The Insolvency Practitioners Regulation Act 2019 and the Insolvency Practitioners Regulation (Amendments) Act 2019 were passed in June and introduce new regulations and duties for insolvency practitioners to come into force in stages over the next year.

The Regulations will require all practitioners to obtain a licence and meet minimum standards as set out by the Registrar of Companies. Those who are already accredited under CAANZ or RITANZ will be provisionally considered 'Licensed Practitioners' when the licensing regime comes into force by June 2020. All practitioners will then have until October 2020 to apply for a licence from an accredited body. 

If a practitioner accepts an appointment as liquidator for an insolvent company, but does not have a licence, they will be committing an offence and could be liable for a fine of up to $75,000. Additionally, if practitioners do not report serious problems about an insolvent company, including offences committed by shareholders, directors and the company itself, the practitioner could be liable for a fine of up to $10,000.

The Regulations also disqualify directors, creditors, auditors and/or receivers of the insolvent company (or a related company) from being appointed as its liquidator. An exception applies where a practitioner has only provided professional services to a company regarding solvency. 

These are just some of the changes that the Regulations are designed to make over the next year in an attempt to improve regulation of the industry. Practitioners have limited time to get up to speed with the changes to comply with the new regime.

 

DISCLAIMER: All the information published in Commercial eSpeaking, No 53 Spring 2019 is true and accurate to the best of the authors' knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Commercial eSpeaking, No 53 Spring 2019 may be reproduced with prior approval from the editor and credit given to the source.  Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: adrienne@adroite.co.nz. Ph: 029 286 3650 or 04 496 5513.