1

Guide to the Governance

of Māori Land

a comprehensive and fully referenced guide to governance structures and succession

processes for Māori land together with practical tools to assist in decision making and

information dissemination.

Presented in conjunction with maoriland.net and whenua.net

© Copyright 2012 whenua .net and maoriland.net All rights reserved.

Disclaimer

While every effort has been made to ensure the accuracy of this publication, it has been written,

edited, published, and made available strictly on the basis that its authors, editors, and publish-

ers are excluded from any liability for anything done or omitted to be done by any person in reli-

ance, whether wholly or partially, on the contents of this publication. Readers faced with specific

circumstances should refer to the full text of the Act or Acts concerned and/or seek appropriate

expert advice, and they should not rely solely on the text of this publication.

Copyright statement

[A major part of this guide has been taken from a series of booklets published by the Māori Land

Court. The hyperlinks to the references have been added.]

Publications produced by the Ministry of Justice are subject to Crown copyright protection

unless otherwise indicated. The Crown copyright protected material may be reproduced free of

charge in any format or media without requiring specific permission. This is subject to the mate-

rial being reproduced accurately and not being used in a misleading context. Where the material

is being published or issued to others, the source and copyright status must be acknowledged.

The permission to reproduce Crown copyright protected material does not extend to any mate-

rial that is identified as being the copyright of a third party. Authorisation to reproduce such ma-

terial must be obtained from the copyright holders concerned. Note: Ministry of Justice „publica-

tions‟ comprise those documents produced by the Ministry in its business as usual capacity. It

does not include documents or judgments produced by judicial/court officers.

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Table of Content – click on heading to see the relevant page.

Introduction 7

The Kaupapa 7

Te Ture Whenua Māori Act 1993 9

Background 9

Māori land owning structures 9

Succession to Mäori land 10

Definition of succession 10

Succession order 10

The Will 15

Māori incorporations 18

What is a Māori incorporation 18

Establishing a Māori incorporation 18

Land that can be included in a Māori incorporation 19

Constitutions 19

Changes to the constitution 19

Interim committee of management 19

Term of office 19

Committee of management 20

Nominations 20

Committee of management appointments 20

Term of office 20

Notifying the Māori Land Court 21

The chairperson and the secretary 21

Payments committee members 21

Committee members employed by the incorporation – conflict of interest 21

Removing a member of the committee 21

Borrowing money from the Māori incorporation 22

Quorums for a committee of management meeting 22

Māori incorporation land 22

Gifting or selling 22

Granting a lease 23

Mortgaging Māori land 23

Investment land 23

Māori incorporation shares 24

Minimum shareholding 24

Share registers 24

Shares held in a pūtea or whānau trust 24

Shareholder liability 25

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Transfer shares 25

Appointments by proxy 27

Postal voting 27

Quorums 27

Special resolution matters 28

Submitting a special resolution 28

Māori incorporation finances 29

Māori incorporation income 30

Lending and investing money 31

Dividend amounts 31

Unclaimed dividends 31

Māori Land Court duties 32

Special resolutions 32

Alienation 32

Māori Land Court powers 33

Mismanagement by a Māori incorporation member 33

Māori Land Court determination options 33

Investigating the affairs of a Māori incorporation 33

Mismanagement sanctions 34

Winding up a Māori incorporation 34

Other landowning entities 36

Trustees and trusts 36

Legal definition 36

Types of trusts 36

Setting up a trust 37

Trustees 39

Nominating a trustee 39

Number of trustees 39

Types of trustee 39

Responsible trustees 39

Custodian trustees 40

Advisory trustees 40

Trustees' Duties 40

Acquaintance with the property 40

Adherence to the trust order terms 40

Impartiality 40

Investments 41

Diligence and prudence 41

Delegation of responsibilities 41

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Act jointly 41

Act without personal profit 41

Pay the right people 41

Trust account information 41

Declare conflicts of interest 41

Regular disclosure 41

Administering the trust 42

Tax on trust income 42

Resolving problems 42

Spending trust funds for Māori community purposes 42

Amending a trust 43

New trustees 43

Terminating a trust 43

Ahu whenua trusts 43

Whenua tōpū trusts 45

Kaitiaki trusts 46

Whānau trusts 48

Pūtea trusts 49

Transferring shares in Māori Land 51

Use of vesting orders 51

Transferring shares 51

Transferring shares as a sale or a gift 51

Transferring shares to trustees 52

Transferring shares to facilitate partition 52

Selling shares 52

Information required 52

The Court hearing 53

Granting a vesting order 53

Māori incorporation shares 54

Share registers 54

Transferring Māori incorporation shares 54

Committee of management 54

Responsibility of Trustees (detailed version) 55

Trustees’ meetings 56

First trustee meeting 56

Setting trust goals 58

Professional advice 58

Ongoing trustees’ meetings 58

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Frequency 58

Giving notice 58

Quorum 58

Voting 58

Attendance 59

Beneficiaries’ meetings 59

Frequency 59

Notice 59

Quorum 60

Voting and proxies 60

Administration of a trust 60

Trustees’ authority 60

Varying the terms of a trust 61

List of current beneficiaries 61

Annual report 61

Financial accounts 61

Audit of accounts 61

Accounts payable 62

Payments to trustees 62

Income 62

Administering the trust 62

Trustee liability 62

Signing documents 63

Enforcement of obligations 63

Investments 63

Emissions Trading Scheme 64

Is entry into the ETS Alienation 65

Mäori business principles – a potential point of difference 66

Glossary 67

Chapters in progress (not in any particular order) 69

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Introduction

This Guide is available without charge via the Internet as a stand-alone document although

because of the many hyperlinks to statutes, on-line calculators and forms, it is best to read

it on a device with immediate access to the Internet. It can be downloaded and saved but

there will be a charge for this as a printable version.

It is acknowledged that the sections on Māori Incorporations, Māori Land Trusts, Trustee‟s

Duties, Share and Māori Land Transfers and Succession have been taken largely from the

booklet series by the Māori Land Court accessible from its website. The extension hyper-

links to references are unique to this Guide.

The Kaupapa

In broad terms, there are three categories of Māori land:

that with no governance structure whatsoever (an estimated 16,000 blocks, some

very small are in this category);

that with some income but not particularly well run, often with little input from Gov-

ernance and run by paid professionals (eg farm consultants, the accountant and/or

secretary, the latter frequently from the firm originally appointed by the Māori Land

Court when the entity was set up in the 1950s through to the 1970s);

that successfully operated by an entity and meeting the expectations of sharehold-

ers/beneficiaries albeit that in many cases one could be forgiven for observing that

the governance is hereditary.

The objective of this guide is primarily aimed at owners of land in the first two categories

with some thoughts and comments on aspects of the last category. This will focus on ac-

countability and compliance with the law.

The underpinning version of the legislation relating to Māori Land is Te Ture Whenua Maori

Act 1993 (it has had many predecessors). In the Preamble the following statement is

made:

Whereas the Treaty of Waitangi established the special relationship between the Maori

people and the Crown: And whereas it is desirable that the spirit of the exchange of ka-

wanatanga for the protection of rangatiratanga embodied in the Treaty of Waitangi be reaf-

firmed: And whereas it is desirable to recognise that land is a taonga tuku iho of special

significance to Maori people and, for that reason, to promote the retention of that land in the

hands of its owners, their whanau, and their hapu, and to protect wahi tapu: and to facilitate

the occupation, development, and utilisation of that land for the benefit of its owners, their

whanau, and their hapu: And whereas it is desirable to maintain a court and to establish

mechanisms to assist the Maori people to achieve the implementation of these principles.

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From this the intentions of the Act are clear yet there are some who treat it as indicative (as

to how an Incorporation in particular should be run) when it is unambiguously prescriptive,

right down to the order of the Agenda for an Annual General Meeting.

This Guide is therefore dedicated to giving those with ancestral connections to Māori land a

better understanding of the governance and management options available. This includes

access to the forms required to make the relevant applications to the Māori Land Court

(these have all been updated from 1 December 2011 with the Māori Land Court Rules 2011

coming into effect).

Before anyone has an interest in Māori land, they need to have succeeded to it from their

forebears so after a short overview about the legislative framework relating to Māori land,

the first section is about Succession, ensuring that future generations do not lose their he-

reditary connections.

Website www.whenua.net has been developed for use in conjunction with the Guide. For

example, it contains some free tools that can be used as a basis for some “back of the en-

velop” calculations.

A fundamental question relating to un-used land is the issue size and fencing. For this we

have developed a calculator that (i) converts from hectares to acres and vis versa (for those

still confused about what a hectare looks like) and (ii) gives an approximation of the perime-

ter length. These are available as a computer version or for a smartphone.

In additional to the free information and tools, there are some Excel® and JavaScript®

templates available for purchase. This includes an Excel® Cashbook and Share Register.

Note: All the references in this colour are hyperlinked either to the relevant section in a

Statute or Regulations or the reference shown.

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Te Ture Whenua Māori Act 1993

The primary Statute dealing with Māori land issues currently is Te Ture Whenua Māori Act

1993 (“the Act” in subsequent references). The Act, among other things, sets out the work-

ings of the Māori Land Court (with the administrative details set out in the latest Māori Land

Court Rules 2011). The Act also sets out the legal framework for Māori Incorporations and

land-owning Trusts.

Background

From the time the original Bill was introduced to Parliament to its final enactment was 17

years. The final Act was created entirely from SOPs (supplementary order papers). This is

evident in some of the inconsistencies and contradictions in the various parts of the Act.

The fact remains however that at the time of its introduction, very little Māori land was un-

der the operational control of its owners but rather it was leased out, usually to Pākehā les-

sees on very long leases. The structures were therefore designed primarily for passive

ownership with mechanisms for the distribution of net cash surpluses to beneficiaries or

shareholders.

The advent of ancestral land coming back into the operational control of its owners was a

fundamental change and in this writer‟s view, the legal framework options in the Act fall

short of what is required for good governance of Māori land in the 21st century. A testament

to this view and an implicit criticism of the Act is that most settlement land appears to be

coming back under General title and often held by limited liability companies, by-passing

the protections of the Act completely.

Māori land owning structures

The Act sets out the framework for a number of Māori land owning structures.

These are:

• Māori Incorporations

• Pütea Trust

• Whānau Trust

• Ahu Whenua Trust

• Whenua Topu Trust

• Kaitiaki Trust

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Succession to Mäori land

Definition of succession

Māori land is owned by either one owner or several owners. In some cases there are hun-

dreds of owners for one block or title. When an owner dies, it is important to transfer his or

her interests to whoever is entitled to receive those interests. Those people are called suc-

cessors and the process is called succession.

Successors are then entitled to make decisions about the use of that land for their benefit

and for the benefit of future generations.

When ownership lists are not kept up to date and succession does not occur, communica-

tion problems can occur among the living owners.

No one has the right to vote for the interests of a deceased person until succession has

been achieved. However, an administrator1 appointed under a grant of administration2 has

the right to vote once the shares are vested3 in the administrator.

Succession order

To legally transfer the land interests of a deceased person to successors, the Māori Land

Court issues a succession order.

Finding out if you have entitlement for succession

If a family member has died and you believe that he or she may have owned interests in

Māori land to which you may be entitled to succeed, you can find out about those interests

by:

• visiting the Māori Land Court and searching the electronic database or getting someone

to do this for you

• completing an application for a search.

This application will require the Māori Land Court staff to search the record for you. This

process is known as a Part IV search and is provided free of charge.

• searching on the maorilandonline.govt.nz.

Searching Māori Land Court records

Before starting a search, get together as much of the following information about the de-

ceased person as possible. This information will assist the Māori Land Court to determine

all land interests:

1 Someone who is given authority by the High Court to manage and administer the estate of a deceased person. When an administrator is appointed by the High Court, the court issues a grant of letters of administration (a fe-male administrator is called an administratrix). 2 A grant of administration from the High Court is generally required to enable the assets of a deceased person to

be transferred to those entitled to the assets. 3 The administrator/s are responsible for ensuring that these assets are transferred to those entitled to them.

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• all the deceased person‟s names (including maiden name, if applicable)

• the deceased person‟s brothers‟ and sisters‟ names

• the deceased person‟s parents‟ names (including the mother‟s maiden name)

• the names of anyone from whom the deceased person may have obtained interests

• the names of the lands in which the deceased person may have had interests.

Assets the Māori Land Court deals with

In most cases, succession applications can be dealt with by the Māori Land Court. The

Māori Land Court can make succession orders for:

• any interest in Māori land

• any freehold interest owned by a Māori in general land (but only on application by a per-

sonal representative4 appointed by the High Court)

• any leasehold interest in a registered cross lease5 over Māori land

• money held by the Māori Trustee (or any other agent, trustee 10, or Māori incorporation)

for the deceased derived from Māori land

• interests in Tītī Islands

• interests in the Wi Pere Trust

• ōta whakanoho (occupation order).

Assets the Māori Land Court cannot deal with

The Māori Land Court cannot make succession orders if the estate of the deceased in-

cludes:

• general land (except for property held jointly, like a joint family home, where the part-

ners are joint tenants6 )

• cash over $11,000 held by a bank or an insurance company

• significant company shares,

unless the estate is under formal administration. Māori Land Court staff will advise you to

seek legal advice to have an administrator appointed.

That administrator can then apply to the Māori Land Court for succession to any Māori land

interests to the successors.

Applying to the Māori Land Court for succession

4 An executor, administrator, or trustee of a will. 5 9 A cross lease occurs where several owners of land in one title lease out separate areas, within that title, to each other individually for house sites. A composite title is issued to each house owner, comprising: (a) the freehold share of the lessee in the whole block, and (b) the leasehold interest of the lessee in the individual site. 6 People who own the land jointly. The interests are not split between them – they are co-owners. If one owner

dies, the other joint tenant/s automatically succeeds to the interest that the deceased joint tenant held.

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You need to file an application for succession at a Māori Land Court office.

The application can include all Māori land interests in all Māori Land Court districts, includ-

ing Māori incorporation shares. You do not need to file separate applications for each dis-

trict.

There are two types of grant:

(a) Where a person dies leaving a valid will, a grant of probate may be made to the execu-

tor/s named in the will (although in rare cases, formal administration may be granted to

someone other than the named executors).

(b) Where a person dies Intestate (without a will), a grant of letters of administration is ob-

tained.

