The Act establishes a co-regulatory regime for insolvency practitioners operating in New Zealand, providing for licensing by accredited bodies, and introducing new licensing requirements.
The new regime aims to promote quality, expertise, and integrity in the profession of insolvency practitioners.
The Registrar of Companies will be responsible for granting accreditation to bodies who can license insolvency practitioners.
How this will affect insolvency practitioners
If you are working as an insolvency practitioner, you should familiarise yourself with the requirements of the Act and decide whether you’ll need to apply for an insolvency practitioner licence. The process for applying has not yet been determined.
In general, insolvency practitioners must not accept new insolvency engagements from 1 September 2020 without a licence.
The Act includes transitional provisions (set out in Schedule 1 ) under which existing insolvency engagements will not normally be affected. The Registrar will provide further guidance about this shortly.
Insolvency practitioner licences will be issued by accredited bodies. The Registrar will have no role in licensing decisions, and cannot issue licences directly or overrule accredited bodies’ decisions to grant or refuse a licence.
As yet, no professional bodies have been accredited or recognised, but the Registrar is working closely with the New Zealand Institute of Chartered Accountants (NZICA) (the New Zealand regulatory body of Chartered Accountants Australia and New Zealand (CA ANZ)) and the Restructuring Insolvency & Turnaround Association of New Zealand (RITANZ) and expects to make an announcement regarding accreditation shortly.
If you are an insolvency practitioner and a member of one of these professional bodies, you should contact them directly to discuss licensing requirements and timing. Transitional provisions are likely to apply if you are already an accredited member of the existing CA ANZ-NZICA-RITANZ voluntary scheme, but you will need to make contact to discuss the relevant requirements.
If you are an insolvency practitioner and not a member of one of the professional bodies, you should review the eligibility requirements set out in their rules. The current CA ANZ-NZICA-RITANZ voluntary scheme allows for insolvency practitioners that are qualified accountants to join via CA ANZ/NZICA, while non-accountants join via RITANZ. While statutory processes are still currently underway, the Registrar expects that both accountants and non-accountants will be able to obtain an insolvency practitioner licence under the new regime if they meet the relevant eligibility requirements.
How this will affect creditors, directors, shareholders – and others interested in insolvency matters
The Act is primarily focussed on insolvency practitioners. Creditors, directors, shareholders, and others with an interest in insolvency matters do not need to do anything before the new regime takes effect on 1 September 2020.
From that date, a public register of licensed insolvency practitioners will be available online. The public will be able to use this register to find a suitably licensed insolvency practitioner to act for them, or information about current insolvency practitioners.
For people involved in an existing insolvency, nothing should change immediately. The Act’s transitional provisions (these are set out in Schedule 1 ) means existing insolvency engagements may continue for at least a year.
A summary of the regulations
The Insolvency Practitioners Regulation (Amendments) Act 2019 makes a number of changes to the Companies Act 1993 and the Receiverships Act 1993 to reflect the requirements of the new regulatory regime. This includes updated requirements for liquidation, receivership and voluntary administration reports. The detail of these reports is to be prescribed in regulations.
The Companies (Reporting by Insolvency Practitioners) Regulations 2020 have now been published and will come in to force on 1 September 2020.
The reports are required to:
- provide creditors with certain information relating to an insolvency so that they can assess the likelihood that they will be repaid, and the extent of any payment they may receive;
- facilitate the Registrar’s oversight function in respect of data collection; and
- assist creditors, professional bodies and the Registrar of Companies to detect inappropriate conduct, such as potential fraud, by insolvency practitioners.
Further information about the new reporting requirements will be available shortly. This includes information about a new module to provide summary insolvency reports on the Companies Office website. Insolvency practitioners should familiarise themselves with the new reporting requirements in the Regulations.
The Insolvency Practitioners Regulations 2020 have also been published. These prescribe certain aspects of the new scheme, such as fees, the companies levy, and information that should be included and searchable on the Insolvency Practitioners Register.