Geddis on Jones and Air NZ

Andrew Geddis writes:

Air New Zealand is a company, governed by the Companies Act 1993. Despite the Crown’s bare majority shareholding, Air New Zealand is not a SOE or even a MOM. As such, the board of Air New Zealand – its directors – have legal duties under the Companies Act. Primary amongst these are that “when exercising powers or performing duties, [they] must act in good faith and in what the director believes to be the best interests of the company.”

Note that their duty is to the best interests of the company. Not to the nation. Not to the provinces. Not even to the shareholders directly – even where the majority shareholder is an elected minister of the Crown. (Just to be clear, however – Air New Zealand’s shareholding minister is the minister of finance, Grant Robertson. It isn’t Shane Jones.)

So, if the directors of Air New Zealand are of the opinion that the company’s best interests are served by closing particular routes and opening others, then that’s what they legally are required to do. They simply cannot say “we believe it would be best for Air New Zealand to stop flying to Kāpiti, but we should do right by it and its people so we’ll keep on doing it.”

In fact, if they were to say that, then they’d potentially be committing an offence that is punishable by up to five years’ imprisonment or a fine of up to $200,000. Not that I think they’d be prosecuted for making one such route decision, but the existence of this offence provision shows just how important these fundamental director’s duties are.

So Shane Jones is huffing and puffing by demanding Air NZ directors break the law and if they don’t agree with Shane, he wants them sacked. Wonderful leadership from the Government.