COVID-19 response for companies and other business entities
The COVID-19 Response (Requirements For Entities—Modifications and Exemptions) Act 2020 was passed on 13 May 2020 under urgency and received Royal Assent on 15 May 2020.
Previously part of the omnibus COVID-19 Response (Further Management Measures) Legislation Bill before being split off, the Act contains significant changes to enable businesses and local government to more effectively manage the immediate impacts of the response to COVID-19 pandemic.
The changes to insolvency and corporate law are designed to increase the prospects of businesses surviving the COVID-19 response. These amendments include—
- adding a “business debt hibernation” regime to allow companies and other business entities affected by the pandemic to place existing debts into hibernation for up to 7 months to enter into agreements with their creditors in relation to existing debt;
- adding a temporary safe harbour from ss 135 and 136 of the Companies Act 1993 to provide relief to company directors facing insolvency because of COVID-19;
- extending statutory deadlines;
- enabling Registrars to issue exemption notices in relation to compliance with statutory obligations (such as calling or holding meetings and auditing, assurance, or financial reporting or review requirements); and
- enabling the use of electronic means (including electronic voting and the use of electronic signatures) when an entity’s constitution or rules don’t permit this.
The provisions apply to building societies, charitable trust boards, companies, credit unions, firms, friendly societies, incorporated societies, industrial and provident societies, limited partnerships, and certain Māori governance entities.
This Act comes into force on the day after the date on which it receives the Royal assent.
Source document: New Zealand Legislation
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