The Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ) has welcomed news that the Insolvency Practitioners Bill has passed into law on Wednesday, almost a decade after it was first introduced into Parliament.
The Insolvency Practitioners Regulation Bill and the Insolvency Practitioners Regulation (Amendments) Bill are designed to promote better outcomes under the corporate insolvency system – introducing tighter regulations and standards to ensure practitioners act in the best interests of creditors.
The laws will see the implementation of a robust new licensing system for insolvency practitioners, providing effective mechanisms to monitor and regulate their conduct. Practitioners will also be required to undertake continuous professional development in order to uplift the insolvency industry.
Licensing will finally bring New Zealand up to par with international standards, as well as ensuring consistency with the approach taken to other financial professions, such as auditors and financial advisors.
RITANZ is New Zealand’s independent self-regulatory body for insolvency practitioners and those working in the field of business reconstruction, turnaround and corporate and personal insolvency. The organisation has actively advocated the need for licensing in the industry and introduced self-regulation, in the absence of government regulation.
RITANZ Chair, John Fisk, strongly supports the passing of the Bills, noting they promote the importance of practitioner regulation.
“This is a significant development for our industry and one which we are supportive of, in terms of the new co-regulation and licensing for insolvency practitioners. This move by the Government means that we’ll now be on a more level playing field. We’re delighted that Parliament has responded to the need to protect the interest of creditors who have suffered financial losses.
“As an industry body which exists, in part, to restore the economic value of underperforming businesses, assist financially challenged individuals and promote the integrity of the insolvency profession, we believe this is in the best interests of our industry as well as the New Zealand public, and we therefore welcome this new development.”
The law was first introduced to Parliament in April 2010, and was parked for a number of years before being revived by Paul Goldsmith in 2013, then continued by Kris Faafoi following the change in Government.
Both Bills will be phased in over the next year, with full implementation expected by the end of June 2021.
Further details of the legislation:
- In order to carry out liquidation proceedings, insolvency practitioners must either hold a licence with an accredited body or be a lawyer, accountant or member of a recognised professional body.
- The Registrar of Companies will implement and manage the public register of licensed insolvency practitioners – and be responsible for granting accreditation for individuals or organisations to issue and administer licences.
- Under the new legislation, insolvency practitioners will be required to apply for a new licence every five years, to ensure they remain fit to carry out liquidations. Licences will be granted on the basis that applicants meet the minimum prescribed standards.
- Strict penalties will be enforced under the new licensing regime, with unlicensed individuals acting as insolvency practitioners being liable to a fine of up to NZD$75,000.
- The legislation also implements more rigid disclosure and reporting requirements, to effectively manage liquidation proceedings and practitioner appointments, ensuring there are no conflicts of interest or disclosure of misinformation.