Zealand Variant of Director Primacy

I spent most of November in New Zealand on extended holiday, so I was amused to run across an article on New Zealand corporate governance that embraces a version of my director primacy theory of corporate governance:

The conventional shareholder-centric view of company law holds that directors manage the company for the benefit of shareholders of the company, and the shareholders have ultimate and residual control over the company. This article re-examines the source of the management powers of the board, and the legal relationship between shareholders and directors. It is argued that corporate governance in New Zealand has a statutory, rather than a contractual, basis, and shareholders cannot in any realistic sense be considered to control the business and affairs of companies. The board plays an essential role in New Zealand companies. It has an irreducible core set of functions relating to the supervision and monitoring of the business and affairs of the company. Where shareholders exercise management powers, whether under the corporate constitution or company law doctrine, the law imposes director-like duties on the shareholders. Theories of company law founded on incorporating simple shareholder-centric models are, therefore, unlikely to provide a satisfactory basis for the development of company law by the New Zealand courts.

Chris Noonan & Susan Watson, The Foundations of Corporate Governance in New Zealand: A Post-Contractualist View of the Role of Company Directors, 22 New Zealand Universities Law Review 649 (2007). Noonan and Watson go on to state that “S Bainbridge, “Director primacy: the means and ends of corporate governance” (2003) 97 NWULR 547 has also emphasised the primacy of directors in listed companies.”