On the 1 July 2021, the Minister of Justice asked the Ministry of Justice to review the Act. This review will look at:
How has the Act operated since 2013?
Is there any part of the Act that should change?
The review will finish by 30 June 2022, with the Ministry providing a report to the Minister. The Minister will then make the report public.
The Ministry is asking for submissions from the public with a deadline of 3 December 2021. RITANZ will be making a submission but we encourage all interested members to also make their own submissions to the MoJ.
To access the consultation document and obtain more information, click here.
The Bill seeks to prevent professional advisers (defined as a person “providing advice on the financial management of companies”) who recommend receivership, liquidation, or administration of a business from subsequently undertaking any of those roles in respect of the entity in question. Clearly an Investigating Accountant (IA) type role would fall foul of this and the drafter points to an inherent conflict of interest in these circumstances.
The RITANZ Regulatory Committee intends to raise its concerns at this proposed law reform (with MBIE and in any subsequent consultation or committee phase) on the basis that:
1. Receiverships are largely created by contract with the secured creditor entitled to make the decision when and who to appoint. Receivers have duties to their appointer and statutory duties to other parties. They are governed by the IP licensing regime and the rules and guidelines imposed on them;
2. Liquidators and administrators are also Licensed Insolvency Practitioners and are subject to statutory duties of disclosure and engagement, actions of creditors to replace them and, ultimately, the supervision of the Court;
3. This issue was extensively reviewed by the Insolvency Working Group in 2016 whose recommendations were largely adopted in the 2019 law reforms;
4. Prior to the above law reform, the Courts, in Companies Act s280 applications, had reached the position where Investigating Accountants (who might otherwise have disqualifying relationships with the debtor or the secured creditor) were often in the best position to administer the debtor entity in the most efficient manner, for the benefit of all parties;
5. Other jurisdictions (Australia in particular) which have a licensing regime, do not have laws of this nature.
If any members have any further views they wish to add then please make contact with our Executive Director or make your own views known to MBIE.
The Government has decided to implement a range of temporary measures across Commerce and Consumer Affairs legislation that respond to the disruption and uncertainty caused by the re-emergence of COVID-19 in the community. These include delays to the commencement of some new regulatory obligations and flexibility to make it easier for businesses and other entities to operate safely during heightened alert levels. These changes affect forthcoming credit reforms, food country of origin disclosure requirements, and include reapplying temporary relief from 2020 in respect of corporate governance legislation and contract and commercial law.
Of significance to lenders and borrowers the Government agreed to:
Delay the full commencement of the Credit Contracts Legislation Amendment Act 2019 (the Amendment Act) by two months, to 1 December 2021. This was necessary due to the impact of recent COVID-19 alert levels on lenders’ implementation of the reforms, which has disrupted training and other preparations and forced a reprioritisation of resources to support existing customers. This delay will include the regulations that were due to come into force on 1 October 2021, such as the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020.
Subject to Parliament passing the necessary legislation, temporarily reactivate amendments made to the Contract and Commercial Law Act 2017 in 2020 to facilitate the electronic execution of security documents containing powers of attorney. It is currently anticipated that this modification will last for an initial period of 6 months from the date of Royal Assent. Relevantly, unlike the modification made in 2020, the Government does not currently intend to make this modification retrospective.
You may also be interested to hear that the Government has similarly, subject to Parliament passing the necessary legislation, agreed to reinstate the compliance relief contained in the COVID-19 Response (Requirements For Entities—Modifications and Exemptions) Act 2020. This will enable organisations:
a) to do certain matters – including holding meetings, signing instruments, and voting on certain matters – electronically even if their constitutions or rules do not provide for it; and
b) to more easily modify certain requirements or restrictions in their constitution or rules (for example, defer reporting, or waive members’ fees).
This media release is prepared by, and shared courtesy of, Chartered Accountants Australia and New Zealand.
The new co-regulatory licensing regime for insolvency practitioners comes into full effect today, requiring all practitioners to hold a licence from the sole accredited front-line regulator, the New Zealand Institute of Chartered Accountants (NZICA).
This finalises the implementation of the Insolvency Practitioners Regulation Act 2019 (the Act), following a transitional period from 1 September 2020.
During that period, practitioners were required to conclude or resign from any ongoing insolvency appointments prior to 1 September 2021, or obtain a licence to continue work on their appointments after the transitional period.
All formal insolvency engagements such as voluntary administrations, receiverships and insolvent liquidations, both ongoing and new, must now be undertaken by a licensed insolvency practitioner. Practitioners must apply to an accredited body to obtain an insolvency practitioner licence. The New Zealand Institute of Chartered Accountants (NZICA) is currently the only accredited body in NZ.