You need to include with the completed application form:

• the original death certificate or a copy certified by a notary public, a solicitor of the High

Court, a Justice of the Peace, an employee of NZ Post Ltd, a Registrar of the High

Court, District Court or Māori Land Court, or a registered medical practitioner

• the original Will or a certified copy of the Will

• the original grant of administration, if any, or a certified copy

• the application fee – the amount is shown on the application form.

A family member will need to attend the Māori Land Court hearing to answer any questions

that the Judge might have. The application may be heard in the district where the land is

situated or you may request to have the Court hearing at a location that is closer to you.

At the same time as applying for succession, you can apply to establish a whānau trust.

You need to include both applications (this streamlines the process so that you, the Court

staff, and the Judge are able to deal with the succession and the establishment of a

whānau trust at the same time).

There are some succession cases that are dealt with under previous legislation.

These are:

• when the administration of an estate was granted by the High Court before 1 July 1993,

or

• when a person died before 1 July 1994 leaving a will dated before 1 July 1993.

Entitlement to succession

Except where there is a Will, succession to Māori land and Māori incorporation shares is

dealt with as set out in section 109 of the Act as follows:

• The surviving spouse or civil union partner is entitled to an interest until he or she dies

or remarries, provided that there was no legal separation order in existence when

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his/her spouse or civil union partner died. This interest gives the spouse or civil union

partner the right to receive income7 only (rent, interest, etc.) but not the proceeds of the

sale of land or compensation for land taken for any purpose. The spouse or civil union

partner does not have to accept the life interest8. As soon as the life interest terminates,

the land interests will go to the successors outlined below. The family needs to apply to

the Registrar of the Māori Land Court for that to happen.

• Subject to any life interest (outlined above), the deceased‟s children are entitled to any

interests in equal shares. Children legally adopted into the family are included in the en-

titlement, but children legally adopted out are not.

• The interest of any child who died before the deceased will pass to that child‟s children

– and so on down the family tree.

• If the deceased had no children, his or her brothers and sisters are entitled to interests.

Any half brothers and sisters are entitled to share only in interests that the deceased

obtained from their common parent.

• If the deceased has no brothers and sisters, it will be necessary to find out where the in-

terests came from and from that whakapapa work out where the interests should go.

• In the unlikely event that no one is entitled to succeed, the Court can determine who

should succeed and, if necessary, create a trust for the deceased‟s interests.

These provisions also apply to an occupation order as if it were a beneficial interest in Māori

land, provided that the person owns a beneficial interest in the land to which the occupation

order applies and the Court is satisfied that the person should succeed to the occupation

order.

The interests of a child

When the successor is a child at the time the Māori Land Court makes the succession or-

der, the Court can also appoint a kaitiaki9 trustee to act for the child until he or she reaches

20 years of age or marries, whichever occurs sooner.

Whāngai

The Act permits the inclusion of whāngai10 in succession and gives the Court the power to

determine the extent of that person‟s share. The family may want to include whāngai, but

only to a limited extent, and the Māori Land Court can respect that wish. The Māori Land

7 Money that is derived from assets held and earnings (such as rent and interest) but not ‘purchase money’ (land converted into money). 8 A life interest (or life estate) gives a person (usually a surviving spouse) the right to receive income from the estate. That person is called the ‘life tenant’. When the life tenant dies, their right to life interest fin-ishes. Many life interests state that the life interest will terminate if the life tenant remarries. 9 A trustee or guardian. 10

A person adopted informally in terms of tikanga Māori and brought up as the adopting parent’s own child without formal adoption being concluded by any court.

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Court must be satisfied that whāngai should be included and will seek evidence from the

family about this.

Outstanding debts

The Māori Land Court is unlikely to make a succession order until any significant out-

standing debts against the deceased‟s estate are settled. If the Court were to distribute

those interests to the successors before the debts were paid, the estate would lose its abil-

ity to pay its debts. Any income from land interests may be directed to repaying debts.

Sometimes the Māori Land Court is asked by the family to direct the payment of money

held (for example, to settle the funeral account), and the Court can do this.

Selling Māori land to pay debts

The Act does not allow estate trustees to sell Māori land for the purpose of settlement of the

deceased‟s debts. However income from the land can be used to pay debts (rent, interest,

etc). The estate trustees do have the power to sell the land if the beneficiaries (of the Will)

want the land sold and if all other requirements of the Act are met.

To whom Māori land interests can be left

An owner of Māori land interests can leave those interests by will but only to those people

set out in the Act (up until 1 July 1993 there was no limitation and a person could leave his

or her interests to whomever he/she wished).

When making a will you or your solicitor should check the provisions of section 108 of the

Act but, in summary, Māori land interests or Māori incorporation shares can only be left to:

• children or descendants

• brothers and sisters (but half-brothers and half-sisters may only receive interests that

the testator11 received from their common parent)

• anyone entitled to receive interests by whakapapa

• anyone related to the testator by blood who is a member of the hapū associated with

the land

• other land owners who are members of the hapū associated with the land

• whāngai of the testator

• trustees of any of the above

• the spouse or civil union partner for life or a shorter period (usually for widowhood). The

holder of an occupation order may also leave the occupation order to any one or more

of the persons listed above, provided that the person owns a beneficial interest in the

land to which the occupation order applies and the Court approves it. If Māori land is

willed to someone who does not qualify, that part of the will is invalid. However, the rest

11

The person who makes the Will.

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of the will won‟t be affected. The Māori Land Court will determine who should succeed

to the land on the basis of law.

The Court is also able to decide that other persons who are not included in the above list be

given a life interest. These people could be a de facto spouse, a stepchild, or someone for

whom the deceased may have felt a moral obligation to make provision.

The Will

Personal representative

When a will has been left, the personal representative (executor12) usually applies to the

High Court for probate13 and then administers the estate. The personal representative is re-

sponsible for making sure that all the details in the will are finalised.

However, if the estate is small the family may decide not to seek probate from the High

Court.

Whether or not a personal representative has been appointed by the High Court, the Māori

Land Court can make succession orders where:

• the deceased died before 1 July 1993 (the will applies)

• the deceased died between 1 July 1993 and 1 July 1994 (the will applies as long as the

will was signed before 1 July 1993)

• the deceased died after 1 July 1993 and the will was signed after 1 July 1993 (the will

applies only if it complies with the Act).

Grant of administration made by the High Court

When the High Court has already made a grant of administration, the Māori Land Court can

hold a succession hearing. The Māori Land Court can transfer the interests directly to the

beneficiaries or, alternatively, to the personal representative, who must later seek another

court order14 in favour of the beneficiaries.

Contesting the will

If anyone wants to contest the deceased‟s will, they can make application to the High Court

or the Family Court for hearing under the Family Protection Act 1955. Notice of the applica-

tion to the High Court or the Family Court should be filed with the Māori Land Court so that

12 A person appointed to carry out certain duties under the last will of a deceased person. The deceased will have named the executor in his/her will. Appointment of the executor is confirmed by the High Court when the value of the assets is substantial, or where the type of assets require this. When an executor is confirmed by the High Court, that court issues probate in his/her favour. (If the will does not name an ex-ecutor/executrix, then the person who is appointed by the High Court to administer the estate is called an administrator/ administratrix.) 13

When the High Court confirms the appointment of an executor to administer the will of a deceased per-son, the court’s authority for that person to act is given in a grant of probate. 14

A document prepared and signed by a court, to give effect to a decision of a judge of the court.

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it will not inadvertently make any orders before the High Court or the Family Court has dealt

with the matter. Due to the cost involved, applications to the Family Court are preferable.

Any application to contest a will must be made to the High Court or Family Court within

twelve months of the grant of administration. If the application is made on behalf of a mi-

nor15 or someone under disability16, that period automatically extends to two years. The

High Court or Family Court has the power to extend either period if the estate has not been

distributed.

Māori incorporation shares

If the family wishes, the Māori Land Court can include incorporation shares in a succession

order unless:

• administration was granted before 1 July 1993

• the person died before 1 July 1994 and their will is dated before 1 July 1993.

In these cases, the family or personal representative needs to approach the incorporation

secretary directly.

Entitlement to succession

Before 1 July 1993, Māori incorporation shares were dealt with in the same way as other

personal property (such as cars and cash). Where there was no will, the surviving spouse

was usually entitled to receive non-Māori land assets, including Māori incorporation shares.

Since 1 July 1993, shares in a Māori incorporation are deemed to be interests in Māori land.

Unless exemptions apply, they are treated in the same way as Māori land interests.

Whānau trusts

A whānau trust can be set up at the time of succession. However, any person included in

the trust must consent to their interests being included in the trust. If any family members

do not consent, their interests must not be included and they will receive their shares per-

sonally. Where a member of a family is not included and does not contribute shares to the

trust, it is important that the whānau trust order does not inadvertently include that person

as a beneficiary17. Often the tüpuna named in the order is the deceased parent and the

beneficiaries are named as all the descendants of that parent. The tüpuna may still be

named but the beneficiaries must be clearly defined as excluding any family member who

had declined to contribute shares to the trust.

15

A person who has not yet reached the age of 20 and has not legally married. 16 Physical or mental disablement that, in the opinion of the court, results in a person lacking, wholly or partly, the competence to manage his/her affairs in relation to his/her property. 17

Person who benefits from a trust or estate.

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It is important that the beneficiaries of the land interests be determined first in case the

whānau trust is ever terminated. The land interests would then go directly back to those

beneficiaries of the estate who contributed shares to the whānau trust.

The Māori Trust Office

The Māori Trust Office administers many Māori land blocks and distributes money to the

owners. The Māori Land Court automatically sends a copy of all orders affecting ownership

to the Māori Trustee to keep land records up to date. Because the Māori Trustee also dis-

tributes money from Māori land, it is important that there are addresses for all successors.

Tītī Islands interests

Interests in the Tītī Islands cannot be willed. Those entitled to succeed must belong to one

or more of the following classes:

• descendants

• those related by blood to the deceased

• those legally adopted.

Wi Pere Trust interests

A beneficiary in the Wi Pere Trust who has left a will may dispose of their interests only to a

person who belongs to one or more of the following classes:

• children and remoter issue (i.e. grandchildren, great grandchildren) of the beneficiary;

• any person who would be entitled to succeed to the interest if the beneficiary died with-

out leaving a will;

• any other person who is related by blood to Wi Pere; or

• trustees of any person referred to above.

Where the beneficiary died without leaving a will, succession will be the same as for Māori

land.

In either case, however, any adopted child (or that child‟s children or grandchildren) is not

entitled to succeed to any interest in the Wi Pere Trust greater than a life interest, unless he

or she is also related by blood to Wi Pere (note that provisions of Section 2 of the Māori

Purposes Act 1991, relating to the Wi Pere Trust Estate, override the provisions of the

Adoption Act 1955).

Likewise a spouse or civil union partner of a beneficiary may also be granted a life interest

but nothing greater than that unless he or she is related by blood to Wi Pere.

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Māori incorporations

Important changes to the rules governing Māori incorporations were brought about by.

Māori incorporations constituted under earlier acts continue under the Act. The order of in-

corporation continues to operate (including any restrictions imposed by that order), but only

in accordance with the Act and the Māori Incorporations Constitution Regulations 1994. The

regulations quoted throughout this guide are contained in the Māori Incorporations Constitu-

tion Regulations 1994.

Most Māori incorporation‟s will have made alternations to the default Constitution contained

in the Regulations. Many such alterations have been made in contravention of the authority

given by the Act. (Click here to see the section on amending a Constitution.)

Because of the importance of the Constitution, every member of a committee of manage-

ment of a Māori incorporation should have a copy and be totally familiar with its contents.

What is a Māori incorporation

A Māori incorporation is a structure similar to a company albeit without the onerous respon-

sibilities for directors set out in the Companies Act 1993.

Its purpose is to facilitate and promote the use and administration of Māori freehold land18

which it holds on trust on behalf of the beneficial owners.

Māori incorporations are designed to manage whole blocks of land and are the most com-

mercial of all Māori land management structures. Whānau, Pūtea19, and Kaitiaki20 trusts can

operate under the umbrella of a Māori incorporation.

Almost anything that is legally in order can be achieved by a Māori incorporation. However,

the sale of an incorporation‟s land can be carried out only under very stringent rules. These

rules ensure that the Act‟s kaupapa is met – to promote the retention of Māori land in the

hands of its owners and their whānau and hapū21 and to facilitate the occupation, develop-

ment, and utilisation of that land for the benefit of its owners and their whānau and hapū.

Establishing a Māori incorporation

To establish a Māori incorporation, landowners need to apply to the Māori Land Court. They

need to:

• hold a meeting, in accordance with Part 9 of the Act, at which they pass a resolution to

establish a Māori incorporation; or

18

1 Land whose beneficial ownership the Māori Land Court has determined by freehold order (that is, the Court has

created a title for the land and determined the beneficial owners to that land). Freehold titles are often divided by partition order. The land retains the status of Māori land. The status of the land will continue to be Māori land unless

and until the Māori Land Court makes an order changing the status of the land. 19

Literally, a “basket”. In the context of a trust, it is the concept of several people, collectively, filling a basket by con-tributing communally with money and other assets. 20

A trustee/guardian – in this context, of a minor or person unable for any reason to fully manage his or her own af-

fairs. 21

A sub-tribe or kin group that is linked by a common ancestor.

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• have 15 percent of the total shareholding consent; and

• send an application with a copy of the minutes of the meeting to the Māori Land Court.

If the Māori Land Court is satisfied with the application, it will issue an order of incorporation

and appoint the initial committee of management.

Land that can be included in a Māori incorporation

A Māori incorporation can include one or more blocks of Māori freehold land, so long as at

least one of the blocks has more than two owners.

Once a Māori incorporation has been constituted, it can acquire any type of land – not just

Māori freehold.

Constitutions

Māori incorporations must have a constitution. The inaugural constitution for every Māori

incorporation is set out in the First Schedule to the Māori Incorporations Regulations 1994

and includes such requirements as:

• general meetings of shareholders

• voting

• committees of management

• shares.

Changes to the constitution

Section 253A of the Act and Rule 4(1)(h) of the constitution allow shareholders to alter the

constitution by putting further restrictions on the powers of the committee of management.

The shareholders cannot alter the constitution to give the Māori incorporation wider powers

than those included in the Māori Incorporations Constitution Regulations 1994. Any altera-

tion is by a special resolution (requiring 21 clear days Notice) passed by the shareholders,

as set out in the constitution.

Interim committee of management

When the Māori Land Court establishes a Māori incorporation, it will appoint an interim

committee of management.

