COVID-19 Response (Further Management Measures) Legislation Act

3 June 2020

The COVID-19 Response (Further Management Measures) Legislation Act makes changes to the Companies Act and other related legislation to help provide relief for companies and other entities facing difficulties in complying with their statutory obligations, or obligations under their constitutions or rules, because of COVID-19.

Allow certain modifications to constitutions or rules

Entities are able to make certain modifications to their constitutions or rules (such as calling or holding meetings, rules relating to dispute resolution or waiving, suspending, deferring or reducing fees payable by members).

Section 15 of the Act outlines the provisions that may be modified, namely —

• calling or holding meetings, including for the purpose of establishing a quorum
• a method or form of voting
• giving or receiving information
• making or keeping new records
• a method or form of dispute resolution
• a method or form of disciplinary procedure
• a waiver, suspension, deferral, or reduction of fees or other amounts payable by members of the entity to the entity
• a deferral of auditing, assurance, or financial reporting or review requirements
• use of electronic means to do any matter listed in the section above
• other procedural or administrative processes.

Section 16 of the Act outlines which provisions may not be modified, namely —

• the purpose or objects of the entity
• the powers of the entity (other than a procedural or administrative power)
• the sale, transfer, or other disposition of real or personal property
• voting rights or rights to a dividend or other distribution
• the duties of the governing body or governing officers (other than a procedural or an administrative duty)
• fees or other payments (other than a waiver, suspension, deferral, or reduction of fees or other amounts payable by members of the entity to the entity)
• any matter if the modification to that matter has a material detrimental effect (direct or indirect) on the substantive rights or powers of any creditor or other person
• any matter that is prescribed by regulations
• the number or need for a quorum
• rights of access to courts, tribunals or arbrital tribunals
• any alteration or addition to the constitution or rules made by order of a court
• any other matter that is not listed above.

In order to make modifications under the act clubs must;

• keep a record of their use and the reasons why (decided by a majority of governance officers)
• as soon as is practicable after their use, make reasonable efforts to notify members of the matter
• notify the responsible Registrar or agency (or Registrars if there is more than one for a particular entity) — this does not apply to a firm or post-settlement governance entity.

The modification provisions have retrospective effect from 21 March 2020 when New Zealand moved to Level 2 of the COVID-19 alert system. All provisions apply until 30 November 2020, unless extended by an Order in Council, up to but no later than 31 March 2021.

Enable use of electronic means

The use of electronic communications where otherwise not permitted, requires that the majority of the entity’s governing officers believe in good faith that it is not reasonably practicable to carry out the task by non-electronic means. These tasks are:

• having or recording information in writing
• calling or holding meetings, including for the purpose of establishing a quorum
• voting (though there are some matters that electronic voting can’t be used for)
• giving or receiving information
• making or keeping new records
• providing access to records or information held by or on behalf of the entity
• signing any instrument
• retaining any information.

When using using electronic means as outlined above (e.g. electronic communications, electronic signatures), an entity must:

• keep a record of their use and the reasons why (decided by a majority of governance officers)
• as soon as is practicable after their use, make reasonable efforts to notify members of the matter
• notify the responsible Registrar or agency (or Registrars if there is more than one for a particular entity) — this does not apply to a firm or post-settlement governance entity.

All provisions apply until 30 November 2020, unless extended by an Order in Council, up to but no later than 31 March 2021.

Exemptions from compliance obligations

Under the exemption provisions, the responsible Registrar or Minister may grant exemptions from the following statutory obligations:

• calling or holding meetings (including procedures at meetings)
• a method or form of voting
• giving or receiving information
• making or keeping new records
• rights to inspect or access information or records
• a method or form of dispute resolution (excluding rights of access to courts)
• a method or form of disciplinary procedures
• auditing, assurance, or financial reporting or review requirements
• any other matter specified by regulations.

No exemption can dilute the number or need for a quorum.

These provisions apply until 30 November 2020, unless extended by an Order in Council, up to but no later than 31 March 2021.  Relaxing statutory deadlines falls within the exemption powers of the responsible Registrar or Minister. There is no application process, but exemptions won’t be made unless there are clear problems to resolve. Entities should contact the Registrar or agency and explain their issues.

The expectation is that this relief is temporary and entities should comply with their statutory obligations in their constitutions or rules where it’s reasonable for them to do so. Entities can use electronic communications, including electronic meetings, even if their constitutions or rules do not allow them to.

For more information visit https://is-register.companiesoffice.govt.nz/ we recommend that where clubs are unsure about the exemptions or making changes under the COVID-19 Response (Further Management Measures) Legislation Act that you contact the Societies Office directly for further guidance and advice.