Lee Melissa: Insolvency Practitioners Bill — First Reading 
Lee Melissa: Insolvency Practitioners Bill — First Reading 
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MELISSA LEE (National) 
: 
 It is a pleasure to rise to take a short call on the Insolvency Practitioners Bill. Having listened to all of the speakers who spoke before me there seems to be a consensus across the House. I particularly liked the turn of phrase that the Hon Shane Jones used—he congratulated the architects of the legislation. I take this opportunity to acknowledge the previous Minister of Commerce Lianne Dalziel as well as the current Minister of Commerce Simon Power. He has done a lot of work and I look forward to the tremendous amount of work that will be coming to the Commerce Committee. 
The overriding focus in the commerce portfolio is to restore confidence in our capital markets after the huge global financial crisis we have had and the collapse of many finance companies in New Zealand so that mum and dad investors in New Zealand can have that confidence back. Insolvency practitioners play a crucial role in mitigating losses to investors when a company hits difficult times. In spite of their important role insolvency practitioners are not required to be licensed or registered. That is hugely surprising to me especially when an insolvent business is wound up. Insolvency practitioners are required to demonstrate sound judgment and good negotiation skills. They need to have a knowledge of commercial law and investigative skills to quickly assess whether the financial position of a company has resulted from the company’s not having had adequate financial management systems. An understanding of the statutory obligations of company directors and of their own obligations under insolvency law is also required and when these people do not have a clue we are in big trouble. 
This bill is part of the National-led Government’s focus on improving the integrity of our financial system. The aim of the bill is to establish a negative licensing system for insolvency practitioners. Earlier speakers have also mentioned this. It gives the Registrar of Companies the power to prohibit or restrict individuals from providing corporate insolvency services. The number of bad seeds in the scheme of things is only small and to set up a licensing system whereby all practitioners have to be registered or licensed and accredited would cost practitioners thousands to operate. This cost would be passed on to people who often do not have the money to pay it. Often the insolvency practitioners take out the money first so that at the end of the day the people who are in financial trouble do not end up getting anything. 
The main change to the Companies Act 1993 applies specifically to the kinds of people who are disqualified to act as the liquidator of a company or as the administrator of a company. Apart from those who are currently disqualified I particularly like it that anyone who is a family member shareholder director auditor or receiver of the company or a related company in the 2 years immediately preceding the insolvency is disqualified. However one class of person who would normally be disqualified has been removed from this legislation—that is a person who has a continuing business relationship with a secured creditor of a company becomes eligible to be appointed as a liquidator of that company. 
The Registrar of Companies gets more powers in this bill. For anyone who in the past 5 years has failed to comply with the Act the registrar has the power either to prohibit that person from practising as an insolvency practitioner for 5 years or to make that person practise under supervision for 5 years. Anyone acting in contravention of such a decision is liable to the maximum fine of $10000. What is really good for the public is that they are able to see a list created by the companies register of the people who are struck off—people who are either restricted or prohibited from acting as insolvency practitioners. 
As I said this is a very short call as I am the last speaker. I look forward to the submissions in the Commerce Committee. I commend this bill to the House.