In appointing the interim committee, the Court will consider (but will not be bound by) any

nominations made by, or on behalf of, the owners. Any committee must consist of at least

three members, and no more than seven.

Term of office

The interim committee of management‟s term of office expires after the first annual general

meeting is held. That meeting is to be held within six months after the Māori incorporation‟s

financial year ends.

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At the first annual general meeting, the shareholders must elect a new committee of man-

agement. Members of the interim committee may stand for election to the new committee of

management.

Committee of management

Nominations

Shareholders nominate and elect committee members. Nominations should be made in

writing, signed by the shareholder making the nomination, and accepted in writing by the

person nominated.

Nominations should be lodged at the registered office of the Māori incorporation at least

three clear days (ie there must be three full days between the day on which the nomination

is lodged and the day of the meeting) before the date fixed for the shareholders‟ meeting to

consider nominations.

Shareholders need to carefully choose suitable people and should ensure that the commit-

tee members have appropriate skills to protect the assets and provide a return to the

shareholders.

Committee of management appointments

Anyone can be appointed or elected to the committee of management. A member need not

be a shareholder in the Māori incorporation.

No one, though, can be appointed or continue to be a member who is or becomes:

• subject to a compulsory treatment order made under Part II of the Mental Health Act

1992

• a bankrupt who has not been discharged

• convicted of any offence punishable by imprisonment for a term of six months or more,

unless that sentence has been served.

Term of office

Members of the committee hold office for up to three years. If a vacancy occurs (because

someone dies, resigns, or is removed), the shareholders may elect a replacement. That

person will continue in office for the remainder of the term for which his or her predecessor

was appointed.

A committee member who is due to retire from the committee is automatically nominated for

re-election unless that person declines the nomination at least seven clear days before the

meeting.

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Notifying the Māori Land Court

The Act gives shareholders of Māori incorporations the freedom to elect their own commit-

tee members without requiring the Māori Land Court to confirm them. However, the Māori

incorporation must notify the Māori Land Court of new memberships.

The chairperson and the secretary

The committee of management appoints a chairperson and a secretary. The chairperson is

one of the committee‟s members; the secretary does not have to be a member.

The interim committee of management must hold its first meeting within one month after the

date of its appointment. The chairperson and secretary are appointed at this meeting. The

committee also appoints a place that will be the registered office of the Māori incorporation.

Within two weeks after this meeting, the committee must inform the Māori Land Court of:

• the name, occupation, and address of the appointed chairperson

• the name, occupation, and address of the appointed secretary

• the place appointed as the registered office of the Mäori incorporation.

The committee must review these appointments annually.

Payments committee members

Members may be entitled to receive reasonable fees and reimbursement of expenses, in-

cluding travelling costs. The shareholders will decide how much is to be paid and may es-

tablish fixed fees and expenses.

Committee members employed by the incorporation – conflict of interest

A committee member may be employed by, or make a contract22 with, the Māori incorpora-

tion. However, because of the potential for a conflict of interest, Rule 24(2) of the constitu-

tion does not allow that committee member to take part in any of the committee‟s discus-

sions or votes about the business where the conflict exists.

Committee members must declare any conflicts of interest to the committee. They should

also carefully consider their future involvement on the committee.

Removing a member of the committee

Any shareholder can apply to the Māori Land Court to remove any member or members

from the committee, provided that there are grounds for removal. Reasons to remove a

member could be that:

• the member has failed to carry out his or her duties satisfactorily

22 An agreement between two parties that is intended to be enforceable at law. Contracts are usually written, but a spoken

agreement can also be a contract.

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• the member has contravened any part of the Mā ori incorporation‟s constitution or has

acted in a manner that is not compatible with membership of the committee

• it is in the best interests of the Mā ori incorporation that the member be removed from of-

fice.

Investigating the election of members to the committee

If a shareholder is unhappy about the way an election was conducted, he or she can apply

to the Māori Land Court for an investigation.

Following its investigation, the Court may:

• confirm the appointment of the person(s)

• declare the election invalid and order a new election to be held.

There may be costs for an investigation.

Borrowing money from the Māori incorporation

Committee members may not borrow money from the Māori incorporation. The Act specifi-

cally prohibits loans to committee members.

Quorums for a committee of management meeting

A quorum23 is established by three members if the committee numbers three, four or five

members in total or by four members if the committee numbers six or seven in total. In all

cases at least three members of a committee must agree to any decision for it to be valid.

In order to facilitate the establishment of a quorum, telephone conferences are an accept-

able way to hold a committee of management meeting.

Māori incorporation land

Gifting or selling

The Māori incorporation can transfer any Māori freehold land vested24 in it provided that:

• a special resolution passed by the shareholders has agreed to it;

• shareholders owning at least 75 percent of the shares agree;

• the land is first offered to members of the preferred classes of alienees25 (primarily

members of the hapü associated with the land in terms of tikānga26 Māori);

• any transfer of land is confirmed by the Māori Land Court.

23

The minimum number of members that must be present at a meeting to make proceedings valid. 24

A change of ownership of land gives the recipient of that interest the ownership and its associated rights (land may be vested in a trustee, or shares may be vested in another person). 25

Section 4 of the Act lists the preferred classes of alienees in relation to any alienation. In considering applica-

tions relating to alienations, the Māori Land Court must be satisfied that the preferred classes of alienees have

been granted an opportunity to exercise the first right of refusal. 26

Māori custom.

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Where a transfer of land is primarily a small adjustment of boundaries, the Māori Land

Court has the power to confirm a transfer without the above points being satisfied.

If the Māori incorporation holds land that has been determined to be “investment land” in

terms of section 256 of the Act, it may gift or sell that land without restriction.

Granting a lease

The Māori incorporation can grant a lease of any land it holds, but any lease over Māori

freehold land for a term of more than 52 years must be agreed to by a resolution passed by

the shareholders owning at least 50 percent of the shares and approved by the Māori Land

Court. A copy of any lease exceeding 21 years must be submitted to the Registrar of the

Māori Land Court for noting. The Māori Land Court has no role in checking or confirming

the terms of any lease.

The Māori incorporation is not required to first offer the lease of Māori land to the preferred

classes of alienees. The Māori incorporation does not have to inform the Māori Land Court

that it is leasing investment land.

Mortgaging Māori land

Māori incorporations can mortgage Māori land unless the Māori Land Court has ordered

otherwise or the shareholders have passed a resolution that the land cannot be mortgaged.

A copy of any mortgage needs to be submitted to the Registrar of the Māori Land Court for

noting. The Court has no role in checking or confirming the terms of any mortgage.

There is a risk, however, with mortgaging Māori land. Should the Māori incorporation fail to

meet the loan repayments, the mortgagee (lender) is permitted to sell the land on the open

market without consulting the Māori incorporation or the shareholders. There is no require-

ment to refer a mortgagee sale to the Māori Land Court.

Investment land

Land acquired by the Māori incorporation after the Māori incorporation was established may

remain as investment land and be held by the Māori incorporation as general land27.

The Māori incorporation is free to buy, sell, and mortgage investment land and to generally

treat it in a businesslike way, free of restrictions imposed by the Act. The Māori incorpora-

tion may ask the Court to declare additional land to be corpus land instead of investment

land.

27

This term covers land that is not Māori land that has been alienated from the Crown and land that is no longer

Crown or Māori land and is owned by Māori.

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Māori incorporation shares

Calculating shares

When the Māori incorporation is established, the Māori Land Court will determine the total

number of Māori incorporation shares.

Where more than one block is included in the Māori incorporation, each shareholder will be

allocated a number of shares based on the value of any land interests and other net assets

that he or she has contributed to the Māori incorporation.

Minimum shareholding

The Māori incorporation may decide to set a minimum shareholding. This may affect a

shareholder who wishes to transfer only part of his or her shares to the Māori incorporation.

Gifts or transfers under section 264 below this minimum can be refused by the incorpora-

tion. The shareholder could establish a whānau trust28 with the shares.

However, the registration of a Court order cannot be refused, regardless of the number of

shares involved.

Share registers

The Māori incorporation is required to establish a share register as an official record of the

shareholders. The share register must list the names of the shareholders, the shares held

by each shareholder, and the address of each shareholder.

The secretary for the Māori incorporation will maintain the share register by noting any

share transfers or successions29 processed by the Māori Land Court. Shareholders can in-

spect the share register. The Māori incorporation may charge a fee to anyone other than a

shareholder, or his or her agent, for inspecting the share register.

Shares held in a pūtea or whānau trust

If Māori incorporation shares are held in a pūtea or whānau trust, the names of the trus-

tees30 can be entered on the share register as the owner of those shares.

The committee of management needs to know that the shares belong to the trust and that

trustees have been duly appointed by the Māori Land Court. The Māori Land Court will give

a copy of the Court orders31 to the Māori incorporation.

28

A trust in terms of section 214 of the Act where interests are held for the benefit of the descendants of a particu-

lar family member or tipüna. 29

The process of transferring the assets of a deceased person to the persons entitled to receive those assets. 30

A person bound to deal with property on behalf of the owners or beneficiaries. The trustee becomes the legal

owner when the order appointing him/her as trustee for the land is registered against the title. The beneficiaries are called the beneficial owners.

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Once the trust is entered in the share register, the trustees will receive notices of Māori in-

corporation shareholders‟ meetings. Trustees of whānau trusts vote on behalf of the benefi-

ciaries32 of those shares. Trustees of pūtea trusts do not have the power to vote. Voting for

pūtea trusts is carried out by the owners who contributed shares to the trust.

Share certificates

On request, the Māori incorporation can provide to any shareholder a share certificate that

shows the number of shares held by that shareholder at the date on which the certificate is

issued.

Shareholder liability

A shareholder in a Māori incorporation cannot be held personally responsible for any liabili-

ties incurred by the Māori incorporation.

However, if the Māori incorporation is wound up with large debts, the shareholders could

lose the assets that they contributed to the Māori incorporation because those assets could

be used to offset the debts.

The shareholders should be aware that if Māori land has been mortgaged, it can be sold to

settle that mortgage.

Transfer shares

A shareholder may transfer (that is, sell, gift, or exchange) shares provided that:

• the shares to be transferred do not result in a shareholding less than any minimum set

by the Māori incorporation

• the shares are transferred to a member of the preferred classes of alienees.

The shares can be offered to the Māori incorporation as a last resort.

Shares can also be transferred from a parent to his or her children, grandchildren, or more

distant relatives. A spouse33 or civil union partner of a shareholder can acquire shares only

if he or she is a member of the preferred classes of alienees. (A spouse or civil union part-

ner may be entitled to a life interest34 should the shareholder die.)

Share transfers can be arranged directly with the Māori incorporation or by an order of the

Māori Land Court. However, the Māori Land Court only deals with Māori incorporation

share transfers where successions or trusts are concerned. The transfer of live shares is

31

A formal document, signed by a Judge or senior Court official and stamped with the Court‟s official seal, to give effect to a

decision of a Judge of the court. 32 Person(s) who benefit from a trust. 33 A legal wife or husband. 34

A life interest (or life estate) gives a person (usually a surviving spouse) the right to receive income from the es-

tate of a deceased person. That person is called the “life tenant”. When the life tenant dies, their right to l ife inter-est finishes. Many life interests state that the life interest will terminate if the life tenant remarries. The life interest does not entitle the life tenant to any other portion of the estate. It is limited to income (eg rents or interest) and

excludes capital (eg purchase money or compensation for land).

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dealt with directly by the incorporation. The requisite forms are prescribed in the Māori Land

Court Rules 2011, click here.

Succession to shares

Shares in a Māori incorporation are deemed to be shares in Māori land, and succession is

arranged in the same way as for Māori land. Where a grant of letters of administration35 or

probate36 has been issued, the executor37 may apply directly to the Māori incorporation to

transfer the deceased‟s shares to the successors38.

Whānau and pūtea trusts

If the shares are owned by a whānau trust, the trustees will receive the notice of the meet-

ing and vote for those shares. If the shares are owned by a pūtea trust, the trustees will re-

ceive the notice of the meeting, but the people who contributed the shares, not the trustees,

will vote.

General meetings of shareholders

General meetings of shareholders must be called and conducted as required in terms of the

Act and the constitution. The Māori Land Court may direct that a special meeting of share-

holders be held.

Notification of a shareholders‟ meeting

At least 14 days before the meeting, shareholders should receive written notification of any

meeting, detailing where and when the meeting will be held and what issues are to be dis-

cussed. Where a special resolution is to be discussed, the notice of the meeting must be

sent at least 21 days before the meeting.

If shareholders‟ addresses are unknown, the Māori incorporation can place a notice in local

newspapers.

Attendees

Any shareholder may attend and vote at any meeting, either personally or by a proxy39.

Where a shareholder has appointed a proxy, notification of the appointment must be lodged

at the office of the Māori incorporation at least 48 hours before the meeting takes place or

at a time allowed by the chairperson of the committee of management.

35

A grant of administration from the High Court is generally required to enable the assets of a deceased person to be transferred to those entitled to the assets. 36

When the High Court confirms the appointment of an executor to administer the will of a deceased person, the

Court‟s authority for that person to act is given in a grant of probate (see also executor). 37

A person appointed to carry out certain duties under the last will of a deceased person. The deceased will have named the executor in his/her will, and the appointment of that person is confirmed by the High Court. When an

executor is confirmed by the High Court, that Court issues probate in his/her favour. If the will does not name an executor, then the person who is appointed by the High Court to administer the estate is called an administrator. The feminine form for executor is executrix. 38

A person who receives, as of right, a share of a deceased person‟s estate. 39

The authority given by an owner of an interest in land to another person to vote on their behalf.

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Voting on resolutions

Every shareholder present in person, or by proxy, shall have one vote only (for each proxy

that they hold) for each resolution. Any resolution will be carried if a majority of the votes

are in favour of it.

Proxy voting

Where a proxy is appointed, that person is entitled to vote for the person for whom the

proxy acts (there is a sample proxy form at the back of the Regulations).

Demanding a poll

Alternatively, it can be demanded that voting is counted by way of shares. This demand can

be made by at least five people at the meeting with a right to vote, or by voters with at least

one-tenth of the total votes. This is called demanding a poll.

Appointments by proxy

The shareholder can appoint anyone as his or her proxy, with the exception of current

members of the committee of management or anyone currently nominated for election to

the committee of management. (See form template.)

Postal voting

Postal voting is only permitted if shareholders have so decided by special resolution at a

previous general meeting. If permitted, any shareholder can cast a postal vote on all, or

any, matters to be voted on at the meeting.

