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.

"It is wrong in policy, because it leaves an undesirable degree of uncertainty that will result in increased costs of advice and will act as a deterrent to businesses engaging in the retail market," he said.

The New Zealand Shareholders' Association supported the increased emphasis on civil liability, saying good governance is crucial to keeping a lid on the risk of investing.

The commerce committee is due to report back on September 7.