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Summary and Comments

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Category: 

Litigation

Date: 

1997-08-14 11:39:34

Subject: 

Watch for Mass Resignations of Corporate Directors

  Link:

http://www.year2000.co.nz/y2kher11.htm

Comment: 

This article from the New Zealand BUSINESS HERALD (Aug. 5) paints a grim picture. Corporate directors in New Zealand may be held personally liable for a y2k-related failure of their companies. If it goes bankrupt, assets of directors are at risk.

Unless governments at the state and federal level exempt them from this liability in 1998, we can expect to see mass resignations in 1999. This will be a sign that y2k will hit with full force.

If directors remain blind to this problem, and if the courts survive, and if the government doesn't retroactively forbid y2k lawsuits -- any of which is possible -- directors will pay a high price for their psychological denial in 1999.

* * * * * * *

"If a company continues trading while ignoring the obvious potential for disaster in, or on approaching, 2000, the directors might incur liability to creditors or shareholders for negligence or breach of statutory duty," Mr Adlam said.

"On a liquidation, a director may be held personally liable to contribute to the assets of the company by way of compensation."

"If directors did not initiate a checking or converting programme promptly, liability will depend on whether the company survives in spite of the directors' inertia."

Link: 

http://www.year2000.co.nz/y2kher11.htm

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