If postal votes are going to be accepted, the notice of the meeting must state the name of

the person who the committee of management has authorised to receive and count postal

votes at the meeting.

If no one has been authorised to receive and count the postal votes, the secretary of the

committee will be the authorised person (the authorised person‟s duties are set out in Rule

20 of the constitution).

To submit a postal vote, the shareholder is required to send a notice about how his or her

shares are to be voted to the person authorised to receive and count the votes. The notice

is to be sent to that person not less than 48 hours before the start of the meeting. (See form

template.)

Quorums

The quorum for general meetings is 20 shareholders, or the number of shareholders equal

to two-thirds of the total number of shareholders (whichever is less). Some Māori incorpora-

tions may need to pass a special resolution to vary this quorum.

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A meeting cannot be considered to have been properly constituted unless three sharehold-

ers are present in person throughout the meeting. [Attendance by a proxy-holder deems the

shareholder to be present.]

A shareholder who casts a postal vote will not be counted for the purposes of determining

the quorum.

Special resolution matters

The following matters must be dealt with by a special resolution:

• whether to include the owners of additional Māori freehold land in the Māori incorpora-

tion

• whether to amalgamate the Māori incorporation with any other Māori incorporation

• whether to transfer any Māori freehold land vested in the Māori incorporation

• whether to grant a lease, licence, or forestry right over any Māori freehold land vested in

the Māori incorporation for a term of more than 21 years

• whether to sell or make a gift of any Māori freehold land vested in the Māori incorpora-

tion (taking into account the fact that the sale or gifting of such land requires 75 percent

of the shareholders to vote in favour)

• whether to set aside any Māori incorporation property or income40 for charitable trust

purposes

• whether to restrict or prohibit the powers, rights, or privileges of members of the commit-

tee of management

• whether to alter the constitution of the Māori incorporation

• whether to wind up the Māori incorporation

• whether to support an application for a partition order, an amalgamation41 order, or an

aggregation order42

• other matters specified in the constitution as matters to be dealt with by special resolu-

tion (eg fixing a quorum for general meetings, varying to time by which committee of

management nominations have to be received by).

Submitting a special resolution

Any shareholder can submit notice of a special resolution in writing to the committee of

management.

The special resolution has to be attached to the written notice of the general meeting or of

the next available meeting of shareholders. No special resolution can be moved at any

40

Money that is derived from assets held and earnings (such as rent and interest) but not “purchase money” (land converted into money). 41

Amalgamation of titles occurs when the titles of two or more blocks of land are cancelled and a single title is is-

sued for the whole of the area. The blocks of land are no longer separate (refer to section 307 of the Act). 42 Aggregation of titles occurs when two or more separate blocks of land share a common ownership list. The titles

remain separate, but there is only one common ownership list for all the aggregated land (refer to section 308 of the Act).

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general meeting unless a notice of the resolution has been included in the notice of the

meeting.

Māori incorporation finances

Accounts

Every Māori incorporation is required to keep proper sets of accounts including full, true,

and complete financial accounts of the Māori incorporation.

The committee of management is also required to file a copy of the accounts with the Māori

Land Court in which district the land is situated within 14 days after the general meeting of

shareholders.

Informing shareholders

The committee of management should submit to a general meeting of shareholders a profit

and loss account detailing income received and expenditure incurred together with all cur-

rent financial statements and a balance sheet.

The committee of management must provide this information within 18 months of the Māori

incorporation being established and at least once every year after that.

The shareholders are allowed to inspect the accounts of the Māori incorporation. The incor-

poration may charge a fee for inspecting the accounts. Copies of accounts filed in the Māori

Land Court are available for inspection at the Court.

Auditor

An auditor must be appointed by the shareholders at each annual general meeting. The

term of office for an auditor is from the end of the meeting at which they were appointed to

the end of the next annual general meeting. A Māori incorporation does not have to appoint

an auditor if its gross revenue was $25,000 or less in its previous financial year.

An auditor must be a member of the New Zealand Society of Accountants or a member, fel-

low, or associate of an approved association of accountants constituted in some part of the

Commonwealth outside New Zealand.

Duties

At the annual general meeting, the auditor is required to report to the shareholders on the

Māori incorporation‟s accounts and should state:

• whether all the information and explanations that the auditor has required have been

provided

• whether proper sets of accounts have been kept by the Māori incorporation

• whether:

i) the balance sheet is properly drawn up and gives a true and fair view of the state of

the Māori incorporation‟s affairs

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ii) the profit and loss account is properly drawn up and gives a true and fair view of the

results of the Māori incorporation for that financial year

iii) the share register has been duly and correctly kept.

Access to the Māori incorporation‟s records

To enable auditors to perform their duties, they have the right of access at all times to the

books and papers of the Māori incorporation.

Auditors are also entitled to any other information from the committee of management and

any other officers of the Māori incorporation as necessary.

Costs

It is the responsibility of the Māori incorporation to meet any costs incurred by the appoint-

ment of an auditor.

Share valuer

A share valuer must be appointed by the shareholders at each annual general meeting. The

term of office for a share valuer is from the end of the meeting at which they were appointed

to the end of the next annual general meeting.

A share valuer must be a member of the New Zealand Society of Accountants or a mem-

ber, fellow, or associate of an approved association of accountants constituted in some part

of the Commonwealth outside New Zealand. The auditor may also act as the share valuer.

Duties

Where required, the share valuer assesses the value of the shares in the Māori incorpora-

tion.

In assessing a fair share value, the share valuer will take into account:

• any change in the current market value of the Māori incorporation‟s assets since the last

balance date

• any money paid to the shareholders since the last balance date

• the estimated financial results of the Māori incorporation for the current financial year

• anything else that might affect the equity value of the Māori incorporation.

Costs

It is the responsibility of the Māori incorporation to meet any costs incurred by the appoint-

ment of a share valuer.

Māori incorporation income

Spending income

There are four areas in which Māori incorporation income can be spent. These are:

• to meet any costs that the Māori incorporation incurs, including any capital works or

capital investment

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• setting aside cash reserves

• payment of dividends to shareholders

• as authorised by a resolution of the shareholders for the purposes specified in the reso-

lution. [This includes any Kaumatua grants although because they are age related, their

legality under the Human Rights Act is debateable.]

Lending and investing money

Committees of Māori incorporations are bound to exercise diligence, prudence, and care in

dealing with shareholders‟ funds. The Act has a specific ban against Māori incorporations

lending money to members of its committee of management.

Dividend amounts

The amount that can be paid as a dividend is recommended by the committee of manage-

ment and passed by resolution of shareholders.

In setting aside an amount for paying a dividend, the committee of management must en-

sure that adequate provision has been made for meeting costs incurred by the Māori incor-

poration, for setting aside cash reserves, and for meeting unclaimed dividends. Please note

that dividends are paid only from the Māori incorporation‟s profits (including accumulated

profits and realised capital profits).

Unclaimed dividends

Dividends become unclaimed after they have been held by the Māori incorporation for ten

years without being claimed by the shareholder or by anyone else entitled to them.

Within twelve months after dividends becoming unclaimed, the Māori incorporation must

compile a list of shareholders to whom the unclaimed dividends are payable, showing the

amount of dividend payable. That list must be sent to the Māori Land Court. The Māori

Land Court will include this list in the register of Māori incorporations and have the list

available for public inspection.

If, within twelve months after the list has been included in the register of Māori incorpora-

tions, no claim has been lodged for unclaimed dividends, the committee of management

may authorise the transfer of those dividends to the Māori incorporation absolutely, and

they may be used as if they were income derived from the operations of the Māori incorpo-

ration.

If a shareholder at any time legally establishes a right to unclaimed dividends, the amount

claimed is payable by the Māori incorporation to the shareholder. Māori incorporations are

not bound to pay interest on unclaimed dividends.

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Māori Land Court duties

Register of Māori incorporations

Each Māori Land Court office is required to maintain a register of Māori incorporations

within its district. The register is available for inspection. The Māori Land Court may charge

a fee for inspecting the Māori incorporations register.

The register must include:

• the name of the Māori incorporation and the date of the court order establishing the

Māori i incorporation

• the name, or description of, and the area of the lands vested in the Māori incorporation

• the names, occupations, and addresses of the members of the committee of manage-

ment, the chairperson, and the secretary of the committee

• the location of the office of the Māori incorporation

• any orders made in relation to the Māori incorporation

• the date that the annual accounts are filed in the Māori Land Court

• all lists of unclaimed dividends

• all special resolutions.

Special resolutions

When a special resolution is made at a shareholders‟ meeting, the secretary is required,

within 21 days after the meeting, to send a copy of the special resolution and details of the

date and place of the meeting to the Māori Land Court.

Alienation

The Māori Land Court will also include in its title43 records, any alienation44 that it has noted

in terms of section 150B(3) of the Act.

Accounts

The Māori Land Court is required to make Māori incorporation accounts available for public

inspection, and it may charge a fee for this service.

43

The legal ownership of property and the legal evidence of a person‟s ownership rights. 44 Alienation is when landowners grant certain rights of their land to another person. For example, selling land gives the new

owner the ownership rights; leasing land gives the lessee a limited right to occupy land in return for payment of rent (and other

conditions); mortgaging land gives the mortgagee the right to sell the land if the mortgage is not repaid (refer to section 4 of the Act).

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Māori Land Court powers

Mismanagement by a Māori incorporation member

The Māori Land Court has the power to require any member of a Māori incorporation to ap-

pear in Court to explain any of the following:

• failure to file a list of unclaimed dividends with the Māori Land Court

• failure to keep accounts

• failure to submit a balance sheet, profit and loss account, and any other relevant docu-

mentation to shareholders at a general meeting

• failure to file a balance sheet and other documents with the Māori Land Court

• failure to appoint an auditor

• failure to send a copy of special resolutions to the Māori Land Court

• failure to keep a share register

• failure to hold annual general meetings of shareholders

• failure to disclose a conflict of interest

• making payments from the funds of the Māori incorporation that are not authorised.

Māori Land Court determination options

If the Court is not satisfied with the explanations provided, it may:

• remove any member of the committee of management or the secretary of the Māori in-

corporation

• suspend the powers of the members of the committee of management and appoint

someone more competent to exercise all the powers of the committee

• impose restrictions on, conditions on, or exceptions to the powers of the Māori incorpo-

ration

• give directions for operating the Māori incorporation

• suspend all or any provisions of the constitution of the Māori incorporation

• order the winding up of the Māori incorporation

• refer any matters to the Attorney-General to consider whether prosecution should com-

mence.

The Court can exercise these powers as it sees fit and for any period of time it considers

appropriate.

Investigating the affairs of a Māori incorporation

An investigation of the Māori incorporation can be requested:

• on application to the Māori Land Court by shareholders who together own at least one-

tenth of the shares; or

• by a special resolution passed at a general meeting of the shareholders.

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Investigator

The Court will appoint the investigator (also referred to as the “examining officer”).

Costs

There are costs associated with requesting an investigation. The Māori Land Court, before

appointing an investigator, may require the applicant to pay a deposit for security of costs

for the investigation.

During, or on completion of, the investigation, the Court may make an order for the payment

of a reasonable sum to meet the costs of the investigation. The Court will decide which

party has to pay.

During an investigation

The committee of management will be required to:

• produce all books and papers relating to the investigation and give all assistance they

can to the investigator

• provide explanations, at the direction of the Māori Land Court, on anything referred to in

any report of the investigator.

If the committee does not comply with any request from the investigator, the Māori Land

Court can enquire further and hear any witnesses concerning the matter.

The Court may hold any committee member guilty of contempt of court if they refuse to co-

operate.

Inquiry into the investigator‟s report

After the Māori Land Court considers the investigator‟s report, the Court may decide to hear

the matter in open court. It will issue directions for serving notice of the Court sitting and

any other matters to be dealt with.

Mismanagement sanctions

If it is found that there have been episodes of mismanagement in the operations of the

Māori incorporation, the Court may take any of the actions listed above.

Committee of management vacancies

If any members of the committee are removed following an investigation, the Court may:

• order an election to fill the vacancy/vacancies

• fill the vacancy/vacancies with any qualified person

• order that the vacancies remain unfilled pending a further order by the Court.

Winding up a Māori incorporation

Reasons to wind up a Māori incorporation

A Māori incorporation can be wound up for any of the following reasons:

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• upon an investigation of the operation of the Māori incorporation

• by a special resolution, passed by the shareholders at a general meeting, recommend-

ing that the Māori incorporation be wound up

• if the committee of management has not filed the annual reports (including the balance

sheet and other documents) with the Court

• if the number of shareholders in the Māori incorporation is reduced to below two

• if the Māori incorporation cannot pay its debts

• in the opinion of the Court, it is just and fair that the Māori incorporation be wound up.

When a Māori incorporation is wound up

On winding up a Māori incorporation, the Māori Land Court will appoint a liquidator. The au-

thority of the committee of management will cease, and the liquidator will have the powers

to manage the Māori incorporation and sign documents.

Liquidator - Duties

Depending on the Court‟s directions, the liquidator can sell or otherwise dispose of the as-

sets of the Māori incorporation other than Māori freehold land (investment land can be

sold). Any proceeds from the sale of the assets will be held by the liquidator pending further

orders from the Court.

The liquidator may, with the permission of the Court, also lease any Māori freehold land

vested in the Māori incorporation for a period not exceeding seven years, including any

terms of renewal, on any conditions and at a rental that the liquidator sees fit.

When the liquidator has wound up the Māori incorporation, he or she must file in the Māori

Land Court a full statement of account about the winding up of the Māori incorporation.

If the Court is satisfied that the Māori incorporation has been wound up properly, it will issue

an order dissolving the Māori incorporation.

Payment

The Court may set the liquidator‟s payment rate. The costs will be met from the income and

assets of the Māori incorporation.

Vesting the land

If the land has not been sold, the Court will make an order vesting the land in the people

who are beneficially entitled. They will usually be the Māori incorporation‟s shareholders.

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Other landowning entities

The kaupapa of the Act is to promote the retention of Māori land in the hands of its owners

and their whānau and hapū and to facilitate the occupation, development, and utilisation of

that land for the benefit of its owners and their whānau and hapū.

The Māori Land Court deals with applications for new trusts, replacement trustees, varia-

tions to trusts, reviews of trusts and formal complaints. The Māori Land Court also receives

trust reports and financial accounts. It does not administer trusts.

