De-facto Five Star Finance director banned

Press Release
Ministry of Economic Development

19 June 2009

De-facto Five Star Finance director banned

The Deputy Registrar of Companies Peter Barker has prohibited Neill Allan Williams, who he found to have been involved in the management of Five Star Finance Limited and Five Star Consumer Finance Limited, from directing or managing a company in New Zealand.

The Registrar of Companies has the power under section 385 of the Companies Act 1993 to prohibit persons from being a director, or involved in the management of companies. The power can apply to any person who has been a director, or involved in the management of, a failed company or companies within the previous 5 years. Where a person has been identified as a candidate for prohibition on the basis of multiple failed companies the onus is on that person to satisfy the Registrar that their management of the affairs of those companies was not at least partly responsible for their demise, or that prohibition would not be just or equitable.

Mr Williams was not a registered director of the companies, however, Mr. Barker was satisfied that Mr. Williams operated as a defacto-director of the Five Star Finance Companies, falling within the extended definition of director in Section 126 of the Companies Act 1993, or was a manager of the companies.

Mr. Williams was unable to satisfy Mr. Barker that the way in which he managed the affairs of the Five Star group companies was not at least partly a cause of the failure of those companies.

The report to the Registrar of Companies by the Ministry of Economic Development’s National Enforcement Unit alleged mismanagement including: reckless trading; breaches of each of the director’s duties under the Companies Act 1993; and the failure to maintain adequate books and records.

The prohibition notice was issued on 29 May 2009. Mr. Williams is prohibited for five years from this date.

Background:

Five Star Consumer Finance Limited’s principal business consisted of providing financing for consumer durables to the retail consumer market – for example loans financing the purchase of household items such as furniture and whiteware. It was put into receivership on 23 August 2007. Shortly after, various related companies including Five Star Finance Limited and Five Star Debenture Nominee Limited, were put into receivership and/or liquidation. These companies provided financing to various non-consumer industries.

Prohibition

The maximum term of prohibition under Section 385(3) of the Companies Act 1993 is five years. The prohibition prevents those concerned from acting as directors or promoters of a company, or being concerned in, or taking part, whether directly or indirectly, in the management of a company.

Penalty

Failure to comply with the notice of prohibition is an offence and persons are liable upon conviction to a penalty of up to 5 years imprisonment or a fine not exceeding $200,000.

ENDS

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