After postponing the licensing of insolvency practitioners due to COVID-19, the licensing regime and the remaining provisions of the Insolvency Practitioners Regulation Act 2019 (IPRA) will now commence on 1 September 2020.
What has already come into force?
||Regulations to implement the legislation
|Sections 22 to 26
||Provisions enabling the Registrar of Companies to prescribe licensing and other matters
||Prescribed minimum standards, conditions, and requirements for ongoing competence for licensed insolvency practitioners were set on 23 March 2020.
|Sections 34 to 36
||Provisions relating to the accreditation of bodies and the ability for the Registrar to grant accreditation
||Prescribed minimum standards for accredited bodies were set on 23 March 2020.
|Sections 39 and 42 to 49
||Matters relating to policies, directions, and other matters relating to accredited bodies
|Sections 57 to 59
||Exemption from membership of accredited bodies for certain overseas practitioners and members of religious societies or orders
|Sections 69 to 82
||Cabinet has agreed fees for licence registration (NZ$165), annual licence confirmation (NZ$105), and an additional annual levy of NZ$1 for company registration to recover the costs of the regime - regulations to follow.
What will happen from 1 September ?
Here are the key things and deadlines you need to know about insolvency practitioner licensing.
- Accredited insolvency practitioners who are CA ANZ / RITANZ accredited will be treated as licensed insolvency practitioners when the licensing regime comes into force.
- Unaccredited insolvency practitioners will not be treated as licensed insolvency practitioners under the transitional provisions and will be unable to accept new insolvency appointments from 1 September 2020. It is therefore essential for any unaccredited insolvency practitioners who wish to continue accepting new appointments from 1 September 2020 to urgently seek accreditation.
- Unlicensed insolvency practitioners will have until 31 August 2021 (one year from commencement of the IPRA), to complete any existing insolvency assignments, otherwise they will need to retire from appointments and appoint successors who are licensed practitioners. Anybody who accepts an appointment as an insolvency practitioner without a licence will commit an offence punishable by a fine of up to NZ$75,000.
- Accredited insolvency practitioners will have until 31 December 2020 (four months from commencement of the IPRA), to apply for a licence from an accredited body (i.e. CA ANZ / RITANZ). Practitioners who apply for a licence will continue to have a temporary licence while their licence application is considered by an accredited body. Once a practitioner’s licence application is approved, they will become a fully licensed practitioner. If a practitioner’s licence application is declined, the practitioner will be prohibited from accepting any new insolvency appointments going forward and must finish any existing assignments by 31 August 2021.
- Accredited bodies will have until 31 August 2021 to determine licence applications.
- Qualified accountants and lawyers will still be able to accept appointment as liquidators of solvent companies from 1 September 2020. Nevertheless, accountants and lawyers who are unlicensed practitioners must be mindful that if it becomes apparent that a liquidation is no longer solvent, they will need to resign as liquidator immediately and appoint a successor who is a licensed insolvency practitioner.
We welcome the Government’s decision to implement the licensing regime in September. The decision to delay commencement of the regime which was originally scheduled to start on 17 June 2020 was a pragmatic decision given the uncertainty of the COVID-19 crisis. In light of the many demands the Government currently faces, it could have easily put insolvency practitioner licensing in the ‘low priority basket’ and delayed commencement of the regime until next year.
Insolvency practitioner licensing is timely and will bolster integrity and professional standards amongst insolvency practitioners, particularly as it is expected that there will be an increase in formal insolvency appointments in the coming months due to the impacts of COVID-19.