Trustees and trusts

A trustee is someone who has been given the legal responsibility of looking after someone

else‟s assets and liabilities for that other person‟s benefit. A trust is the obligation that the

trustee has.

Legal definition

The legal definition of a trust is an equitable obligation binding a person (the trustee), to

deal with property over which he or she has control (the trust property) for the benefit of cer-

tain persons (the beneficiaries), any one of whom may enforce the obligation. The trustee

may also be a beneficiary.

Types of trusts

Under Part 12 of Te Ture Whenua Māori Act 1993, there are five types of trusts.

Ahu whenua trust

This is the most common Māori land trust. It is designed to promote the use and administra-

tion of the land in the interest of the owners. These trusts are often used for commercial

purposes.

Whenua tōpū trust

This is an iwi or hapū based trust. It is designed to facilitate the use and administration of

the land in the interest of the iwi or hapū. This type of trust is also used for receiving Crown

land as part of any settlement.

Ahu whenua and whenua tōpū trusts are land management trusts and generally involve

whole blocks of land.

Kaitiaki trust

A kaitiaki trust relates solely to an individual who is a minor or has a disability and is unable

to manage his or her affairs. This trust can include all of an individual‟s assets.

Whānau trust

This is a whānau oriented trust. It allows the whānau to bring together their Māori land inter-

ests for the benefit of the whānau and their descendants.

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Pūtea trust

A pūtea trust allows the owners of small and uneconomical interests to pool their interests

together.

Whānau and pūtea trusts are share management trusts and relate primarily to specified

shares in land rather than a whole block of land. Interests in several Māori Land Court dis-

tricts can be included in one trust.

Setting up a trust

Landowners can set up a trust by holding a meeting, nominating trustees to manage their

property interests, and then applying to the Māori Land Court (see application forms).

Except for kaitiaki trusts, the process is the same to set up each type of trust.

Holding a meeting

The owners first need to have a meeting at which they:

• agree to set up the trust

• agree which blocks of land or shares should be included in the trust

• agree to the terms of the draft trust order, which sets out the trustees‟ powers, rights,

and obligations

• nominate trustees

• take accurate minutes.

All landowners should be given sufficient notice about the meeting and sufficient opportu-

nity to consider and discuss the proposal.

The Act does not establish a quorum for meetings of landowners in a trust, although the

landowners may determine a quorum for future meetings and specify this number in the

trust order.

Māori Land Court staff

Māori Land Court staff can attend the meeting if the owners wish. Note, though, that Court

staff are not legal advisers.

Their function is to advise on the correct processes and procedures of the Court.

Applying to the Māori Land Court

After the meeting, the owners need to apply to the Māori Land Court to set up the trust.

They must provide the Court with:

• a copy of the minutes of any meeting of owners relied upon as support for the applica-

tion, and a list of those in attendance

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• details as to how notice was given in respect of any meetings at which the proposal was

considered

• a schedule of the interests (in Māori land, in general land owned by Māori, or in a Māori

incorporation) that the owners seek to have vested in the trust. In the case of a kaitiaki

trust, any general land or personal property sought to be vested in the trust must also

be included.

• a copy of the draft trust order, which has been approved by the owners

• the names of the proposed trustees and details as to the way in which they have been

selected

• the written consents of the proposed trustees

• the grounds on which the application is made

• a current search of the land transfer title of any general land included in the application

• a list of those persons who voted against the proposal or dissented or objected to it dur-

ing the course of consultation over the formation of the trust

• the fully completed application form and the application fee (which is shown on the ap-

plication form).

The applicant for any pūtea, ahu whenua or whenua tōpū trust must also give notice, as to

the time, date and place of the hearing of the application, to anyone who dissented or ob-

jected during the consultation process.

Setting up a kaitiaki trust

• Setting up a kaitiaki trust is different from setting up other trusts. The following docu-

ments need to be filed with the Māori Land Court:

• the minutes of any whānau meetings

• evidence of the person‟s disability (e.g. a doctor‟s certificate) or evidence proving that

they are a minor (such as a birth certificate)

• the consent of the person with the disability (if he or she is capable of giving it)

• the name of the nominated trustee(s) and details as to the way in which they have been

selected

• the written consent of the nominated trustee(s)

• details of any specific powers the trustee(s) may require

• details of the property to be included in the trust

• confirmation that there is no current property order45 under the Protection of Personal

and Property Rights Act 1988

45

Property orders are granted under the Protection of Personal and Property Rights Act 1988. They are designed to protect persons who are under disability, especially mental disability. Orders are granted by the High Court.

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• the fully completed application form and the application fee (which is shown on the ap-

plication form).

Trustees

Nominating a trustee

Landowners can nominate anyone to be a trustee (a trustee does not have to be a land-

owner). Each nominated trustee‟s written consent is required. It is the Court order46, not the

nomination, that appoints the trustee. The Court needs to be satisfied that the trustee is a

“worthy appointee”. It is unlikely to appoint someone who is:

• bankrupt

• imprisoned

• convicted of a crime involving dishonesty

• under mental disability

• a minor

• known to the Court to have been guilty of misconduct in the administration of a trust

• involved with a corporation that is in liquidation or no longer in business.

Landowners may nominate, for example, an individual professional person such as a solici-

tor, an accountant, or a farm consultant; a Māori Trust Board; a body corporate47; a Māori

incorporation; the Māori Trustee; the Public Trust; or a trustee company to be a trustee.

Landowners should nominate people who have the right skills to be a trustee. They should

be mindful about nominating any trustee who may have a conflict of interest.

Number of trustees

The number of trustees should be limited to a number that can effectively work together. If

too many are nominated, the Court may decline to appoint some of them.

Types of trustee

The Act recognises three types of trustee.

Responsible trustees

Responsible trustees are responsible for:

• carrying out the terms of the trust order

• administering and managing the business of the trust

• preserving the assets of the trust

• collecting and distributing the trust‟s income48.

46

A formal document, signed by a judge or senior court official and stamped with the court’s official seal, to give effect to a decision of a judge of the court. 47

A legal entity such as a company, incorporation, or Māori trust board.

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Custodian trustees

Custodian trustees are responsible for:

• gathering together and holding the assets of the trust

• investing funds

• disposing of assets

• signing documents as directed by the responsible trustees.

Custodian trustees are not responsible for administering the trust – the responsible trustees

are. The assets of the trust are vested in the custodian trustee where one is appointed.

Advisory trustees

Advisory trustees are responsible for giving advice to the responsible trustees. They are not

responsible for administering the trust. All trusts have a responsible trustee, but they do not

have to have custodian or advisory trustee(s). If there is a custodian trustee, the assets of

the trust are vested in them. If there is no custodian trustee, the assets of the trust are

vested in the responsible trustee(s). Trust assets are not vested in advisory trustees.

Trustees' Duties

Trustees are bound by the Act and the Trustee Act 1956. Their key duties are „to maximise

the assets and minimise the liabilities of the trust‟ to the best of their ability and within the

law. Their powers, rights, and obligations are set out in the trust order. Trustees must not

spend money unnecessarily or without proper authority, as this is a breach of the trust or-

der. If they do, the beneficiaries have the right to hold them personally liable for any finan-

cial loss brought about by their mismanagement. The beneficiaries can take a case to the

Māori Land Court or the High Court. The Courts regard any breach of trust as a very seri-

ous matter, and if trustees are found to be at fault, they can expect to pay for any losses

that they have caused. The duties of trustees are summarised as follows:

Acquaintance with the property

Trustees must be acquainted with the trust property and the terms of the trust. They should

keep informed of all issues affecting the trust.

Adherence to the trust order terms

Trustees must adhere to the terms of the trust as set out in the trust order.

Impartiality

Each trustee must treat all beneficiaries with the same degree of fairness. Trustees must

not be partial to, or influenced by, any one beneficiary.

48

Money that is derived from assets held and earnings (such as rent and interest) but not ‘purchase money’ (land converted into money).

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Investments

Investments must be made in terms of the trust order and in accordance with the Trustee

Act 1956 and its amendment of 1988.

The government does not guarantee investments. Trustees who invest trust funds must be

prudent when investing and seek expert financial advice.

Diligence and prudence

Trustees are required to act with the care, diligence, prudence, and good judgment that

prudent business people would exercise in managing other people‟s affairs.

Delegation of responsibilities

Trustees must not delegate their responsibilities unless the trust order clearly allows this, or

unless delegation is permitted by law. Trustees may, however, employ professionals to as-

sist the trust.

Act jointly

Trustees must work together. They must share responsibility for any wrongdoing or mis-

takes made. All trustees are accountable to the beneficiaries.

Act without personal profit

Trustees must not benefit personally from being a trustee. If the trust order permits, they

may be entitled to reasonable reimbursement for expenses they incur in carrying out their

role as trustee.

Pay the right people

Trustees must pay trust money only to the people named on the trust order. They will not

be excused for paying the wrong person, even if they mistake the intention of the trust order

or take professional advice to do so.

Trust account information

Trustees must keep full and proper accounts. Beneficiaries, or their authorised agents, may

access the accounts on request. Other information about the trust must also be made

available to the beneficiaries upon request.

Declare conflicts of interest

Trustees should avoid, if possible, any situation where a conflict of interest might arise.

Where it cannot be avoided, the trustee‟s interest must be declared, and that trustee should

not take part in negotiations or decision making.

Regular disclosure

Trustees must keep their beneficiaries regularly informed and provide full details of the fi-

nancial position and performance of the trust. They must undertake appropriate consulta-

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tion with beneficiaries on major policy issues and obtain the beneficiaries‟ consent to any

changes to the terms of the trust order.

Administering the trust

Trustees are responsible for the day-to-day running of the trust (the Māori Land Court does

not administer trusts). Trustees are appointed to ensure that the landowners‟ interests are

met, and so they should communicate regularly with the landowners. They should also

keep the Court up to date because landowners often make enquiries of the Court. Land-

owners have appointed trustees to act on their behalf and to administer their property, and

so they should allow the trustees the opportunity to operate.

Tax on trust income

Different types of taxes may apply to trusts. The trustees should discuss the trust‟s tax li-

ability with the Inland Revenue Department and with their accountant. The trust is a sepa-

rate legal entity and is required to have its own Inland Revenue Department taxpayer num-

ber.

Resolving problems

Should problems arise, the owners and trustees should try and sort out the problems them-

selves to avoid legal action. If the problems cannot be resolved, the landowners can apply

to the Māori Land Court to:

• review the terms, operation, or other aspect of the trust

• add, replace, or remove trustees

• investigate the trust

• enforce the terms of the trust

• vary the terms of the trust

• terminate the trust.

An application to the Māori Land Court needs to be filed on the relevant application form

and accompanied by the application fee, which is shown on the form. Evidence supporting

any allegations must also be filed.

Spending trust funds for Māori community purposes

Some trust funds can be spent for Māori community purposes – purposes for the promotion

of health, social, cultural and economic welfare, and educational and vocational training

within Māori communities. These purposes are fully outlined in section 218 of the Act.

Whenua tōpū and pūtea trusts allow spending only for Māori community purposes. Whānau

and ahu whenua trusts may also use funds for Māori community purposes if their trust order

allows or if the Court directs them to. The trust order will define who will benefit from Māori

community purpose funds.

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Amending a trust

The trust order may need to be varied or changed if the needs of the landowners and the

land are not being met. To make changes to the trust order, the owners should meet to de-

cide the new trust terms and then make an application to the Māori Land Court. The min-

utes of the meeting should be attached to the application. Landowners must assure the

Court that a reasonable number of them support the proposed changes (the trust order will

often indicate the proportion of owners that make up the trust‟s quorum). Landowners must

also assure the Court that the beneficial owners49 have had sufficient notice of the pro-

posed changes and have been given sufficient opportunity to discuss and consider them.

New trustees

New trustees may need to be appointed when a trustee is not re-elected, resigns, or dies.

To appoint a new trustee, the owners need to meet to agree on new trustees and then ap-

ply to the Māori Land Court to add, remove, or replace a trustee. The following documenta-

tion must be included with the application to the Court:

• a copy of the notice advertising the meeting

• the minutes of the meeting at which the owners consented to the replacement or

additional trustees

• the written consent of the nominated trustee(s)

• the resignation of a trustee or the confirmation of their death (or other evidence for

removing a trustee)

• the fully completed application form and the application fee, which is shown on the

form.

Terminating a trust

Trusts can be terminated, but different criteria apply to the different types of trusts. [See in

the relevant section.]

Ahu whenua trusts

Summary

The ahu whenua trust is the most flexible type of trust. It is a land management trust de-

signed to manage whole blocks of land and is often used for commercial purposes. It aims

to facilitate and promote the use and administration of the land in the interests of the own-

ers. It allows the trustees to conduct their business in a professional and businesslike man-

ner and at the same time provide for the cultural needs of the owners. Whānau, pūtea, and

49 The owner of a beneficial interest in land. Where land is vested in trustees, the trustees own the land as legal owners on behalf of the beneficiaries. The beneficiaries hold their individual shares in the land as beneficial own-ers.

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kaitiaki trusts can operate under the umbrella of an ahu whenua trust. Almost anything that

is legally in order can be achieved under an ahu whenua trust. However, the sale of land

can only be achieved under very stringent rules that ensure that the Act‟s kaupapa is met –

namely, to promote the retention of that land in the hands of its owners and their whānau

and hapū, and to facilitate the occupation, development, and utilisation of that land for the

benefit of its owners and their whānau and hapū. Many owners ensure that their trust order

prohibits the sale of land altogether.

The Māori Affairs Act 1953 and Te Ture Whenua Māori Act 1993

The ahu whenua trust replaces the section 438 trust created under the Māori Affairs Act

1953. Section 438 trusts that already existed when Te Ture Whenua Māori Act 1993 came

into force were renamed ahu whenua trusts. Ahu whenua trusts are established under sec-

tion 215 of the Act.

Assets required to establish a trust

Māori land or general land owned by Māori can be used to establish an Ahu Whenua trust.

The trust may involve one or more blocks of land, and is made in respect of all the shares in

the block or blocks of land.

Succession

Succession to individual shares in the block will continue.

Trust money

Trust money may be spent in any way permitted by the trust order, and this may include us-

ing the money for Māori community purposes.

Reviewing the trust

The trustees or beneficiaries of an ahu whenua trust may apply to the Māori Land Court to

review the terms, operation, or other aspects of the trust. However there can be no more

than one review of the trust within a two-year period.

