Mainzeal – The “Perils” of Shareholder Support
29 November 2024

Lawyers and business people have now had a month to digest the Supreme Court’s decision in Yan v Mainzeal Property and Construction Limited (In Liquidation) (Mainzeal).  [1]


The Supreme Court (Court) upheld the Court of Appeal’s decision that the Mainzeal directors were liable for insolvent trading and ordered that the directors contribute $39.8 million plus interest to the assets of the company. The liability of three of the four directors was capped at $6.6 million plus interest.


The Mainzeal decision is perhaps unsurprising. It reinforces the Supreme Court’s existing position in Madsen-Ries (as liquidator of Debut Homes Limited (In Liquidation)) and Othersv Cooper and Others (Debut Homes)[2]. The decision also provides extensive guidance on the approach directors should take to their statutory duties under sections 135 and 136 of the Companies Act 1993.


In summary, the Court ruled that, at the point at which company is insolvent, or nearing insolvency, it is incumbent upon the directors to take stock of the situation and seek independent advice if necessary. At this point, there needs to be a plan for continued trading that mitigates a substantial risk of serious loss to creditors and means that obligations incurred will continue to be honoured. A lack of capital should be addressed by recapitalisation or shareholder support which could be reasonably relied upon. Liquidation, or some other form of insolvency protection, becomes the alternative if continued trading cannot be justified on this basis.


This result has been roundly criticised by lawyers and business people as providing too much focus on creditor protection, at the expense of allowing directors to exercise their business judgment. This outcome has prompted numerous calls for a review of the Companies Act.[3]


Perhaps, the most interesting aspect of the decision is shareholder support. On a balance sheet basis, Mainzeal had been trading insolvent for some time. The Richina Pacific group ostensibly provided support through letters of support and “contra” arrangements for the supply of goods. Assurances of support were also given by Richard Yan, the managing director, often in unconditional terms. Issues of legal enforceability, extracting money from China, and lack of capitalisation of some group members put question marks next to this support. Ultimately, the Court decided it was “distinctly uncertain” whether Richina Pacific would provide money to meet Mainzeal’s liabilities. As such, going forward, the directors did not have reasonable grounds for believing the company would honour its obligations.[4]


In our view, this finding places directors of foreign owned subsidiaries in an invidious position. They are being asked to test the effectiveness of shareholder support but will likely lack the means do so. In many cases, they will be employees who are ultimately responsible to the offshore business.


Questioning the legal enforceability or lack of intent behind support arrangements may be seen as a lack of good faith. Historically, letters of comfort from a parent company were given great weight; although, not legally enforceable. Often, these letters would support an auditor’s finding of solvency. Now, directors are being asked to apply a much higher degree of scrutiny to these arrangements.


We agree the law needs a serious review. The pool of directors in New Zealand is already too small. This is unsurprising given the consequences of taking too much business risk and getting it wrong.

[1] [2023] NZSC 113


[2] [2020] NZSC 100


[3] See in particular National Business Review, Companies Act ‘long overdue a rethink’: lawyers react to Mainzeal, 25 August 2023, https://www.nbr.co.nz/law/companies-act-long-overdue-a-rethink-lawyers-react-to-mainzeal/


[4] [2023] NZSC 113 at paragraph [267]


For more information contact Mark Hopkinson or Mike Roberton.


