National Finance director Carol Braithwaite said she wanted to leave her position, but was told by her partner - jailed National Finance boss Trevor Allan Ludlow - that he needed her at the company.
Braithwaite is on trial at the High Court at Auckland for misleading investors.
She faces one charge of making untrue statements in a company prospectus.
According to the Crown, there are ten material untruths in the document, an allegation Braithwaite now accepts.
She is defending the charge on the basis that she believed, at the time, the prospectus was correct.
The accused gave evidence in her own defence today and told the court she believed the 2005 prospectus she signed was true.
She said she had read it, along with any other documents that were given to her by other directors at the company.
"I thought this (the business) is all going great, the prospectus is correct," she said.
She had become a director at the request of Ludlow - her de facto partner.
"I thought that's what wives did, they become a director of their husband's company," she said.
But from early on in her directorship, she said she wasn't involved in the running of the day-to-day business.
From 2003, she said she wanted to resign from her position, but Ludlow wanted her to stay on.
"He couldn't get another director at that time," she said
Braithwaite told the court that if the pair disagreed Ludlow would get angry and in the past he would "take it out on the children".
"He would smack the young ones, he would smack them hard," she said.
Braithwaite had two children with Ludlow and three from her previous marriage living with her at the time.
Although the 2005 prospectus had said Braithwaite received $79,000 as a director, the accused said today she only received an allowance of $500 a week from Ludlow.
Under cross-examination from the Crown Braithwaite said when she went to directors' meetings she had tried to be independent.
"I tried my best," she said.
The accused said she had not done any research into director responsibilities before taking up the position.
When asked by Crown lawyer John Dixon about controls that could have been in place to make sure the company was run correctly, Braithwaite replied.
"I didn't know that I was supposed to...I was following what the other directors were doing," she said.
She accepted, in hindsight, that she should have done more in her role as a director.
The Crown, which argues Braithwaite abdicated her responsibilities as a director, will continue its cross-examination this afternoon.
National Finance went into receivership in 2006, owing investors $21 million. Some investors have recovered 49c in the dollar.
Ludlow is serving a sentence of six years and four months after being convicted of charges laid by the Serious Fraud Office and the Financial Markets Authority.
He was found guilty last July of defrauding investors of an estimated $3.5 million.
He and Braithwaite once shared a $1.5 million Devonport property and in 2009 he blamed the stress of the business' failure for the pair's break-up.
Both are banned from being company directors until next April.
National Finance accountant John Gray pleaded guilty to theft and false accounting charges in the Auckland District Court in 2010 and was sentenced to nine months' home detention.By Hamish Fletcher @hamishfletcher Email Hamish