The Institute of Directors warns new legislation tightening the rules for foreign companies operating in New Zealand could lead to unintended consequences.
It supports the general thrust of the Companies and Limited Partnerships Amendment Bill but does not believe reference to criminal behaviour should be included.
The Bill requires a New Zealand-resident agent for companies and limited partnerships, introduces tougher rules and criminalises certain breaches of directors' duties.
But institute chief executive Ralph Chivers has told Parliament's commerce committee that most company directors do a very good job.
Institute governing council member Jim Donovan says there's no need to include criminal liability in the Bill.
Mr Donovan says the existing Crimes Act and Companies Act, plus the Financial Markets Conduct Bill, all cover criminal behaviour by company directors.
The institute also criticises the Bill for requiring foreign companies operating here to have a New Zealand-based agent.
Mr Chivers says that doesn't go far enough, and that a more effective solution would be to require an overseas company to have at least one director who was a New Zealand resident.
"It would mean at least one director was always within reach of the law."
Under questioning from committee members Mr Chivers reassured them that individual investors do now have greater protections against misconduct by company directors.
The commerce committee is due to report back to Parliament on the Companies and Limited Partnerships Amendment Bill by 24 January 2013.