Terminating the trust

The trust may be terminated on application to the Māori Land Court. The application can be

made by anyone, though it is normally made by the trustees and should follow a meeting of

the beneficial owners at which the termination was considered. When the Court terminates

the trust, the ownership of the land reverts back to the current beneficial owners of that land

or whoever the Court determines to be entitled to the land.

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Whenua tōpū trusts

Summary

The whenua tōpū trust is an iwi or hapū land management trust. It aims to facilitate the use

and administration of the land in the interests of the iwi or hapū. It has many of the features

of an ahu whenua trust. It allows the trustees to conduct their business in a professional

and businesslike manner and at the same time, provide for the cultural needs of the benefi-

ciaries.

Whānau, pūtea, and kaitiaki trusts can operate under the umbrella of a whenua tōpū trust.

Almost anything that is legally in order can be achieved under a whenua tōpū trust. How-

ever, the sale of land can be achieved only under very stringent rules that ensure that the

Act‟s kaupapa is met – namely, promoting the retention of Māori land in Māori ownership.

Many owners ensure that their trust order prohibits the sale of land altogether.

The Māori Affairs Act 1953 and Te Ture Whenua Māori Act 1993

Whenua tōpū trusts were established under section 216 of the Act. There was no equiva-

lent of a whenua tōpū trust under the Māori Affairs Act 1953.

Assets required to establish a trust and intention of the trust

Māori land or general land owned by Māori can be included to establish a whenua tōpū

trust. The trust must promote and facilitate the use and administration of the land in the in-

terests of the iwi or hapū.

Though the trust may involve one or several blocks of land, this trust is popular for receiving

Crown or local body land under section 134 of the Act, where the land becomes Māori land

upon hand-back. All shares in any block are included.

Succession

There will be no succession so long as the trust exists (although there is provision for suc-

cession to owners of large shares); the land will remain vested in the trustees. The Court

can, however, determine who the successors would be when a beneficiary dies because

this can help the trustees to maintain the whakapapa.

Beneficiaries at landowners‟ meetings

Members of the hapū or iwi named in the order are beneficiaries and are entitled to have a

say at landowners‟ meetings. Beneficiaries represent themselves or give a power of attor-

ney. Proxies may only be appointed if the trust order expressly permits.

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Trust money

The Act requires that the trust money be spent for Māori community purposes, as set out in

section 218 of the Act, or as approved by the Court for the general benefit of members of

the iwi or hapū.

Reviewing the trust

The trustees or beneficiaries of a whenua tōpū trust may apply to the Māori Land Court to

review the terms, operation or other aspect of the trust. However there can be no more than

one review of the trust within a two-year period.

Terminating the trust

Because the trust is iwi or hapū-based, it is usually intended to be permanent. However, if

the beneficiaries decide to terminate the trust, an application to do so can be made to the

Māori Land Court. The application can be made by anyone, though it is normally made by

the trustees.

Unless the beneficial ownership of the land has already been established, the Court needs

to determine the owners of the land and vest the land in those owners, or otherwise deter-

mine who would be entitled to receive the land.

Kaitiaki trusts

Summary

The kaitiaki trust is the only trust that relates solely to individuals. It is designed specifically

for minors or individuals with a disability, either physical or mental. It is not advisable for mi

nors to enter into contracts – they need to have a trustee so that their shares can be repre-

sented. If an individual‟s disability limits their ability to carry out their own business, either

partially or completely, the kaitiaki trust allows the trustee to conduct the individual‟s busi-

ness in a professional and businesslike manner and to provide for the needs of that individ-

ual.

The trustee is appointed by the Māori Land Court to properly represent the individual and

take care of his or her assets. Kaitiaki trusts can work under the umbrella of whānau, pūtea,

ahu whenua and whenua tōpū trusts, or Māori incorporations.

The Māori Affairs Act 1953 and Te Ture Whenua Māori Act 1993

The kaitiaki trust replaces the Part X trust created under section 93 of the Māori Affairs Act

1953. Part X trusts that existed when Ture Whenua Māori Act 1993 came into force were

renamed kaitiaki trusts under section 217 of the Act.

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Assets required to establish a trust

Any assets, including cars or money, can be used to establish a kaitiaki trust for any Māori

person. A non-Māori person who has shares in Māori land or has Māori incorporation

shares can also have a kaitiaki trust established. A non-Māori person cannot have a kaitiaki

trust established over general land.

A kaitiaki trust cannot be created where there is a property order in force under the Protec-

tion of Personal and Property Rights Act 1988.

Succession

Succession will continue.

Representing shares at owners‟ meetings

The trustee represents the individual at meetings.

Spending trust money

Trust money can be spent in any legal way that will benefit the individual.

Reviewing a trust

The trustee must apply to the Māori Land Court for a review within five years of the trust be-

ing established and thereafter every five years unless the Court determines otherwise. The

trustee is also required to file a trust report with the Court within 15 months after the estab-

lishment of the trust and thereafter annually. If the trustee is the Māori Trustee, reports are

needed only every three years after the initial report.

Terminating a trust

If a disabled person recovers from their disability or if a minor marries, then an application

to terminate the trust can be made to the Māori Land Court. The trustee is simply removed

from the Court record by re-vesting the shares in the beneficiary, leaving the owner to act in

his or her own right. When a minor reaches 20 years of age, the powers of the trustee

automatically cease. However the shares need to be re-vested in the beneficiary to remove

the trustee‟s ownership of the shares. If the assets remain in the name of the trustee after

the minor has turned 20 the trustee is said to be „functus officio‟ – he or she has no legal

power to deal with the assets. If there is some other disability brought to the attention of the

Court, the Court can extend the term of the trustee‟s appointment and vary the trust to re-

flect that other disability. If the owner has died, an application for succession should be

dealt with at the same time.

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Whānau trusts

Summary

The whānau trust is a share management trust designed to manage specified shares in

Māori land. It is the most family-oriented trust. It allows whānau to bring together all their in-

terests for the benefit of that whānau and their descendants. This provides the whānau with

an alternative to fragmenting their shares. The whānau may name a tüpuna in the Court or-

der. Unless stated otherwise, all the descendants of that tüpuna may benefit from the trust.

These trusts will often operate under the umbrella of an ahu whenua trust or Māori incorpo-

ration. A whānau trust is often established on succession.

The Māori Affairs Act 1953 and Te Ture Whenua Māori Act 1993

Whānau trusts were established under section 214 of Te Ture Whenua Māori Act 1993.

There was no equivalent of whānau trusts under the Māori Affairs Act 1953.

Assets required to establish a trust

Shares in Māori land, Māori incorporations, or general land owned by Māori can be in-

cluded in a whānau trust provided the owners of those shares agree. If the trust includes

the shares of an owner who has died, that owner‟s successors must all agree before the

shares can be included. If everyone doesn‟t agree, then the succession will occur and then

those successors who want the trust can vest their shares in the trust.

Succession

So long as the trust exists, there will be no succession. The land interests will remain

vested in the trustees. However, the Court can determine who the successors would be

when a beneficiary dies as this can help the trustees to maintain the whakapapa.

Representing whānau trust beneficiaries at landowners‟ meetings

The trustees represent the beneficiaries at landowners‟ meetings, but they can only act by

majority. If a majority of trustees cannot attend a meeting and vote together, the trustees do

have some options. The vote cannot be split amongst the trustees because the whānau

trust holds an individual interest in the land.

If a landowners‟ meeting is called under Part 9 of the Act, there is specific provision for

proxies to be completed. The trustee who does attend must have enough proxies from

his/her co-trustees to represent a majority of the trustees.

If the meeting is for an ahu whenua trust, there may be provision in that trust order for vot-

ing by proxy.

The whānau trust order may contain a provision for using proxies. The trustees must check

the relevant trust orders carefully.

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Trust money

The Act requires that the trust money be spent for the benefit of the beneficiaries, although

the Court may also allow for Māori community purposes. Funds do not need to be distrib-

uted to all beneficiaries. Payments can be made to particular beneficiaries who have spe-

cific needs, but the trustees must be even-handed and must not continue to make pay-

ments to one person (or family) to the exclusion of others.

Reviewing a trust

The trustees or beneficiaries of a whānau trust may apply to the Māori Land Court to review

the terms, operation or other aspect of the trust. However there can be no more than one

review of the trust within a two year period.

Terminating a trust

Beneficiaries may agree to terminate a trust or withdraw the shares that an individual has

contributed to the trust. An application can be made to the Māori Land Court to terminate

the trust. The Court will vest the shares in the original contributors or their successors. No-

tice to all the other trust beneficiaries will be required.

Pūtea trusts

Summary

A pūtea trust is a share management trust and deals with small interests that would other-

wise be uneconomic to the owners.

Pūtea trusts allow the trustees to conduct trust business so that the needs of the owners

are taken care of collectively. The name „pūtea‟ was chosen because of the concept of

people collectively filling a basket. These trusts are not designed to deal with whole blocks

of land – they deal with smaller interests within a block or within various blocks.

Pūtea trusts may be used by Māori incorporations to manage uneconomic interests. Pūtea

trusts often operate under the umbrella of an ahu whenua trust or Māori incorporation.

The Māori Affairs Act 1953 and Te Ture Whenua Māori Act 1993

Pūtea trusts were established under sections 212 and 213 the Act. There was no equivalent

of pūtea trusts under the Māori Affairs Act 1953.

The assets required to establish a trust

The trust‟s assets will be the collective interests of the participating owners of interests in

Māori land, Māori incorporations, or general land owned by Māori. Such interests can be

combined to cover the small interests in several blocks. Alternatively, a pūtea trust can be

for small interests in an individual block or an incorporation.

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The owners, whose interests are to be included in the trust, give their consent to the crea-

tion of the trust (the Māori Land Court can rule that consent is not needed, for example, if

the shares are uneconomic).

Succession

There will be no succession so long as the trust exists. The shares will remain vested in the

names of the persons entitled to them although, in practice, the name of the trust will ap-

pear in the Māori Land Court‟s ownership list. The Court can, however, determine who the

successors would be when a beneficiary dies as this can help the trustees to maintain the

whakapapa.

Representing pūtea trust beneficiaries at owners‟ meetings

At meetings for Māori land shares, the trustees represent the owners, but they can only act

by majority. The vote cannot be split among the trustees. If the meeting is called under part

9 of the Act, there is specific provision for proxies to be completed. The trustee who does

attend must have enough proxies from his/her co-trustees to represent a majority of the

trustees. The pūtea trust order may contain a provision for using proxies. The trustees must

check the relevant trust orders carefully.

At meetings for incorporation shares, the trustees get notice of the meeting, but the owners

who contributed the shares have the voting rights.

Trust money

The Act requires that trust money be spent for Māori community purposes.

Reviewing a trust

The trustees or beneficiaries of a pūtea trust may apply to the Māori Land Court to review

the terms, operation or other aspect of the trust. However there can be no more than one

review of the trust within a two-year period.

Terminating a trust

Beneficiaries may agree to terminate the trust or withdraw the shares that an individual has

contributed to it. An application can be made to the Māori Land

Court to terminate the trust.

The Court will vest the shares in the original contributors, their successors, or anyone di-

rected by the beneficial owners.

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Transferring shares in Māori Land

Use of vesting orders

Except when Māori land is vested in a Māori incorporation, Māori land shares can only be

transferred by a vesting order made by the Māori Land Court. For this reason, you must ap-

ply to the Māori Land Court for a vesting order if you want to transfer your shares to some-

one else.

If you want to sell or gift your shares, and those shares form part of Māori land vested in a

Māori incorporation, you must file a transfer application with the secretary of the Māori in-

corporation. A vesting order can be used to transfer Māori land shares:

• from one person to another on the sale or gift of the shares

• to the trustee(s) of the landowners

• from a trustee, or representative, to the person beneficially entitled to the shares

• to provide a dwelling site for an owner

• between owners to facilitate a partition of the land.

People entitled to receive Māori land shares or interests Māori land shares can only be sold

or gifted to certain people who belong to a group defined in the Act as the preferred classes

of alienees.

The Act recognises that blocks of Māori land are generally owned by people connected to

each other and to the land through kin groups, such as iwi and hapū . In order to preserve

the kin groups, the Act restricts the type of people to whom land can be sold or gifted.

These people can be:

• the owner‟s children or direct descendants

• any whanaunga of the owner who, in accordance with tikanga Māori , are associated

with the land

• the other beneficial owners of shares in the same land who are members of the hapū

associated with that land

• the trustees for any of the people referred to above

• anyone descended from a former owner of the land who is, or was, a member of the

hapū associated with that land.

Transferring shares

Transferring shares as a sale or a gift

You can only transfer Māori land shares by a sale or a gift with a vesting order, unless the

Māori Land Court agrees to confirm a memorandum of transfer. A memorandum of transfer

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is generally only used if the land is solely owned or if all of the owners are joining in the

sale.

Transferring shares to trustees

Māori land shares can be transferred, by a vesting order, to a trustee from a person who

owns, or is entitled to own, Māori land shares.

Transferring shares from trustees or representatives Māori land shares can be transferred,

by a vesting order, from a trustee or representative for someone else to the person who is

entitled to be the beneficial owner.

Transferring shares to facilitate partition

If owners of Māori land shares agree or arrange to allot shares on a partition, the Māori

Land Court may make a vesting order to give effect to the agreement. Section 164 of the

Act applies.

Selling shares

If Māori land shares are sold, the Court cannot sign or seal a vesting order unless it is satis-

fied that the money has been paid to the alienor, to the Māori trustee or to the Court-

appointed agent or trustees.

A certificate, signed by the Māori trustee or the Court-appointed agent or trustee or the alie-

nor, that the money has been paid, is sufficient evidence to satisfy the Court.

Gift duty – From 1 October 2011, no longer applicable.

Applying for a vesting order

You must apply to the Māori Land Court for a vesting order. You can apply if you are:

• the owner of the Māori land shares to be transferred

• the person who will receive the Māori land shares a trustee for either of the people men-

tioned above. The applicant, or counsel for the applicant, must sign the application for

the vesting order.

Information required

An application for a vesting order must:

• state the relationship between the parties

• be accompanied by a whakapapa or other documentary evidence necessary to estab-

lish that the transferee belongs to one or more of the preferred classes of alienees.

If the application involves a contract or an arrangement relating to the proposed transfer,

then the contract or a written agreement between the parties must be filed with the applica-

tion.

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Unless the Court directs otherwise, the following items must also be filed with the applica-

tion:

• a certified copy of the entry in the district valuation roll for the land in which the shares

to be vested are held, or

• a valuation of that land by a registered public valuer

• a valuation of all or any other assets attached to the land.

