Travel restrictions: Key legal considerations

Yesterday’s announcement of further travel restrictions, including the requirement that travellers entering New Zealand must self-isolate for a period of 14 days, heightens the challenges many New Zealand businesses are already facing. Our thoughts are with our clients at this difficult time. To provide some help in this highly dynamic environment, we have pulled together some of the key legal considerations that you might be needing to think through. For those of you working through urgent issues today, we’ve included some key contacts who can be reached today.

• Health and Safety: The government is encouraging New Zealanders to avoid non-essential travel overseas. An employer can direct and enforce compliance with the travel restrictions by employees (and customers, clients, suppliers and others who come into physical contact with employees), given obligations under the Health and Safety at Work Act. Contact Kylie Dunn or Emma Peterson, or your usual Russell McVeagh contact, for further assistance.
   
• Employment: Employees who are well but have to self-isolate should work from home or be on discretionary leave (which should be paid, unless there are special circumstances, like travel with knowledge of the restrictions). Early communication with your workforce before their first period of work after midnight Sunday will be important. See our briefing here. Contact Kylie Dunn or Emma Peterson for further assistance.
   
• Review key contracts: If the government restrictions make it impossible, more difficult or simply uneconomic to perform your contractual obligations, a careful review of key contracts is required. It is worth considering whether you are entitled to terminate a contract and/or give notice of a force majeure event, or if the contract has been frustrated. Conversely, it is worth considering whether any of your suppliers might have the benefit of termination or force majeure clauses. Then you will need to consider where each of those steps may lead for the parties. For further guidance see our briefing here. Contact Will Irving, Kirsten Massey, Marika Eastwick-Field or your usual Russell McVeagh contact for further assistance.
   
• Liquidity/insolvency/directors’ duties: Liquidity and asset values can change rapidly in this environment, causing contractual, cashflow and balance sheet issues for companies and those with whom they deal. Heightened vigilance by directors is necessary to ensure they can discharge their duties. High-quality information is important and expert advice should be taken. There is a range of processes to protect and restructure businesses facing insolvency in New Zealand, but early and informed action is a key risk mitigant. Contact Matt Kersey or your usual Russell McVeagh contact, for further assistance.
   
• Continuous disclosure: The events of recent times, including this weekend's announcement, require listed issuers to have a heightened focus on continuous disclosure, both in terms of material developments arising from the impact on employees, supply chains and customers, and in continually assessing internal earnings projections against its guidance or market consensus forecasts. Contact David Raudkivi or Ian Beaumont, or your usual Russell McVeagh contact, for further assistance.
   
• Shareholder meetings: Companies with annual or special shareholder meetings coming up may wish to consider holding these as virtual or hybrid meetings, including for directors attending from offshore. Given the 20 working day shareholder meeting notice period under the NZX corporate governance code, it would be wise to be prepared for further restrictions to emerge during the notice period and indicate in the notice that the meeting may become entirely virtual (constitution permitting). Contact David Raudkivi or Ian Beaumont, or your usual Russell McVeagh contact for further assistance.
• Regulators: Organisations under regulatory requirements should consider whether they remain able to meet those requirements. If not, you may need to liaise with your regulator to advise them of your plans to meet any regulatory requirements in interrupted circumstances, or impediments that may prevent you doing so. Contact Will Irving or Kirsten Massey, or your usual Russell McVeagh contact, for further assistance.
   
• Travel Insurance: Most travel insurance policies exclude cover for known pandemics, and many have had restrictions around Covid-19 since January. If travel needs to be cancelled due to the new restrictions, or if your organisation will incur increased costs of bringing staff back from overseas, you should check your travel insurance policy and talk to your insurer or broker as to the availability of cover. Contact Marika Eastwick-Field for further assistance.
   
• Business interruption insurance: Most business interruption insurance is designed to respond to physical loss of or damage to the assets of a business and is unlikely to be available to cover the impacts of something like Covid-19. Some organisations purchase additional "contingent business interruption" cover, which might respond depending on the circumstances. Again, you should check your policy and talk to your insurer or broker as to the availability of cover. Contact Marika Eastwick-Field for further assistance.

We will provide further information, including on our own response to Covid-19, and other ways we can help, this week. The Prime Minister's statement describing the current restrictions, and signalling further announcements and support measures to follow, can be read in full here.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.