Covid relief key expiry dates for businesses in 2021
In 2020, the government introduced a raft of legislation to provide temporary relief for businesses struggling to navigate the effects of the Covid pandemic. Some relief measures, such as the safe harbour for company directors, have already expired, while others will expire this year unless they are renewed. The key expiry dates for 2021 that you should be aware of are:
- 26 March: Landlords and tenants of commercial premises who could not agree on rental arrangements during the 2020 lockdown period have until this date to access the government’s subsidised arbitration or mediation service to resolve the dispute.
- 31 March: Measures allowing companies, incorporated societies and other entities to hold meetings online and make temporary exceptions to their rules.
- 15 May: Provisions allowing for electronic signatures when signing security agreements that contain powers of attorney.
- 22 September: The requirement for landlords to give 30 working days’ notice instead of 10 working days’ notice to end a commercial lease where the tenant fails to pay rent.
- 31 October: The cut-off date for businesses to enter into the government’s business debt hibernation scheme has been extended until 31 October 2021.
The scheme allows businesses to have a month of protection from most creditors enforcing their debts, and a further six months’ protection if their creditors agree.
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A focus on syndicated farm investments
With the current low interest rate regime looking set to continue for some time, investors are increasingly looking at ways to generate a reasonable income either for their retirement or for other forms of saving.
Recently, commercial property syndicates have come back into fashion. Their popularity is based on the return that they are able to provide to investors, notwithstanding the risks inherent in that sort of investment.
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Water easements
Water is an absolute necessity for any type of farming or horticultural activity. Historically viewed as an infinite and expendable resource, water is now seen as having a finite supply and must be dealt with as a commodity. The right to access water from a source, such as a spring or well, and the right to use that water are different, but related, issues.
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Hefty consequences for getting it wrong when company was in financial distress
In September 2020, the Supreme Court released its keenly anticipated decision in the Debut Homes case[1]. This decision illustrates the risks for directors where a company is experiencing irrecoverable financial distress.
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For all overseas purchasers
It seems as though the Overseas Investment Office (OIO) has been under constant evolution over the last two years. In June, the OIO enacted a change that now requires all overseas purchasers of New Zealand business assets to submit a notification to the OIO before the transaction takes place — regardless of the asset value. This submission will allow the OIO to monitor and prevent New Zealand asset ownership being unnecessarily diluted due to stressed sales caused by unprecedented economic pressures from Covid.
Which transactions does this apply to?
Previously, ‘overseas persons’ who purchased New Zealand business assets valued under $100 million (excluding land), did not have to apply for OIO consent. Under the ‘Emergency Notification’ requirement, however, the OIO must be notified by every overseas person before purchasing any New Zealand business assets — even if the transaction holds minimal value. This includes an increase of shareholding in a business in which the overseas person already holds an interest. The requirement to submit a notification does not extend to purchases that require the consent of the OIO, as the office will already be aware, and have the opportunity to reject, those transactions.
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Remote working: the new normal
As a result of the Covid lockdown, many employees were required to work remotely, and some are continuing this arrangement.
Working remotely comes with some important considerations, particularly in terms of health and safety. If you are an employer, you should be:
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Best to sign again after lockdown to avoid later complications
During the Covid lockdown, special rules applied to the signing of some legal documents. Obviously it was, and is, not possible to have your signature witnessed by someone outside your bubble in Levels 3 and 4. So the law allowed signing over audio-visual link (AVL) and other similar arrangements. While these documents will remain valid in the future, it may be wise to have wills and enduring powers of attorney (EPAs) signed out of lockdown to avoid any time-consuming queries later on.
Many legal documents need to be signed in a particular way or before a particular person. For example, some documents such as affidavits must be signed in front of a JP or lawyer. As this was, and is, not possible during lockdown, special rules were put in place to enable people to sign documents such as wills, EPAs, affidavits and so on.
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New Privacy Act comes into force in December
The Privacy Bill is on its third reading in Parliament and will now become law on
1 December 2020. It will repeal and replace the current Privacy Act 1993, and
will update the law to reflect the continually-evolving needs of the digital age.
Why new legislation?
Your personal information is stored in many places by organisations such as businesses,
government agencies, healthcare providers, financial institutions, social network platforms and telecommunications companies (called ‘agencies’ in the new legislation).
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Clause 27.5 and inability to access premises
In the past three months, most landlords and tenants would have become more familiar with the details of their lease. In particular, most will be looking at how clause 27.5 of the Auckland District Law Society (ADLS) lease applies to the government-imposed lockdown that we have all experienced as a result of Covid-19.
A bit of background
Following the Christchurch earthquakes, landlords and tenants were not permitted access to leased properties that were inside the ‘red zone’ while investigations into the structural integrity of buildings were being undertaken. In these instances, where the property had not been totally or partially destroyed, the parties were still required to meet their full obligations under their lease even though they were unable to operate from their leased premises.
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Covid-19 can be ‘frustrating’
Covid-19, and the restrictions imposed by the government in an attempt to control it, have deeply affected our lives. However, it’s not just our social lives that have become frustrated. Some businesses and individuals have found themselves party to a contract they can no longer perform due to Covid-19 and the government restrictions. Whether it is an event scheduled during a lockdown that can no longer be held, a customer who you can no longer supply or transport goods to due to travel or border restrictions, or a service you can no longer provide, the ‘doctrine of frustration’ may be able to help.
The courts first recognised the doctrine of frustration in the 1800’s case of Taylor v Caldwell[1] where two parties had a contract to lease a music hall that burnt down before any concerts could be held. The court held that the contract was frustrated and the parties were discharged from their obligations under the contract.
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