Summary of Key Legislative changes for businesses

POSTED BY Michelle York
Rick Shera
22 June 2020

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Image is sourced from uniteforrecovery.govt.nz and is used under licence from the Crown.

We provide a summary of legislation that has been enacted or temporarily modified in response to COVID-19 with the intention of assisting businesses through the pandemic. In most cases, the temporary modifications end either immediately, or shortly after, the expiry of revocation of the Epidemic Preparedness (COVID-19) Notice 2020 (Epidemic Notice). The following therefore needs to be checked to ensure measures have not expired or been changed, but it is correct as far as we know as at 15 June 2020.

This is only a summary. Specific advice should be sought on any issue.

Measures to avoid insolvency

The COVID-19 Response Act inserts a number of changes in the Companies Act 1991 in an effort to increase the prospects of businesses surviving the COVID-19 pandemic. These include:

  • adding a “business debt hibernation” regime to allow companies and other entities to enter into agreements with their creditors in relation to existing debt; and
  • adding a safe harbour for insolvency-related directors’ duties; and
  • reducing the period of vulnerability in a liquidation from 2 years to 6 months; and
  • the inclusion of other provisions to give entities relief from statutory obligations, and obligations in their constitutions and other rules, that would be impossible, burdensome and/or impracticable to fulfil owing to the effects of COVID-19.

For further information on corporate insolvency changes to the Companies Act see our advisory here.

Bankruptcy – vulnerable transactions

Amendments made by the COVID-19 Response Act to the Insolvency Act 2006 reduce the period of vulnerability in a bankruptcy from 2 years to 6 months unless the transaction is with a related party of the bankrupt (in which case the 2 year period remains).

Modification of constitution or rules to aid compliance

The COVID-19 Response (Requirements For Entities—Modifications and Exemptions) Act 2020 permits an entity to modify certain provisions in its constitution or rules if a majority of its governing officers believe in good faith that it is not reasonably practicable to comply with those provisions as a result of COVID-19.

Tax loss carry-back

The COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 amends the Income Tax Act 1997 and Tax Administration Act 1994 to introduce a tax loss carry-back measure. The measure enables tax refunds with respect to profit years to be paid for before the loss year has finished.

Support for landlords, tenants, and mortgagors

Changes to the Property Law Act 2007 inserted by the COVID-19 Response Act:

  • extend the notice period and the period lessees must be in arrears before landlords can cancel commercial leases; and
  • extend the notice period before mortgagees can exercise certain rights under the mortgage, such as the right to sell or repossess the property.

Amendments to the Unit Titles Act 2010 inserted by the COVID-19 Response Act clarify that members can attend body corporate meetings by audio or audio-visual link.

Covid-19 Response (Urgent Management Measures) Legislation Act 2020 amends the Residential Tenancies Act 1986 by inserting a new Schedule 5 which limits the grounds on which a landlord may terminate a lease and freezing rent increases.

Foreign investment

Changes to the Overseas Investment Act 2005 introduced by the Overseas Investment (Urgent Measures) Amendment Act 2020 come into force on 16 June 2020. The changes:

  • bring forward the introduction of a “national interest test” to strategically important business assets; and
  • include the temporary application of that test to any foreign investments, regardless of dollar value, that result in more than 25 per cent ownership interest, or that increase an existing interest to – or beyond – 50 per cent, 75 per cent or 100 per cent in a New Zealand business.

The temporary application will be reviewed every 90 days and remain in place only as long as it is necessary to protect the essential interest of New Zealand while the COVID-19 pandemic and its economic aftermath continues to have a significant impact in New Zealand.

Capital raising

The Takeovers Code (Facilitation of Capital Raising in Response to Covid-19) Exemption Notice 2020 prescribes a number of exemptions which apply to eligible capital raising conducted between 10 April 2020 and 31 October 2020.

Relaxation of anti-competition laws

Changes to the Commerce Act 1986 introduced by the COVID-19 Response (Further Management Measures) Legislation Act 2020 (COVID-19 Response Act) allow the Commerce Commission to grant authorisation for agreements between businesses or individuals that are anti-competitive but are otherwise in the public interest. The Commerce Commission has released guidance on its approach to authorisation as a result of the COVID-19 Response Act. For a copy of the guidance see here.

Employment Relations

The Epidemic Preparedness (Employment Relations Act 2000 – Collective Bargaining) Immediate Modification Order 2020 modifies requirements imposed by the Employment Relations Act 2000 by extending timeframes involved in collective bargaining.

Changes to the Parental Leave and Employment Protection Act 1987 inserted by the by the COVID-19 Response Act allow workers entitled to parental leave to temporarily return to work to assist in the response to COVID-19 without being disadvantaged by losing entitlements to leave and payments.

Sharing of personal information

The Civil Defence National Emergencies (Information Sharing) Code 2013 modifies the applicable information sharing privacy principles by providing that, where the code applies, agencies are authorised in certain circumstances to collect, use or disclose personal information for certain permitted purposes related to the government response to a national emergency.

Signing and witnessing wills and powers of attorney

The Epidemic Preparedness (Wills Act 2007 – Signing and Witnessing of Wills) Immediate Modification Order modifies the requirements for signing and witnessing wills to allow a will to be signed and witnessed by audio-visual links.

The Epidemic Preparedness (Protection of Personal and Property Rights Act 1988 – Enduring Powers of Attorney) Immediate Modification Order modifies requirements imposed by the Protection of Personal and Property Rights Act 1988 and the Protection of Personal and Property Rights (Enduring Powers of Attorney Forms and Prescribed Information) Regulations 2008 to ensure that an enduring power of attorney can be created when the signatories are in different places.

Amendments introduced by the Covid-19 Response Act provide that the provisions in the Contract and Commercial Law Act 2017 relating to electronic signatures apply to security agreements containing powers of attorney.

Alert Level 1 and border controls

There are currently no orders imposing requirements on businesses in place under the COVID-19 Public Health Response Act 2020. The previous Level 2 restrictions prescribed by the Alert Level 2 Order were revoked from 11.59 pm on 8 June 2020 by the COVID-19 Public Health response (Alert Level 2) Order Revocation Order 2020.

The border restrictions put in place through a notices issued by the Director-General of Health under section 70 of the Health Ac 1956 remain in place. For up-to-date information on the Level 1 border controls see New Zealand Immigration here.

Further information

  • For the full list of legislation produced in response to COVID-19 see here.
  • For a comprehensive list prepared by the Financial Markets Authority of the regulatory initiatives that are being deferred during the COVID-19 crisis see here.

Important: This document does not constitute legal advice to any person. Please get in touch if you wish to discuss your particular circumstances.

This information was prepared as at 15 June 2020 and reflects developments as at that date.

POSTED BY Michelle York
Rick Shera
22 June 2020

VIEWED 93 TIMES

PERMALINK