The Government has announced that it will be introducing legislation to make changes to the Companies Act to help companies facing insolvency due to COVID-19 to remain viable and keep New Zealanders in jobs.
A statement from Finance Minister Grant Robertson and Commerce and Consumer Affairs Minister Kris Faafoi says the temporary changes include:
- Giving directors of companies facing significant liquidity problems because of COVID-19 a ‘safe harbour’ from insolvency duties under the Companies Act;
- Enabling businesses affected by COVID-19 to place existing debts into hibernation until they are able to start trading normally again;
- Allowing the use of electronic signatures where necessary due to COVID-19 restrictions;
- Giving the Registrar of Companies the power to temporarily extend deadlines imposed on companies, incorporated societies, charitable trusts and other entities under legislation; and
- Giving temporary relief for entities that are unable to comply with requirements in their constitutions or rules because of COVID-19.
“We are announcing these decisions now to give businesses certainty that these measures are being worked through. We will be asking Parliament to agree to make some of these changes retrospective," Mr Robertson says.
“While they will help increase certainty and provide practical assistance to business owners and directors, the changes must not be seen as a workaround for obligations to creditors and the responsibility of directors to act in good faith.
“I want to emphasise that these changes will not mean that directors are free to disregard the consequences of their actions for the next six months. Other protections in the Companies Act, such as those addressing serious breaches of the duty to act in good faith and punishing those who dishonestly incur debts, will remain in place."