Where a vesting order is sought to gift Māori land shares that have a value of over $2,000,

the owner of the shares will need to give evidence, either in Court or in a written affidavit or

declaration, to support the application.

There is a standard application fee for a vesting order. Please ask your local Māori Land

Court office about this fee.

The Court hearing

The vesting order application will be considered at a Māori Land Court hearing. The owner

of the shares or interests being transferred should attend. Any person who is entitled, or will

be entitled, to a beneficial interest in the land is entitled to appear and to be heard at the

Court hearing.

Granting a vesting order

Before granting a vesting order to transfer shares or interests, the Māori Land Court must

be satisfied that:

• any instruments of alienation have been executed and attested (ie signed and wit-

nessed) in the manner required by the Rules of the Court. The people entitled to act as

witness to the signing are set out in the application form

• the transfer is not in breach of any trust that manages the land

• the value of the shares or interests takes into account the value of all buildings, fixtures,

crops, trees, minerals, and other assets or funds relating to the land

• the value of the shares and interests takes into account the relationships or special cir-

cumstances of the parties

• that the purchase money, if any, has been paid to the alienor or to the Māori trustee or

to the Court-appointed agent or trustees.

In recognition of the principles of the Act that land is taonga tuku iho, of special significance,

and to promote the retention of the land in the hands of its owners and their whānau and

hapū, the Judges usually require that an owner wishing to gift or sell an interest first consult

with their children and whānau.

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Māori incorporation shares

Māori incorporation shares are deemed, for all purposes, to be shares in Māori land held by

the incorporation but the legislation dealing with their transfer is in section 264 of the Act.

Share registers

The Māori incorporation is required to establish a share register, an official record of the

shareholders. The share register must list the shareholders‟ names and addresses and the

shares held by each shareholder.

The secretary for the Māori incorporation maintains the share register by recording any

vesting orders processed by the Māori Land Court.

Transferring Māori incorporation shares

You may transfer your Māori incorporation shares provided that:

• the shares to be transferred do not result in a shareholding less than any minimum set

by the Māori incorporation

• the shares are being transferred to a member of the preferred classes of alienees.

As a final alternative, the shares can be offered to the Māori incorporation if no members of

the preferred class accept the shares.

To transfer Māori incorporation shares, the transferor (the person transferring the shares)

must file a transfer of shares form (form 5 of the Māori Incorporations Regulations 1994)

with the secretary of the Māori incorporation.

The following information is required on the transfer form:

• the transferor‟s name and address

• the number of shares to be transferred

• whether the transfer is a sale or a gift

• if the shares are being sold what the price is

• the name, the occupation, the address, and the date of birth of the transferee (the per-

son receiving the shares).

The form must be signed by the transferor and witnessed by one other person. The witness

must state his or her address and occupation.

Committee of management

The Māori incorporation‟s committee of management is responsible for registering the

transfer against the incorporation‟s share registration, but may refuse to register if they are

not satisfied that the transferee is a member of the preferred classes of alienee, or if the

transfer is not properly completed.

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Responsibility of Trustees (detailed version)

Trustees‟ duties

Trustees50 are bound by the provisions of Te Ture Whenua Māori Act 1993 and the Trustee

Act 1956. Their key duty is “to maximise the assets and minimise the liabilities of the trust51

” to the best of their ability and within the law. Their powers, rights, and obligations are set

out in the trust order.

Trustees must not spend money unnecessarily or without proper authority, as this is a

breach of the trust order. If they do, the beneficiaries52 have the right to hold them person-

ally liable for any financial loss brought about by their mismanagement. The beneficiaries

can take a case to the Māori Land Court or the High Court. The courts regard any breach of

trust as a very serious matter, and if trustees are found to be at fault, they can expect to pay

for any losses that they have caused.

The trustees‟ duties can be summarised into the following eleven principles:

1. Acquaintance

The trustees must be familiar with the property administered by the trust the terms of the

trust order and all issues affecting the trust.

2. Adherence

The trustees must act in accordance with the terms of the trust order.

3. Impartiality

The trustees must treat all trust beneficiaries with the same degree of fairness. The trustees

are there to act in the best interests of all the beneficiaries.

4. Investments

Investments must be made in terms of the trust order and in accordance with the Trustee

Act 1956 and its amendment of 1988. The government does not guarantee investments.

Trustees who invest trust funds must be prudent when investing and seek expert financial

advice.

5. Diligence and prudence

The trustees are required to act with the same care, diligence, prudence and good judg-

ment expected of business people managing the affairs of others. For example, unauthor-

ised or unnecessary spending must not occur. Any failure to pay accounts that results in

50 Persons bound to deal with property on behalf of the owners or beneficiaries. The trustee becomes the legal owner when the order appointing him/her as trustee for the land is registered against the title. The beneficiar-ies are called the beneficial owners. 51 An obligation binding the trustee(s) to deal with property over which they have control (the trust property) for the benefit of the beneficiaries. 52

Person(s) who benefit from a trust.

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additional payments of interest is not acceptable if that failure was caused by lack of effort

by the trustees.

6. Delegation of responsibilities

The trustees must not delegate their responsibilities unless the trust order clearly allows

this, or unless delegation is permitted by law. The trustees may, however, employ profes-

sionals to assist the trust.

7. Act jointly

The trustees must work together. They must share responsibility for any wrongdoing or mis-

takes made. All trustees are accountable to the beneficiaries.

8. Act without personal profit

The trustees must not benefit personally from being a trustee. If the trust order permits, they

may be entitled to reasonable reimbursement for expenses they incur in carrying out their

role as trustee.

9. Pay the right people

The trustees must pay trust money only to the people named on the trust order. They will

not be excused for paying the wrong person, even if they mistake the intention of the trust

order, or take professional advice to make these payments.

10. Trust account information

The trustees must keep full and proper accounts. The beneficiaries, or their authorised

agents, may access the accounts on request. Other information about the trust must also

be made available to the beneficiaries upon request.

11. Declare conflicts of interest

The trustees should avoid, if possible, any situation where a conflict of interest might arise.

Where it cannot be avoided, the trustees‟ interests must be declared, and those trustees

should not take part in negotiations or decision-making. For example, trustees must not

vote on any trust matter in which they also have a personal involvement, such as leasing

land from the trust.

12. Regular disclosure

Trustees must keep their beneficiaries regularly informed and provide full details of the f i-

nancial position and performance of the trust. They must undertake appropriate consulta-

tion with beneficiaries on major policy issues and obtain the beneficiaries‟ consent to any

changes to the terms of the trust order.

Trustees’ meetings

First trustee meeting

A chairperson, a secretary, and a treasurer should be elected at the first trustee meeting.

The selections are made by the trustees with the consent of the nominees.

Chairperson

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The chairperson‟s main duties are to:

• organise meetings with the assistance of the secretary

• ensure that the meeting process is followed and all matters are attended to

• ensure that everyone is given a fair hearing

• perform their duties calmly under pressure

• endorse the meeting minutes

• perform their duties as a responsible trustee in addition to their role as chairperson

• ensure that they do not use their position to influence trustee voting.

Secretary

The secretary does not have to be a trustee. The secretary‟s main duties are to:

• keep a record of the minutes of all meetings (trustees‟ and beneficiaries‟ meetings)

• endorse the meeting minutes

• distribute the meeting minutes

• ensure that the Māori Land Court has the current trustees‟ addresses

• keep a current list of trustees‟ contact details

• receive all correspondence on behalf of the trust

• present correspondence for discussion at trust meetings

• send all correspondence on behalf of the trust

• ensure that all information is kept in order and is made available to trustees and benef i-

ciaries when required. If the secretary is a trustee, then he or she must also perform his

or her duty as a responsible trustee. If the secretary is not a trustee, he or she must not

take part in trust discussions and decisions.

Treasurer

The treasurer‟s main duty is to keep meticulous records of all financial transactions for the

trust. The treasurer should ensure that:

• the signatories to the trust account have the authority to sign and that their authorities

are lodged with the bank

• financial information is available for the annual financial report

• the trustees are aware of any limits to their financial authority and that any authorised

payments do not exceed those limits

• a record is kept of all financial transactions and of related documentation, such as in-

voices and receipts

• all funds are accounted for

• all financial reports are presented at every trust meeting

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• all information is kept in order and is made available to trustees and beneficiaries when

required. If the treasurer is a trustee, he or she should still perform his or her duties as a

responsible trustee.

Setting trust goals

The trustees set the trust‟s goals in accordance with the terms of the trust order. Those

goals should determine the trust‟s work timetable and meeting schedule.

Professional advice

A trust may seek professional advice from a solicitor and/or an accountant if it considers

this appropriate.

Ongoing trustees’ meetings

Frequency

The frequency of trustees‟ meetings should be determined by the trust‟s business needs,

unless there is a specific direction in the trust order. When setting up the trust or managing

any developments, the trustees may require regular meetings. If there is little or no busi-

ness to attend to, meeting unnecessarily may be a drain on the trust‟s resources.

Giving notice

When the need arises, any trustee can call a meeting. For practical reasons, it is advisable

to provide trustees two to three weeks notice of meetings to allow them to make business

and travel arrangements.

The purpose of the meeting and the agenda items should be included in the notice.

Quorum

Trustees act by majority of the trustees (section 227 of the Act). The minimum quorum4 for

any trust meeting must therefore be more than half of the appointed responsible trustees

and not simply half the number of those trustees present and any decision must be agreed

to by more than half of those trustees. If a quorum is established at the meeting but fewer

than half of the appointed trustees agree to any resolution, then that resolution must fail be-

cause section 227 requires a majority of the total trusteeship to agree.

It is rare for a higher quorum to be imposed by the trust order, but trustees should always

check the order to make sure. It is also important to note the convention that when exercis-

ing a casting vote the Chairperson support the status quo.

Voting

Only the responsible trustees can vote at a trustee meeting. If the trust is a Māori Reserva-

tion, and a vote on an issue is evenly split, the chairperson has the deciding vote in accor-

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dance with Regulation 17(h) of the Māori Reservation Regulations 1994. This principle will

only apply to other trusts if stated in the trust order.

Attendance

The trustees are free to invite other people to the meetings, where applicable. In particular,

this may happen when the trust is seeking professional advice. In general, a trustee meet-

ing should be for the trustees only, but in some cases, it may be beneficial for the benefici-

aries to attend. The trustees are obligated to attend all meetings relating to the trust. If a

trustee is continually absent from meetings, the Māori Land Court may remove the trustee.

Beneficiaries’ meetings

Frequency

Usually, the trust order stipulates how often beneficiaries‟ meetings should be held. If the

order makes no stipulation, the trustees must use their discretion. The trustees should be

available to attend all beneficiaries‟ meetings.

The trustees must keep the beneficiaries informed about the trust‟s business, and obtain

their support for any decisions that the trust makes.

Beneficiaries‟ meetings can be called in relation to the following and other matters:

• the election of trustees

• the presentation of accounts

• investments

• the purchase of additional land

• a major purchase, such as a woolshed

• mortgages

• variations to the terms of trust

• termination of the trust.

A beneficiaries‟ meeting must also be called if a requisition has been signed by the number

of beneficiaries stated in the trust order.

Notice

Adequate notice must be given. For practical reasons, it is advisable that at least two to

three weeks notice of a beneficiaries‟ meeting be given to all beneficiaries and trustees.

Where possible, the trust should send a letter of notification about the meeting to each

beneficiary and trustee. The trust should also place a notice about the meeting, with a

meeting agenda, in a local newspaper.

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Quorum

Some trust orders specify the quorum for beneficiaries‟ meetings. Where there is no quo-

rum stated in the trust order, the Court needs to be satisfied that any orders it makes as a

result of that meeting meet the following requirements:

• the owners have had sufficient notice

• the owners have had adequate opportunity to discuss and consider the matters

• there is a significant degree of support by the owners

• there are no objections that the Court deems to have merit.

Voting and proxies

Only beneficiaries can vote on proposed resolutions at beneficiaries‟ meetings. In most in-

stances, the trust order sets out how voting shall take place. If the trust order doesn‟t state

this, the meeting attendees should decide what they prefer. Unless permitted in the trust

order, proxy voting is NOT provided for and should not occur. However a beneficiary may

formally appoint a power of attorney to exercise his or her rights as an owner.

Where the trust order specifically allows for voting by proxy, a beneficiary who cannot at-

tend a meeting may authorise, in writing, another person to vote on his or her behalf.

This person must be at least 20 years old. The proxy form can be obtained from the trus-

tees. Shares voted by proxy count towards the quorum requirements. Unless it is otherwise

stated in the trust order, the beneficiaries‟ voting does not bind the trustees. However, the

voting gives the trustees a clear indication of the beneficiaries‟ wishes. The decisions of any

meeting don‟t bind the Court either – the minutes and resolutions are merely evidence of

the proceedings and the resolutions reached.

Administration of a trust

Trustees‟ authority

The terms of a trust, and the powers and limitations of the trustees, are set out in the trust

order. This makes the trust order one of the most important documents for the trust, and

each trustee should have a copy and be familiar with it. Some judges call it the trustees‟

“job description”.

Other powers and limitations conferred on trustees by legislation include:

• Te Ture Whenua Māori Act 1993

• Trustee Act 1956

• Income Tax Act 2004

• Resource Management Act 1991

• Charitable Trust Act 1957

• Charities Act 2005.

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Varying the terms of a trust

If the trustees want to review their powers, rights, and obligations, as set out in the trust or-

der, they need the support of the beneficiaries, and so they need to hold a meeting with

them. Any changes agreed to at the meeting can be formalised by filing an application with

the Māori Land Court to vary the trust order.

The Court must be satisfied that the beneficiaries have had sufficient notice of the applica-

tion to vary the trust order, and sufficient opportunity to discuss and consider it. The Court

must also be satisfied that there is a sufficient degree of support among the beneficiaries

for the variation.

List of current beneficiaries

The Māori Land Court maintains up-to-date lists of beneficiaries. The trustees should re-

quest a copy of the list of beneficiaries before a meeting with them. However, the trustees

must maintain the beneficiaries‟ contact details.

Annual report

Unless the trust order provides otherwise, the trustees must prepare annual reports. The

trust order may require that a copy of the annual report be:

• filed in any Māori Land Court office along with the annual financial report

• presented to the beneficiaries at the next scheduled beneficiaries‟ meeting.