CA ANZ NZ Country Head Peter Vial FCA says that the introduction of the new regime is an important milestone for insolvency appointments in New Zealand.
“Insolvency practitioners have a responsibility to ensure that the assets of insolvent businesses are realised and distributed in accordance with clear rules and duties to both the insolvent party and their creditors.”
“The new licensing regime is integral to lifting standards and promoting quality and integrity in the profession.”
“As the front-line regulator we will serve the public by carrying out duties under the Act, including licensing, monitoring, and providing a complaints process to ensure that insolvency practitioners are meeting the required standards.”
It is important to note that solvent liquidations can still be undertaken by qualified statutory accountants and lawyers, as well as by licensed insolvency practitioners.
MBIE has sent the following message to all liquidators:
On 1 September 2020, the Insolvency Practitioners Regulation Act 2019 (the Act) came into force and at the same time the Insolvency Practitioners Register went live. The Act requires insolvency practitioners operating in New Zealand to be licensed by an accredited body.
Clause 5(2) of Schedule 1 of the Act, requires a person who is a liquidator of a company and who, on the first anniversary, is not a licensed insolvency practitioner to resign on the first anniversary, that is 1 September 2021 and section 283 of the Companies Act 1993 then applies.
You must take action on incomplete liquidations by 1 September 2021.
For any liquidators who have not yet received licensing:
If you are not a licensed insolvency practitioner and you have been appointed as a liquidator of a company or multiple companies (or of another entity for example a limited partnership, incorporated society or charitable trust board), please resign or transfer any incomplete liquidations to a licensed insolvency practitioner by 1 September 2021.
Special provisions apply to solvent liquidations
If any of the liquidations are solvent liquidations, then you must file a resolution of solvency and be a lawyer or a qualified statutory accountant to continue administering the liquidation. If you have not filed a resolution of solvency, please file it immediately, otherwise the Registrar considers it as an insolvent liquidation. If the solvent liquidation started prior to 1 September 2020, you must complete the liquidation by 1 September 2021.
Please ignore this email if you have recently vacated, or you have registered the final report and a copy of notice of intention to remove the entity, for your liquidations.
This article is reposted here courtesy of MinterEllisonRuddWatts.
The Court of Appeal has delivered its eagerly anticipated judgment in proceedings brought by the liquidators of Mainzeal Property and Construction Ltd against its former directors, including Richard Yan and Dame Jenny Shipley. In those proceedings, the liquidators sought compensation for breach of certain statutory duties of directors engaged on a company’s insolvency: sections 135 (reckless trading) and 136 (incurring obligations) of the Companies Act 1993.
Although differing from the High Court’s judgment in several respects, the Court of Appeal concluded “[t]he liquidators were the successful party in relation to liability, and have established that they are entitled to an award of compensation in respect of the directors’ breaches”.
The Court agreed with the High Court that the directors had traded recklessly (in breach of s 135). It disagreed with the High Court’s approach to compensation arising from their doing so, finding that no loss was attributable to this breach of duty. However, unlike the High Court, the Court of Appeal found that the directors had also caused Mainzeal to commit to obligations without reasonable grounds for thinking that it would be able to fulfil those obligations (in breach of s 136). It considered there was loss attributable to these actions and referred the case back to the High Court to determine the amount of compensation to award to reflect this.
Members will be aware of the new licensing regime that comes into effect on 1 September 2020. As we transition to the new legislation, there will be several immediate changes which will impact on Accredited Insolvency Practitioners that we want to update you on.
Under the legislation, any individual who is not a member of an Accredited Body has to comply with section 57 of the Insolvency Practitioners Regulation Act 2019, in order to be eligible to apply to be a Licenced Insolvency Practitioner and to take Insolvency Engagements as from 1 September 2020.
Section 57 provides for an exemption for overseas practitioners, members of a recognised body, or members of religious societies from the requirement that states you must be a member of an Accredited Body.
The Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ) is pleased to announce a Commencement Order has been made by Parliament today to bring into effect the Insolvency Practitioners Regulation Act 2019 on 1 September 2020, despite an initial delay to the start date due to the impact of COVID-19.
RITANZ has tirelessly advocated for the protection of creditors and licensing of insolvency practitioners over the years and were delighted when the government enacted the Insolvency Practitioners Regulation Act and the Insolvency Practitioners Regulation (Amendments) Act which was set to come into force and effect on 17 June 2020.