‘Safe harbour’ for company directors
THE Government has responded to an increasing clamour from the business community and created a sixmonth ‘‘safe harbour’’ for directors of companies that would otherwise face insolvency as a result of the coronavirus crisis and national shutdown.
Finance Minister Grant Robertson stressed that the relief was temporary and came with significant strings that took creditors’ interests into account.
Directors will have a safe harbour protection for six months and they can opt to place existing debts into hibernation until the company can operate normally again, so long as they get at least half their creditors to agree.
The Government is also allowing the use of electronic signatures where necessary due to the Covid19 restrictions.
The Registrar of Companies will also have the power to temporarily extend deadlines imposed on companies, incorporated societies, charitable trusts and other entities under legislation.
The Government will also give temporary relief to entities that are unable to comply with requirements of their constitutions or rules because of Covid19.
‘‘These measures will support the Government’s work to cushion the economic impact for New Zealand and to support businesses and protect jobs and incomes,’’ Mr Robertson said in a statement.
‘‘We are announcing these decisions now to give businesses certainty that these measures are being worked through. We will be asking parliament to agree to make some of these changes retrospective,’’ he said.
‘‘While they will help increase certainty and provide practical assistance to business owners and directors, the changes must not be seen as a workaround for obligations to creditors and the responsibility of directors to act in good faith.’’
Mr Robertson said he wanted to ‘‘emphasise that these changes will not mean that directors are free to disregard the consequences of their actions for the next six months’’.
‘‘Other protections in the Companies Act, such as those addressing serious breaches of the duty to act in good faith and punishing those who dishonestly incur debts, will remain in place.’’
Consumer Affairs Minister Kris Faafoi said the changes would help retain jobs and support the New Zealand economy to recover as quickly as possible. — BusinessDesk