A New Zealand government committee has recommended the passage of the long awaited Insolvency Practitioners Bill with some few amendments, taking into account comments in Supplementary Order Paper No 45. See this link of 20 December 2018.
A new Insolvency Practitioners Regulation Act
The Bill aims to strengthen the regulation of insolvency practitioners by introducing a licensing system. It would create a new Insolvency Practitioners Regulation Act. This would provide for the regulation of insolvency practitioners and for a licensing regime operated by accredited bodies – presumably RITANZ and CAANZ – and subject to independent oversight by the Registrar of Companies.
This has broad parallels with Australia’s Senate Committee report of 2010 which itself recommended a new authority to replace our two regulators – ASIC and AFSA – with a proposed Australian Insolvency Practitioner Authority. That did not proceed.
Assuming the bill is passed, NZ will have co-regulatory regime like that of the UK, with the professional bodies themselves authorised to license and regulate practitioners. In contrast, Australia retains government regulation, through its two regulators, ASIC and AFSA, with only minimal statutory regulation by ARITA and other ‘industry’ bodies.
Regulation of Australian and other overseas practitioners
As to regulation of overseas practitioners, SOP 45 proposed that the accredited bodies would be responsible for their regulation. It was suggested that this would be onerous for them as different jurisdictions have different rules around who can act as an insolvency practitioner. The Committee nevertheless considered that the accredited bodies should be responsible for regulating overseas practitioners, but it has proposed two changes to make the rules more workable:
One, the scope for licensing overseas practitioners should be limited to those licensed to practise in Australia or another jurisdiction recognised by the Registrar of Companies, by notice in the Gazette.
This amendment would, it is said:
• satisfy New Zealand’s obligations under the Trans-Tasman Mutual Recognition Arrangement
• permit Australian licence holders to obtain a licence in New Zealand
• provide flexibility to recognise foreign regulatory regimes where warranted.
This would also enable a limit on the jurisdictions that the Registrar could recognise to those that have a comparable licensing regime to NZ. It would also require overseas practitioners to join an accredited body in New Zealand – say RITANZ – which would ensure the same level of oversight for all practitioners.
Two, proposed new clause 22A would provide that insolvency practitioners ‘licensed’ in Australia or in a recognised jurisdiction would be able to accept an engagement in New Zealand without first being licensed there, provided they apply for a licence within 10 working days.
“We think that this amendment would allow for flexibility with very little risk because the practitioner will already have been licensed in a trusted overseas jurisdiction. This would better align the bill with trans-Tasman mutual recognition principles”.
As a variation on Australia’s very broad reporting obligations on liquidators, there would be a duty to report ‘serious problems’, not only in relation to the company but to make it clear that insolvency practitioners “must report on any offence they become aware of, even if not directly related to the company”.
Significantly, the Committee recommends that nothing in the section requires an insolvency practitioner “to take any steps to investigate whether a serious problem has arisen. These changes would narrow the scope of what needs to be reported, and confirm that insolvency practitioners are not subject to a positive duty to look for serious problems”.
More news on this in 2019.