Changes to Iwi Trust Structure - From the Chair

I really pleased to announce we’ve streamlined our Iwi Trust and Asset Holding Company structure.  This change will bring greater transparency and clarity to the structure.

Our old structure was difficult to understand.  We had the Iwi Trust which was an unincorporated charitable trust.  Under this structure the Iwi Trust had no separate legal entity and so the assets of the Iwi Trust had to be owned either by the Trustees individually or by a custodian company. As a result a Custodian Trustee (Ngati Mutunga o Wharekauri Custodian Trustee Limited) was used to hold our shares to the Asset Holding Company so that the ownership of the Iwi Trust assets did not need to change every time one of the Trustees changed.  It is important to remember however that the Custodian Trustee was required to act in accordance with directions from the Iwi Trust Trustees and it had no beneficial interest in the shares.  You will remember that it was made pretty clear during the consultation rounds that you wanted the Iwi Trust to be simplified hence we have now incorporated as a charitable trust board called Ngati Mutunga o Wharekauri Iwi Trust Board. The advantages of this are:

• Incorporation enhances transparency as any Trust Deed changes and other documents are required to be lodged with the Trusts and Incorporated Societies Office (in a manner similar to the Companies Office)

• The Trust Board does not need to change every time a Trustee changes and can now own assets in its own name rather than in the name of the Trustees

• The Trust Board replaces the need for a Custodian Trustee thus reducing administration costs and making the structure easier to understand.

The only asset the Custodian Trustee owned was the shares in the Asset Holding Company. Once the Trust Board was incorporated it passed a written resolution to transfer the Asset Holding Company shares from the Custodian Trustee to the Trust Board. Further resolutions were then passed to liquidate the Custodian Trustee as it is no longer required.

We’ve also transferred the shares in Motuhara Fisheries Limited, which were previously held by a Trustee on bare trust for the Iwi Trust, to the Asset Holding Company. Motuhara Fisheries was originally set up to carry out fishing activities. However Motuhara Fisheries does not hold a fishing permit, does not plan to carry out fishing activities (as defined by the Maori Fisheries Act), with its only activity being to lease ACE. Given this is also the prime activity of the Asset Holding Company there is no commercial or legal rationale to have Motuhara Fisheries operating separately to it.  Motuhara Fisheries will also be liquidated later this year once existing ACE lease arrangements have terminated. The advantages of transferring the shares in Motuhara Fisheries and ultimately liquidating it are:

• It reduces administration and duplicated governance costs of two entities

• It ensures stronger accountability with the Asset Holding Company Board being clearly responsible for the performance of the Iwi Trust quota holdings 

Given we were making the changes above we also reviewed whether there were any other legal entities which we were not using. Wharekauri Quota Holding Company, a subsidiary of the Asset Holding Company, had been set up a number of years ago to hold the settlement quota. However it has never been used as it was intended as legal advice was received that it was unnecessary to hold the quota in a subsidiary. Hence we have amalgamated this company into the Asset Holding Company. The key advantage of this is that it reduces administration costs.

We now have a much simplified structure where all the investment assets of the Iwi Trust are held by the Asset Holding Company.  At this stage there is no reason to ring fence our assets under a separate ‘commercial veil’ (an AHC subsidiary).  All we do currently is lease quota, invest in property and hold fixed term deposits.  We’ve no debt against any of our assets and no significant operating risks so there’s simply no need for subsidiaries.  If for any reason this changes in the future the Iwi Trust can always set up a separate company to carry out an activity if for governance or legal reasons it considers it wise to have a degree of separation. Thus having our assets in one company reduces admin costs and increases efficiencies. However at this stage there is no rationale and it only creates additional cost and complexity for no purpose.

 

The end result is simplicity of structure, better transparency, stronger accountability and reduced costs. 

Legal structures are never the most exciting topic but I am excited that we are moving forward and clinically delivering on the initiatives that we promised we would at last years AGMs!

I expect to be able to bring you further news on the appointment of AHC Directors and a Trust Administrator next week. 

Noho ora mai tatou

Paula Page.

For the bush lawyers of us out there I have enclosed a list of legal and tax questions with the answers which our legal and tax advisors have provided to the Iwi Trust:

So we’ve incorporated the Trust – don’t we need a Trust Deed change?

No, the Trust Deed did not need to be amended to allow for incorporation as a Trust Board.  The Trust Deed specifically provided for the Trustees to incorporate as a Trust Board.  It would be desirable if the Trust was looking to streamline the Trust Deed in general, but it’s simply not legally necessary.  Trustee’s obligations have not been altered in any way that is inconsistent with the Trust Deed.

What about the Iwi Trust’s Mandated Iwi Organistation (MIO) status?

Incorporation of the Iwi Trust does not affect this.  The mandate given was not a mandate to individual trustees.  It was a mandate for the Iwi Trust which remains the MIO and continues to hold the assets for all Ngāti Mutunga o Wharekauri. 

Does the transfer of shares in Motuhara Fisheries Limited to AHC comply with the Trust Deed and Maori Fisheries Act?

Yes!  As explained Motuhara Fisheries doesn’t hold a fishing permit nor plan to carry out fishing activities (as defined by the Maori Fisheries Act).  So there is no legal constraint to the AHC carrying out the quota leasing activities of MFL. In fact quota leasing is already the core commercial activity of AHC.

Are there any tax consequences of the changes?

No!  The charitable status of the Iwi Trust remains unchanged and there are no income tax or GST consequences.

Are there any assets remaining in the Custodian Trustee which is currently in liquidation?

No!  The only assets held were the shares in the Asset Holding Company which were transferred to Ngāti Mutunga o Wharekauri Iwi Trust Board by written resolution before the liquidator was appointed – that liquidator also approved by written resolution.  Some people have confused the companies office administration notifications with when Iwi Trust decisions were made.