If trust meetings are not held annually, all the annual reports for the years leading up to that

meeting must be presented.

Financial accounts

The trust must keep a record of all financial transactions and prepare an annual financial

report. The trustees or beneficiaries may access the accounts on request.

Audit of accounts

The trust order may require an audit of the accounts each year. Some trust orders require

this only where the annual income53 for the trust is over $10,000.

The trust order may require the trust to:

• file a copy of the audit report with any office of the Māori Land Court

• present the audit report at the next scheduled beneficiaries‟ meeting.

53

Money that is derived from assets held and earnings (such as rent and interest) but no “purchase money” (land converted onto money).

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Accounts payable

The trustees must ensure that all the accounts and expenses for which the trust is respon-

sible are paid in full.

Payments to trustees

The trustees may be entitled to the reimbursement of actual expenses for performing their

duties as trustees, such as travel and administration expenses for trust meetings, provided

this is allowed for in the trust order or authorised by the Māori Land Court.

The trustees can be employed by the trust or have an interest in any contract with the trust,

but they must not vote or participate in discussions on any matter concerning their remu-

neration, terms of employment, or any contract in which they may be interested.

Income

After payment of all trust accounts and expenses, the trustees may use the surplus income

as set out in the trust order. This may include:

• paying the running expenses of the trust

• distributing the money to the beneficiaries

• making investments

• developing the trust assets

• purchasing land and buildings

• paying goods and services tax (GST).

Trusts are separate legal entities and must each have their own Inland Revenue Taxpayer

Number. Trusts may be required to register for GST with the Inland Revenue Department.

For assistance with this, the trustees should contact their local Māori community officer at

the Inland Revenue Department by phoning 0800 337 776.

The advisory service is free and has been established to help meet the needs of Māori indi-

viduals, organisations and businesses.

Administering the trust

Trustee liability

The trustees are liable, both collectively and individually, for the trust property and the as-

sets of the trust. The beneficiaries can sue trustees for any loss caused by improper or neg-

ligent acts, by applying to the Māori Land Court or to the High Court. However, in terms of

section 227(6) of the Act, any trustee whose vote is recorded as against a decision that

eventuates in such a loss will not be liable. The Māori Land Court regards any breaches of

trust as a very serious matter, and trustees who are found to be at fault can expect to be

made to pay for any losses that they have caused.

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Signing documents

The trustees may be required to sign leases, mortgages, or other documents relating to the

trust. Where there are three or more trustees, they may act by majority unless the trust or-

der provides for all the trustees to act unanimously (see section 227 of the Act).

If an individual trustee does not agree with the proposal passed by a majority, he or she

does not have to sign it. To avoid liability, the individual should immediately advise the other

trustees and the Māori Land Court in writing.

Land Information New Zealand (formerly the Land Transfer Office) requires that for a

document to be eligible for registration, all the trustees must sign it. If a document requires

the signatures of all trustees and a majority have resolved that it should be signed then all

must sign. If a trustee disagrees he/she can have their opposing vote recorded. If a trustee

feels strongly that the document should not be signed then application should be made to

the Māori Land Court for directions.

A trustee who refuses to sign it without making such an application could be in a very awk-

ward situation if the trust suffers losses as a result.

Enforcement of obligations

The Māori Land Court has the power to enforce the trustees‟ obligations in regard to the

trust. The Court can require a trustee to make a written report on the trust‟s administration

or the trustees‟ performances of their duties. A trustee may also be required to appear be-

fore the Māori Land Court for questioning about the report.

Investments

In order to fulfill their key duty of maximising the assets and minimising the liabilities of the

trust to the best of their ability and within the law, trustees may invest trust funds in various

ways. Investments must be made in accordance with the terms of the trust order and the

Trustee Act 1956 and its amendment of 1988.

The government does not guarantee investments. Trustees who invest trust funds must be

prudent when investing and seek expert financial advice.

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Emissions Trading Scheme

Pre-1990 forest

Among other things, the 2008 Climate Change legislation expropriated over one million

hectares of pre-1990 forested land, 80% to 90% of which will be in post-settlement Mäori

ownership. (The largest blocks are under Crown Forest Licences. One such block, known

as the CNI forests totalling 176,000 hectares, has had control vested in a body corporate

representing the claimants since the legislation was enacted.)

The legislation created a deforestation liability for any change of use of this land although

there was the ability (that expired on 30 September 2011) to apply for an exemption if an

owner had less than 50 hectares of pre-1990 forest.

In papers presented to a Select Committee during 2008 MAF estimated that 39% of pre-

1990 forested land was suitable for higher value activities. This represents a huge loss of

potential for the Mäori economy.

One has to ask how, given the Te Ture Whenua Maori Act 1993 and its Preamble, that this

expropriation was ever deemed to be lawful.

In the wider context there are those who believe that there are property rights embodied in

the Human Rights Act that this legislation impinged upon because owners of general title

land no longer had the ability to use their land at they saw fit.

Post-1989 forest

During the submissions process leading up to the 2008 legislation, much was made of the

opportunity for forest owners to voluntarily enter their forests into the Emissions Trading

Scheme (ETS).

Under the legislation, and consistent with the international agreement known as the Kyoto

Protocol, sequestered carbon in trees54 can be sold to those with emissions that they need

to mitigate.

However there are some major pitfalls in this proposition for forest owners. The fundamen-

tal issue is that when anyone sell carbon, they are pledging that that sequestered carbon

will be sequestered for ever – a very, very, very long term commitment.

This means that the carbon sold has to re-purchased (or existing carbon credits surren-

dered) when the trees are harvested. If the carbon price 20 to 30 years hence could be

confidently projected, the price rise risk could be managed but this is not the case.55

54 One tonne of carbon is the equivalent of 3.67 tonnes of carbon dioxide and dry Pinus Radiata is approx-imately 50% carbon. 55

At the time of writing (January 2012) the carbon credit price in NZ is around $NZ7.00 and it has been said that for ETS markets to work in changing emissions behavior the price has to be over $US50 (NZ67)

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Likewise if trees for which carbon has been sold are destroyed by fire, disease or a storm,

any carbon credits relating to those lost trees that have been sold must be re-purchased to

cover any shortfall or further accrued carbon credits surrendered. [If all this sounds compli-

cated, don‟t panic, it is!]

Is entry into the ETS Alienation

This writer is strongly of the view that the day an arrangement is entered into relating to

land that limits the options for future generations, in the case of Māori land, it is alienation.

Entering the ETS with a Post-1989 forest is an example of such and arrangement.

One has to assume that the current legislative framework relating to post-1989 forests will

endure.

The reason for suggesting voluntary entry into the ETS is alienation is that it is highly

unlikely that there would ever be sufficient funds accumulated in a Māori forest owning en-

tity to re-purchase the necessary carbon credits to permit deforestation. That means that

such land is destined for permanent forestry, regardless of the economics of the wood.

[This obligation is already causing problems for owners of pre-1990 forested land, most of

which is Māori land.]

Conclusion

In this writer‟s view the only Māori land that should be considered for voluntary entry into

the ETS is that with native forest that began regeneration after 1 January 1990 and only

with the agreement of the owners. Any carbon credits56 can only be claimed from 1 January

2008.

If the Kawenata permits it, any Nga Whenua Rahui block that didn‟t meet the definition of a

Pre-1990 Kyoto Forest57 as at 31 December 1989 but now meets the Post-1989 definition,

is an ideal candidate for consideration. It is strongly suggested that units are retained (ie

are claimed but not sold) to cover any shortfall in the event of storm damage, fire or dis-

ease. Also this writer believes that shareholder/beneficiary approval should be sought and

consideration be given to requiring greater support than the usual majority of those voting.

For more information, see below:

MAF Forestry & the Emissions Trading Scheme

Legislation Climate Change Response Act 2002

Regulations Climate Change (Forestry Sector) Regulations 2008 (containing the car-

bon stock tables)

56 To understand the quantum and value, see the ETS natives calculator. See latest prices. 57

A Kyoto forest is defined as at least 30m wide, at least one hectare with trees having the potential to grow to 5m with 30% crown cover (ie the fully grown trees shadowing at least 30% of any given area).

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Mäori business principles – a potential point of difference

Ancestral land is the most revered asset to Mäori and the governance structures of the Act

are around land interests. As a result, many of the underlying business principles for Māori

entities, either formal or otherwise, tend to have a land focus and are followed to a greater

or lesser extent.

[From this writer’s experience, self interest and inconsistency are the most common count-

ers to these principles often compromising their status or mana.]

Kaitiakitanga – Recognising and delivering on the responsibility of cultural and financial

guardianship and accountability.

Kaupapa – A commitment to having and honouring clear guiding principles based on Ti-

kanga in the foundation documents of a Mäori business structure.

Kotahitanga – A commitment to unity of purpose.

Manäkitanga – Adherence to the philosophy of respect, hospitality, kindness, mutual trust,

respect and concern for others.

Mana Tüpuna – An acknowledgement of the mana of our ancestors and taking into account

their expectations for our land.

Mana Whenua – Is the authority over (and responsibility for) Mäori land (tribal estates) and

natural resources.

Rangatiratanga – The goal of self determination, autonomy and the right of Māori to be de-

termine our own future.

Te Reo – An acknowledgement of the Mäori language and its place in both our past, pre-

sent and future.

Tikanga – To honour Māori customs and practices as part of the Kaupapa of the structure.

Wairuatanga – A recognition of the spiritual dimension for Mäori as a people.

Whänaungatanga – Acknowledgement of the inter-relationship of us as Māori with our an-

cestors, our whānau, hapū, iwi as well as the natural resources within their our boundaries

such as mountains, rivers, streams and forests.

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Glossary

Grant of Administration is when the High Court confirms the appointment of an executor to

administer the will of a deceased person, the Court‟s authority for that person to act is given

in a grant of probate.

Affidavit is a written statement that is signed and sworn on oath and therefore able to be

used as evidence in court.

Aggregation of titles occurs when two or more separate blocks of land share a common

ownership list. The titles remain separate, but there is only one common ownership list for

all the aggregated land (refer to section 308 of the Act).

Alienation is when landowners grant certain rights of their land to another person. For ex-

ample: selling land gives the new owner the ownership rights, leasing land gives the lessee

a limited right to occupy land in return for payment of rent (and other conditions), mortgag-

ing land gives the mortgagee the right to sell the land if the mortgage is not repaid (refer to

section 4 of the Act).

The Act prescribes the shareholder/beneficiary approval requirements for Māori freehold

land to be alienated.

A beneficiary is the owner of a beneficial interest in land. Where land is vested in trustees,

the trustees own the land as legal owners on behalf of the beneficiaries. The beneficiaries

hold their individual shares in the land as beneficial owners.

Contract is an agreement between two parties that is intended to be enforceable at law.

Contracts are usually written, but a spoken agreement can also be a contract.

An executor is a person appointed to carry out certain duties under the last will of a de-

ceased person. The deceased will have named the executor in his/her will, and the ap-

pointment of that person is confirmed by the High Court. When an executor is confirmed by

the High Court, that Court issues probate in his/her favour. If the will does not name an ex-

ecutor, then the person who is appointed by the High Court to administer the estate is

called an administrator. The feminine form for executor is executrix.

Hapü is a sub-tribe or kin group that is linked by a common ancestor.

Iwi is the traditional Māori tribal hierarchy and social order made up of hapū (kin groups)

and whānau (family groups), having a founding ancestor and territorial (tribal) boundaries.

Income (in the context of Te Ture Whenua Maori Act 1993) is money that is derived from

assets held and earnings (such as rent and interest) but not “purchase money” (land con-

verted onto money).

Kaitiaki is a trustee/guardian (in the context of a trust), of a minor or person unable for any

reason to fully manage his or her own affairs.

Kaupapa is the underlying concepts or philosophies on which tikanga is based.

A life interest life interest (or life estate) gives a person (usually a surviving spouse) the

right to receive income from the estate of a deceased person. That person is called the “life

tenant”. When the life tenant dies, their right to life interest finishes. Many life interests state

that the life interest will terminate if the life tenant remarries. The life interest does not entitle

the life tenant to any other portion of the estate. It is limited to income (eg rents or interest)

and excludes capital (eg purchase money or compensation for land).

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Māori freehold land is whose beneficial ownership the Māori Land Court has determined

by freehold order (that is, the Court has created a title for the land and determined the

beneficial owners to that land). Freehold titles are often divided by partition order. The land

retains the status of Māori land. The status of the land will continue to be Māori land unless

and until the Māori Land Court makes an order changing the status of the land.

A change of ownership of land gives the recipient of that interest the ownership and its as-

sociated rights (land may be vested in a trustee, or shares may be vested in another per-

son).

Māori Incorporation is an administrative structure similar to a company for managing

Māori land vested in it by the Māori Land Court.

Panui is a notice whether for a meeting or any other communication of that ilk.

Poll is a term relating to Māori Incorporations where at least five people at the sharehold-

ers‟ meeting can requisition a vote taking into account the number of shares owned by

those voting rather than a show of hands. This is most commonly called for in the case of

lections for the Committee of Management.

Probate is the granting of administration from the High Court is generally required to enable

the assets of a deceased person to be transferred to those entitled to the assets.

Proxy is the authority given by an owner of an interest in land to another person to vote

(and speak) on their behalf.

Pütea literally means a “basket”. In the context of a trust, it is the concept of several people,

collectively, filling a basket by contributing communally with money and other assets.

Quorum is the minimum number of members that must be present at a meeting to make

proceedings valid. For governance body meetings it is usually a majority of all members.

Succession is the process of transferring the assets of a deceased person to the persons

entitled to receive those assets.

Successor is a person who receives, as of right, a share of a deceased person‟s estate.

Tikanga is Māori custom.

Title relates to the legal ownership of property and the legal evidence of a person‟s owner-

ship rights.

Trustee is a person bound to deal with property on behalf of the owners or beneficiaries.

The trustee becomes the legal owner when the order appointing him/her as trustee for the

land is registered against the title. The beneficiaries are called the beneficial owners.

Vested is a change of ownership of land giving the recipient of that interest the ownership

and its associated rights (land may be vested in a trustee, or shares may be vested in an-

other person).

Whakapapa is a person‟s genealogy, or family tree, linking that person to a particular family

and/or ancestor.

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Chapters in progress (not in any particular order)

Governance – including issues of poor performance

Restructuring

Māori land as an investment

Māori entity administration – a practical guide with Excel templates

Alternative entity structures – a discussion

A printable version

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