The Government is casting too wide a net in deeming reckless directors to be criminally culpable, according to a number of submissions on the revamp of New Zealand's decades-old Securities Act.
A common concern among the 65 written submissions on the Financial Markets Conduct Bill is how far-reaching the term "reckless" can be when determining the criminal liability of a director of a company that issues securities.
The bill, which passed its first reading in March, was designed to limit criminal liability for "egregious contraventions of securities law" that were either intentional or reckless, rather than capture negligence or major misjudgments.
Bank of New Zealand corporate lawyer Paul Hay said recklessness has a "tortuous history in criminal jurisprudence" and easily blurs into the lesser category of gross negligence.
"The unclear boundaries of recklessness should not be allowed to leave any scope for the criminal sanctions to be employed for situations involving negligence," Hay said in his submission to Parliament's commerce select committee.
