Criminal Stain on a White Collar: A Critical Analysis of Proposed Changes to Directors’ Liabilities

The recent finance company collapses have highlighted the need for improved director accountability. However where is the appropriate point to draw the line, which if crossed, imposes criminal liability? The Financial Markets Conduct Bill and the Companies and Limited Partnerships Amendment Bill both attempt to redefine when criminal liability will attach to directors. By assessing the proposed changes in the light of two recent cases, it can be seen that under the proposed changes, directors have the potential to be found criminally liable for less than dishonest behaviour. This raises the issue of whether criminal liability is appropriate in regards to directors’ actions, or whether a civil liability scheme would be more appropriate. This paper looks at the current law and the proposed changes to directors’ liability, and by considering the situations of two failed finance companies, attempts to draw conclusions as to the effects of such changes.