5 October 2026
Many people spend time preparing a will, but far fewer consider what would happen if they were still alive but unable to make decisions for themselves. An Enduring Power of Attorney (EPA) is an important legal document, which enables you to appoint another person (known as your attorney) to make decisions for you if you become mentally incapable of doing so yourself. Like a will, an EPA can be updated as your circumstances change. Like insurance, an EPA may never be needed, but it provides important protection should the unexpected occur. There are two types of EPA. The first relates to property and the second relates to personal care and welfare matters. Property Attorney Your property attorney will make decisions relating to financial assets; that is arranging benefits, paying bills, looking after bank accounts, and buying and selling assets (selling the family home to pay for care for example). You can appoint any number of people to act as a property attorney together or separately, and/or appoint attorneys in succession if you think that is a sensible idea too. You can also elect whether the EPA for property is to take effect immediately and then endure past the point you have lost capacity, or whether it is to take effect only in the situation where you have lost capacity. An EPA that takes effect immediately can be useful if you are travelling overseas or are physically unable to manage aspects of your affairs yourself. While you retain capacity and you remain able to continue managing your own affairs, your attorney’s role is generally to assist rather than take over. Personal Care and Welfare A personal care and welfare attorney will make decisions relating to your health and wellbeing such as your medical treatment, living situation, what level of care you receive, and the like. You can only appoint one attorney at a time as a personal care and welfare attorney. However, like the EPA for property, you can also appoint attorneys in succession. The EPA for personal care and welfare will only ever take effect in the situation where you have lost capacity. What Happens if you do not have an EPA? If you lose capacity and have not appointed an attorney, your spouse, partner, children, or relatives may discover they are unable to access bank accounts, manage investments, sell property, sign legal documents, or make certain healthcare decisions. This is mostly because financial institutions and government agencies generally require proper legal authority before allowing another person to act on your behalf. Without an EPA, family members may need to apply to the Court for orders appointing a property manager to manage your financial affairs and/or a welfare guardian to make personal care and welfare decisions. This process can be a stressful, an expensive, and a time-consuming exercise at a time when stress levels are already high. Things to Think About when Preparing your EPA The sorts of things you need to think about when preparing your EPAs are: Who you would want as your property attorney(s) and any successor attorneys. Who you want as your personal care and welfare attorney and any successor attorneys. Whether you wish to impose any conditions on your attorney. Whether you wish to require your attorneys to consult or provide information to named persons. In relation to your property attorney, whether you authorise your attorney to use your property for their own benefit or the benefit of any other person. In relation to your property attorney, whether you authorise your attorney to use your property to provide gifts (either to family or charities).  It is also important to be aware your EPA needs to be signed and witnessed in the presence of either a lawyer, registered legal executive, or an authorised officer of a trustee corporation for your EPA to be valid. Proposed Changes to the Legislation The Law Commission has recommended replacing the current Protection of Personal and Property Rights Act 1988, which governs EPAs, with an entirely new Act. The Government has accepted the central recommendation to replace the legislation and has indicated substantive reform work is a priority. We do not know precisely what those changes (if any) will look like, but the proposed reforms are summarised as follows: More emphasis on your wishes: Under the current framework, attorneys are often guided by what they think is in your best interests. The proposed reforms would place much greater weight on your own wishes, values, beliefs, and preferences. That may mean that rather than simply appointing an attorney, you may be encouraged to leave more detailed guidance to your attorneys. The attorney’s role may be more focussed on carrying out what you would have wanted rather than them deciding what they think is best. A new supporter role: The proposed reforms establish the creation of a formal supporter whose job is to help a person understand information, weigh options, and communicate decisions without actually making the decision for that person. Capacity may be viewed more flexibly: The reforms recognise capacity is not always all or nothing. The new framework is expected to allow more tailored arrangements rather than completely removing a person’s decision-making authority. Greater safeguards against abuse: Future reforms are likely to strengthen oversight and accountability for attorneys by introducing better record-keeping requirements, clearer obligations on attorneys, and potentially a voluntary register of EPAs. Summary EPAs are not just documents for the elderly. Accidents, illnesses, and unexpected medical events can affect anyone at any stage of life. By putting an EPA in place, you retain control over who will make decisions for you if you cannot make them yourself and, having EPAs in place, can reduce stress for your family in the event you lose the capacity to make decisions for yourself. The Law Commission’s review of the legislation is a good reminder of just how important EPAs are, and we are of the view that ensuring they are in place is of the utmost importance. That being said, the current EPA system is effective and still one of the most important estate planning documents available. If you are interested in learning more about EPAs and the importance of them or would like to discuss putting them in place, please reach out to one of the team members at Glaister Keegan. We would be happy to assist you.
31 August 2026
We're pleased to introduce Zak Nasir , Senior Associate in our Land Development and Commercial Property team. Zak brings a unique blend of legal and planning expertise, helping clients navigate some of New Zealand's most complex property and development projects. With extensive experience in land development, subdivisions, commercial property and resource management matters, Zak advises developers, private clients and infrastructure providers on all aspects of property acquisition, development structuring, subdivision, leasing and disposal. His practice spans projects of all sizes, from boutique developments through to major residential subdivisions involving hundreds of lots. Before becoming a lawyer, Zak worked as a town planner, giving him a valuable understanding of the planning and development process. This background allows him to identify potential issues early and provide commercially focused, practical advice throughout the life of a project. Clients and colleagues alike value his ability to bridge legal, planning and development considerations to achieve successful outcomes. He has previously worked in London as a lawyer and most recently at a large top tier firm in Auckland. Throughout his career, Zak has advised on significant commercial property transactions, large-scale development projects, leasing arrangements and Public Works Act matters. He is known for his pragmatic approach and his ability to work collaboratively with surveyors, engineers, planners and government agencies to resolve complex issues efficiently. Whether assisting first-time developers or experienced industry participants, Zak is committed to delivering clear, practical solutions that help clients move forward with confidence. We are delighted to have him as part of the Glaister Keegan team and look forward to the continued value he brings to our clients and colleagues. Contact: zak.nasir@glaister.co.nz
31 August 2026
Alternative Holidays Current system If the full-time employee works on a public holiday that is an OWD, they get one full alternative holiday , no matter how many hours they worked. The full-time employee must take their leave on another OWD. The full-time employee can cash their leave up after 12 months. Proposed new system The full-time employee earns alternative holiday hours , matching the number of hours they worked (or were on call and called in) on the public holiday. The full-time employee can take the hours on any day they could normally work . The full-time employee can cash their hours up at any time . Leave Payments Current system Leave payments require multiple calculations to account for variable hours and payments. Annual leave taken soon after parental or volunteer leave is paid at a lower rate . Proposed new system All leave is paid at an hourly rate , based on the lowest hourly rate payable for the day the leave is taken plus an average for piece‑rate work. Fixed allowances are paid in full during leave. Annual leave after parental or volunteer leave is paid normally . Leave Compensation Payments (Replacing “Pay as You Go”) Current system Employers and workers can agree to “Pay as You Go” (8% of gross earnings) for casual short‑term work. Proposed new system A Leave Compensation Payment (LCP) of 12.5% of a worker’s ordinary hourly rate is paid on all casual hours . Workers with standard hours also get LCP on additional hours they work, instead of accruing annual or sick leave on those hours. Fixed‑term workers earn leave from day one . For more information please contact Brett Vautier and Paul McKendrick.
Show More