New Zealand insolvency law: The times they are a changin’
It may have been a decade in the waiting, but a new licensed insolvency practitioner regime in New Zealand could well see CPA Australia members playing far more active roles. Here’s what to expect.
Nicole North-Vanner | June 2020
CPA Australia has applied to New Zealand’s Ministry of Business, Innovation & Employment (MBIE) to become an accredited body under the Insolvency Practitioner Regulation Act 2019 (the Act).
If the application is approved, CPA Australia will be authorised to receive, consider, and determine insolvency practitioner licences, to monitor compliance with the Act, receive complaints, and discipline licence holders who breach it.
CPA Australia is perfectly placed to act as a co-regulator in this new framework and looks forward to the opportunity to promote the industry’s integrity and to enable qualified and competent CPA Australia members to provide insolvency services in New Zealand.
The framework seeks to ensure licensed insolvency practitioners have integrity, the right skills, and a good understanding of the principles and practices of corporate insolvency law. The new framework has benefits for the industry and is also in the general public’s interest.
You will need an insolvency practitioner licence if you act as:
- An administrator or deed administrator as defined in the Companies Act 1993 (s.239B)
- An insolvent company liquidator (but not a liquidator acting in respect of a solvent company)
- A receiver as defined in the Receivership Act 1993 (s.2(1))
- A trustee or provisional trustee appointed under subpart 2 of Part 5 of the Insolvency Act 2006.
However, transitional provisions may enable insolvency practitioners who have a preliminary licence to continue to work in that capacity while seeking a full licence within four months of the Act’s commencement.
The transitional provisions will also enable practitioners to continue to work as a company liquidator on matters that have already commenced for up to 12 months without a licence, and complete receivership, administration, and trustee or provisional trustee and deed of company arrangement (DOCA) engagements until the matters are resolved.
All new engagements from the commencement date will require a licence.
To obtain an insolvency practitioner licence, an applicant must demonstrate that:
- You meet the required minimum professional standards
- You are a CPA Australia member
- Have at least five years’ experience undertaking insolvency engagements, or able to satisfy experience and other competency requirements.
- Hold a public practice certificate (PPC) or equivalent and have 1000 hours of senior-level insolvency engagement experience in the past three years, or if you do not hold a PPC, at least 2000 hours of experience in the past three years at a senior level, or otherwise satisfy experience and competency requirements.
- Are a fit and proper person to hold a licence and can meet the continuing obligations of a licensed insolvency practitioner under the Act, including continual professional development and quality review participation.
Your application must also include payment, which is likely to be approximately NZ$316.25 (comprising the registrar’s licence registration fee of NZD$195.50 [GST inclusive] and the accreditation body registration fee of NZ$120.75 (GST inclusive).
Further details on the cost of licences will be available when the regulations are published in due course.
The Act will come into force on 17 June 2020, however, to allow for delays caused by the COVID-19 pandemic, legislation has been introduced to defer commencement of insolvency practitioner licensing until 1 June 2021 – albeit with a proviso for it to be enforced earlier.
Accordingly, it would be prudent to anticipate a mid-to-late 2020 commencement date.
This affords more time to determine whether an insolvency practitioner licence is required and if so, to consider eligibility criteria.
CPA Australia is currently developing a new webpage and application form and preparing a guide to the necessary procedures. Should our application to become an accreditation body be successful, access to the webpage should be available late July.
Nicole North-Vanner is a regulatory risk and compliance specialist at CPA Australia