Post Settlement Governance Entities: A Guide
Disclaimer Statement The Crown has made this guide available solely to assist claimant groups to ensure their chosen post settlement governance entity is compliant with the Crown s governance requirements for post settlement governance entities. In particular, in making this guide available, the Crown is not providing legal or financial advice to claimant groups on how they should structure their post settlement governance arrangements, and the Crown accepts no liability in respect of any post settlement governance entity. It is solely the responsibility of the claimant group to develop a post settlement governance entity which meets that group s needs and purposes. Claimant groups must take their own professional legal and financial advice when developing and establishing their post settlement governance entity. While every endeavour has been made to ensure that the content of this guide is accurate, no liability can be accepted for any incorrect statement or omission or for changes to policies or processes outlined in this guide. ISBN: 978-0-478-324-32420-4 For more information contact: Office of Treaty Settlements DX Box SX10111 Wellington Phone 04 494 9800 or reception.ots@justice.govt.nz www.ots.govt.nz 2
Post Settlement Governance Entities: A Guide Contents Welcome 4 What is a PSGE? 4 The process 5 The Crown s governance principles and 20 questions 6 Governance entity options and template 7 PSGE development and establishment 9 Other things to think about 10 A step-by-step guide to developing a PSGE 11 The Crown s 20 questions 12 3
Welcome The goal of settlement negotiations is to agree a redress package that settles historical Treaty grievances. Setting up a post-settlement governance entity,or PSGE, is a critical part of the process. Redress can only be transferred from the Crown after a PSGE is ratified and established whether it s an on-account transfer or the final settlement package. What is a PSGE? A PSGE is the entity that receives and looks after redress received by a claimant group as part of their settlement. The entity makes decisions on how the redress is managed and how any benefits from it can be used for the benefit of all members of the claimant group. Redress can include cash, property, statutory acknowledgements, deeds of recognition and protocols with government departments and other agencies. This short guide is designed to help claimants establish their PSGE. The guide includes: Information on the Crown s founding principles for PSGEs The 20 questions that need to be considered A flow chart for each step in the process. Starting the discussions early for the PSGE can help make the whole process more efficient and cost-effective. More information Other aspects of Treaty settlement negotiations are covered in Healing the Past, Building the Future available from the Office of Treaty Settlements. 4
The Process The Crown strongly recommends early engagement on governance entity matters. Tips:»» Keep it simple»» Start thinking about the 20 questions and the PSGE early in the process Over the last 15 years the Crown has engaged with numerous mandated bodies on what an appropriate governance entity might look like. Both parties have tried to strike the balance between a structure that meets the needs of the particular claimant group, while at the same time also satisfying the Crown s governance principles.»» Involve as many members of the claimant group as possible»» Talk to OTS»» Get professional advice. Claimant Group There is now a solid base of precedent that new mandated bodies can call on when developing a PSGE. It is in the interests of both the mandated body and the Crown to consider and engage on governance matters sooner in the negotiations process, not later. Representative Transparent Accountable This will enable the Crown to provide initial and on-going feedback on whether the proposed governance entity satisfies the Crown s governance principles. The mandated body and the Crown can then work together to remedy any issues. PSGE 5
In the past most claimant groups have ratified their governance entity and settlement at the same time. However, if a mandated body negotiates to receive redress such as an on-account transfer at any time before settlement date, then the Crown requires that a governance entity is ratified and established to receive that early redress. The Crown s governance principles and 20 questions Crown s governance principles The Crown s principles for post settlement governance relate to representation, transparency and accountability. When engaging with a mandated body, the Crown will want to ensure that the proposed constitution or rules ensure that the governance entity: adequately represents all members of the claimant group has transparent decision-making and dispute resolution procedures is fully accountable to the whole claimant group provides that the beneficiaries of the settlement and the beneficiaries of the governance entity are identical when the settlement assets are transferred from the Crown to the claimant group. Ensuring that the PSGE is consistent with these principles means that the Crown is meeting its responsibility to all New Zealanders to ensure that settlement assets are managed by and for those who will rightfully benefit from the settlement. These concerns are, of course, equally important to members of the claimant group who will want to see good management of their settlement assets. The Crown will not transfer redress to a claimant group until they have a governance entity that has been considered and ratified by the members of the claimant group. 6
Crown s 20 questions The Crown s governance principles are general in nature. In practice, they need to be satisfied by the development of specific text in the constitution or rules of the proposed PSGE. To assist with this, the Crown has developed a set of 20 questions that the mandated body needs to consider, in light of the Crown s governance principles, while developing proposals for a PSGE. If the 20 questions are adequately addressed in the proposed governance entity then the Crown principles will in turn be satisfied. The Crown s 20 questions are set out on pages 12 19. Governance entity options and template The Crown urges claimant groups to seek appropriate professional advice when considering their options for a PSGE. This may include legal and other relevant professional governance-related advice. Models the Crown will not accept Certain governance entity models that have been proposed over the years are not acceptable to the Crown on the basis that they do not satisfy one or more of the Crown s governance principles. Cabinet has confirmed that the Crown will not accept the following entities: charitable trusts companies established under the Companies Act 1993 incorporated societies under the Incorporated Societies Act 1908 Māori trust boards established under the Māori Trust Boards Act 1955. 7
