Why is the Government introducing these relief measures?
In the current economic climate, it’s difficult for directors to make informed judgements about the consequences of entering into financial obligations, or whether continuing to trade will expose creditors to serious losses. The fear of being personally liable for a company’s solvency problems is increasing, resulting in businesses that could otherwise weather the storm being prematurely liquidated.
The Government wants to minimise the disruption to businesses by cushioning the economic impacts of COVID-19. The changes the Government is making will provide support for businesses that were viable before the impacts of COVID-19, so that they can continue trading.
How do entities apply for statutory deadlines to be relaxed?
Relaxing statutory deadlines falls within the exemption powers of the responsible registrar or Minister. There is no application process, but exemptions won’t be made unless there are clear problems to resolve. Entities should contact the registrar or agency and explain their issues.
How long can an entity delay holding its annual meeting or filing returns?
The expectation is that this relief is temporary and entities should comply with their statutory obligations in their constitutions or rules where it’s reasonable for them to do so. Entities can use electronic communications, including electronic meetings, even if their constitutions or rules do not allow them to.
Will the relief provisions extend to Māori governance entities established or recognised under specific pieces of legislation?
The provisions relating to exemptions from statutory obligations and modifications of rules under entities’ own constitutions will also extend to a range of Māori governance entities. These include post-settlement governance entities, Māori trusts and incorporations, and mandated iwi organisations.
What are the new rules around electronic signatures, and why have you made them?
Commercial lawyers have told the Government that the way the Contract and Commercial Law Act and the Property Law Act work together is creating a practical barrier to businesses being able to enter into security agreements with their banks. This has made it impossible or highly impracticable for these security interest deeds to be entered into, which is hindering banks from providing financial support to business.
To address these issues, the Bill allows the electronic transaction provisions in the Contract and Commercial Law Act to be applied temporarily to security agreements containing Powers of Attorney.
Published 7 May 2020
Will there be a delay to the insolvency practitioner licensing?
The Bill has extended the commencement of the insolvency practitioner licensing from 17 June 2020 to 1 June 2021, with the potential for it to be brought forward.
The Registrar of Companies and Chartered Accountants Australia and New Zealand report that the date best balances the need for the licensing regime to be in place to enhance the standards of the insolvency practice, with the time required to implement the regime.