A model the Crown will accept private trust Over the last 15 years, the vast majority of claimant groups have found that private trusts, with subsidiary trusts or companies to manage the settlement assets, meet the principles for PSGEs. Assuming the private trust rules, or trust deed, satisfy the Crown s 20 questions, and the Crown s governance principles, the Crown considers that private trusts are acceptable governance entities for claimant communities to use for settlement purposes. Private trust template On the basis of work with many claimant groups mandated bodies over the last 15 years, all of which have now ratified governance entities, it has been possible to develop a template trust deed that is acceptable to the Crown. This draft form of the template trust deed is available on the Office of Treaty Settlements website www.ots.govt.nz The template trust deed gives mandated bodies the opportunity to consider, and if they choose, utilise it to develop a governance entity that complies with the Crown s governance requirements. Working from a template is more efficient and can save money. If the template is used, please note: The shaded text in the draft trust deed goes to the core of the Crown s governance entity principles (variation to this text will require significant further engagement with the Crown). Further text can be put forward, as long as it is consistent with the shaded text. The unshaded text is not essential but has been included by prior mandated bodies to make the trust deed better suit their needs. Such matters are optional. Claimant groups should seek appropriate professional advice when considering their options for a governance entity. 8
In any event, the Crown strongly recommends and promotes a process of early engagement on proposed governance entity matters. PSGE development and establishment Timing The Crown recommends early engagement between the mandated body and the Crown on governance entity matters. Working closely with the Crown from the start will give the Crown the opportunity to provide feedback on whether the proposed PSGE satisfies the governance principles, and how any issues can be addressed. What early engagement means will partly depend on the specific needs of the particular mandated body and its claimant group. The progress of settlement negotiations may also guide when the mandated body wants or needs to engage on governance entity matters. For example, if the Crown has agreed to provide redress in advance of the settlement, such as an on-account transfer, then a governance entity needs to be in place to receive that transfer. This will require the mandated body to plan to engage on governance matters well in advance of the transfer. At the latest, the PSGE must be ratified and established before the time legislation implementing a settlement is introduced to Parliament. Approach The Crown must have the opportunity to formally assess the proposed PSGE against the Crown s governance principles before members of the claimant group are asked to ratify the PSGE. Prior to formally filing the proposal for assessment, it is important that the mandated body has already undertaken all the necessary background work itself including seeking the views of their claimant group through relevant methods, such as hui and newsletters. 9
The Crown recommends that professional advice is sought when developing PSGE proposals. On the basis of prior experience, the Crown considers that the best approach is one of no surprises. This means that OTS should informally assess the proposed arrangements as part of a longer engagement process before the application is formally filed. Other things to think about When developing a proposed governance entity, a mandated body may need to consider and take account of a range of other issues that are not directly related to the Crown s governance principles, like tax. The mandated body also needs to consider how existing iwi entities might relate to or be associated with the PSGE. This might include more complex issues relating to the status of an existing entity that has statutory authority to deal with certain matters on behalf of an iwi, for instance a Māori trust board under the Māori Trust Boards Act 1955 or a mandated iwi organisation under the Māori Fisheries Act 2004, and how, if at all, that might relate to the proposed governance entity. If the settlement is likely to include collective redress with other iwi, that will need to be taken into account also. Professional advice can help ensure the PSGE takes all these matters into account for the claimant group. 10
A step-by-step guide to developing a PSGE Mandated body internally decides to start consideration of governance entity options. Triggers Early on-account transfer or Ahead of deed of settlement If requested Crown/OTS governance entity specialist meets with mandated body to discuss this booklet including the Crown governance entity principles and 20 questions. Mandated body considers and develops one or more governance entity options, seeking advisory and/or claimant group feedback as required. If requested Crown/OTS governance entity specialist meets with mandated body to discuss their proposed governance entity option/s and provide informal feedback. On-going informal meetings as required between Crown/OTS governance entity specialist with mandated body to further discuss and refine proposed governance entity option/s. Mandated body seeks further advisory and/or claimant group feedback as required. Mandated body formally files governance entity option with the Crown. Final formal discussions between the Crown and mandated body on the proposed governance entity and Crown approval of the same for ratification purposes. Mandated body able to proceed to ratify their governance entity with their claimant community. When To receive on-account transfer To receive settlement redress Establish PSGE 11
The Crown s 20 questions Key Words In the twenty questions: A beneficiary is a person who is entitled to benefits from a deed of settlement of historical claims between Māori claimants and the Crown. Benefits can take a range of forms, and it is up to the governance entity to make the decisions on how those benefits will be distributed. For example, scholarships, kaumatua flats, marae maintenance and health initiatives for members are various types of benefit. There could also be intangible benefits such as the increased vigour and strength of a claimant group because of an increase in the number of members who speak te reo and are integrated into their own tikanga. The governance entity is the representative, accountable and transparent body that receives and manages the settlement on behalf of the claimant group. It will: represent the claimants in regard to the settlement make decisions on how to manage any redress received in the settlement package (cash, properties and other redress) make decisions on how benefits (if any) are passed to the beneficiaries of the settlement. A member is a beneficiary who is registered with the governance entity in relation to the deed of settlement. A representative is a person who is elected to the governance entity. 12
General questions 1. What is the proposed governance entity and its structure? Briefly describe the governance entity, any bodies accountable to it (eg asset management and benefit distribution bodies) and the relationship between the governance entity and those bodies. 2. How was the proposed governance entity developed? What opportunities were there for beneficiaries of the settlement to provide input in the development of any proposals? To what extent were matters of tikanga and kawa considered in the development of the governance entity? 3. What is the relationship between the proposed new governance entity and existing entities (if any) that currently represent the claimant community? What happens to the existing entities once the new entity is established? 13
Representation questions 4. How can beneficiaries of the settlement participate in the affairs of the governance entity? Who are the beneficiaries of the settlement? Are all beneficiaries entitled to register as members? What are the benefits of registration? Are there any registration requirements? How will eligibility for registration be verified? Who makes decisions on registration and how are those decisions made? Can those decisions be appealed, and if so, how? 5. How do members have a say in who the representatives on the governance entity will be? How many representatives will there be on the governance entity? Who can be a representative? Are they chosen on iwi, marae, hapū, whānau or other group basis? How will they be chosen? How do members know when an election is due? How do members exercise their vote? 6. How often and how will the representatives change? What is the term of office for a representative? Under what circumstances (if any) can a representative be removed? 14
Accountability questions 7. What are the purposes, principles, activities, powers and duties of the governance entity and any bodies accountable to it? What are the duties and obligations of the representatives? Do the governance entity and any bodies accountable to it have to act exclusively for the benefit of beneficiaries? Who exercises control over any bodies accountable to the governance entity? 8. Which decisions will members have a say in and how? As well as having a say in who the representatives on the governance entity will be, will members have a say in any decisions made by the governance entity? What notice, quorum and other relevant provisions will there be relating to meetings of members? What voting rights do members have at hui called by the governance entity (such as the AGM)? What majority will be required to pass a resolution at a meeting of members? 9. How are decisions made by the governance entity? How often do the representatives meet? What quorum and other relevant provisions will there be relating to meetings of the governance entity? How are these meetings publicised? Can members attend those meetings? What rights do they have at those meetings? 15
10. Who will manage the redress received in the settlement? Will different bodies manage different aspects of the redress? Are the relationships between the representational, commercial and social functions of the governance entity clearly defined? Are there any limitations on management decisions to hold or use assets, for example, do any transactions require the consent of members? 11. Who will determine what benefits are made available to beneficiaries? Can the function of determining benefits be delegated by the governance entity? 12. What are the criteria for determining how benefits are allocated and distributed? Are these criteria set in the constitution of the governance entity or are the decisions left to the representatives? 16
13. How will the people managing assets and determining benefits be accountable to beneficiaries? Will there be regular hui or other reporting processes for the representatives to report to beneficiaries? What reports will beneficiaries receive? How will roles and responsibilities be separated to clearly define the limits of power that each office holder has? Are there are any limitations on liability of the representatives? Can the representatives be directors or employees of any bodies accountable to the governance entity? What would happen if a representative had a conflict of interest in a decision or transaction of the governance entity? 14. What are the rules under which the governance entity and any bodies accountable to it operate? How do members get access to the rules (trust deeds or constitutions) of the governance entity and any asset management and benefit distribution bodies? What legislation is particularly relevant to the rules (eg Companies Act 1993, Trustee Act 1956, Perpetuities Act 1964, Te Ture Whenua Māori Act 1993)? 17
15. Are there any interim governance arrangements in the period between the establishment of the governance entity and the date that the settlement assets are transferred? If so, what are they? Who will represent beneficiaries of the settlement during the interim period? What can they do? Will there be interim elections? 16. How will the structure and the rules of the governance entity and any bodies accountable to it be changed? How can the structure and the rules of the governance entity be changed? Are there any rules that cannot be changed? How can the relationships with any bodies accountable to the governance entity be changed? 17. What are the planning/monitoring/review processes for decisions of the governance entity? 18. What if members do not agree with a decision made by the governance entity? Can members call a special meeting of the governance entity? Are there dispute resolution procedures for particular issues? 18
Transparency questions 19. How often will accounts be prepared and audited? Who prepares the accounts? How is the auditor chosen? Can a representative be the auditor? Will members have access to copies of accounts? 20. Will beneficiaries receive information about decisions that affect them? How? How often? Can they get a copy of the rules of the governance entity (see question 14)? Will they get annual reports and other regular reports? Can they get minutes and resolutions of meetings of the body? Where do they get further information? 19
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