Rules and Legislation

ETNZ Rules

Index

1. Name

2. Objects

3. Powers

4. Membership

5. Cessation and Termination of Membership

6. Alteration of Rules

7. Meetings of Members

8. Officers

9. Executive Committee

10. Borrowing and Lease Commitments

11. Common Seal

12. Registered Office

13. Winding Up

 

1. Name

The name of the society shall be ” ENERGY TRUSTS OF NEW ZEALAND INCORPORATED ”

2. Objects

The objects of the society shall be:

  • (a) In the interests of their beneficiaries to facilitate the operations of Energy Trusts as significant owners of Energy Companies.
  • (b) To promote, foster, develop and support the trusteeship of Energy Trusts.
  • (c) To affiliate with other organisations, whether incorporated or otherwise.
  • (d) To carry out such ancillary activities as promote the wellbeing of society through the trustee ownership of utilities.

3. Powers

The society shall have all the powers of a natural person.

4. Membership

Energy Trusts whose income and/or capital beneficiaries are consumers/customers of an Energy Company in which the Trust holds shares, or whose beneficiaries are the community or sections of a community within the supply area of an Energy Company in which the Trust holds shares shall be eligible for membership of the society.

Applications for membership shall be on such forms as are prescribed from time to time by the executive committee and acceptance to membership shall be by resolution of the executive committee on a simple majority of those present and voting.

Different classes of membership may be determined from time to time by the society in general meeting.

Members shall be represented by such natural person or persons as shall from time to time be nominated by the member in writing to the secretary save that each member shall be entitled to one vote only. Should there be any plurality of voting or dispute over entitlement then the chairman of the meeting shall determine the specific natural person whose vote shall be counted provided that that person is a member or officer of the member trust.

5. Cessation and Termination of Membership

Membership may be terminated by the member giving notice in writing to the society’s secretary.

Membership of the society may be terminated if payment of fees are not met within three months of due date.

Termination and/or expulsion of members may be by resolution of the executive committee on a simple majority of those present and voting, but any expulsion may be appealed at the next Annual General Meeting and determined on a simple majority vote.

Termination of membership shall not release the member from any financial, fiduciary or other responsibilities to the society.

6. Alteration of Rules

The rules of the society may be altered, added to, or rescinded on a seventy five percent (75%) majority of members present and voting at a general meeting of the society. Notice and details of any alteration, addition or rescission must be given to the Secretary of the society at least twenty eight days before the meeting at which it is intended to propose such alteration, addition, or rescission

7. Meetings of Members

TYPES OF MEETINGS OF MEMBERS

At least annually and not more than eighteen months after the last annual meeting the society shall hold an annual meeting of members.

Special General Meetings of members may be called from time to time to deal with a special matter or topic.

CALLING OF MEETINGS OF MEMBERS

At least ten days notice of meetings of members shall be given by notice to the last known address of the secretary of members. The notice shall specify the date, time and place of the meeting and the business to be conducted thereat. Meetings of members shall be called by the executive committee by resolution or on receipt of written advice stating a special matter or topic of business and signed by not less than five (5) members.

QUORUM OF MEETING OF MEMBERS

At any General Meeting of the society fifty percent (50%) of members shall form a quorum.

ADJOURNMENT OF MEETINGS OF MEMBERS

In the event of the absence of a quorum of members within fifteen (15) minutes of the appointed time for the commencement of a general meeting of members the meeting shall stand adjourned to such time, date and place as those members present determine, being not less than ten (10) days later and of which notice shall be given in the same manner as for general meetings of members save that five (5) days notice shall suffice. At such adjourned meeting those members present at the appointed time shall constitute a quorum.

CONDUCT OF MEETINGS OF MEMBERS

The chairman, or in his absence the vice chairman, or in the absence of both the chairman and the vice chairman a person representing a member elected by the meeting shall preside at all meetings of members. A person elected by the meeting shall retire from the chair on the arrival of the chairman or vice chairman. The chairman of the meeting shall have a casting vote in the event of a tie. Voting shall be by a show of hands. A vote by ballot shall be taken on the request of any member. Voting shall be restricted to members of the society only.

BUSINESS OF ANNUAL GENERAL MEETING OF MEMBERS

The Business of the Annual General Meeting of Members shall include the receipt and consideration of the reports of the Chairman, Treasurer and financial statements and the Auditor. The election of officers and Executive Committee members and such other business as may properly be considered by an Annual General Meeting.

8. Officers

The officers of the society shall consist of a Chairman, Vice Chairman, Secretary/ Treasurer, an Auditor and Solicitor. Officers other than that of Secretary/Treasurer shall be elected at the Annual General Meeting of the society. The executive committee shall have the power of appointment to fill the office of Secretary/Treasurer and the casual vacancy of any office. The office of Chairman and/or Vice Chairman shall be vacated on cessation of membership of the Society by the Trust of which that officer is a representative. Elected officers shall hold office until the close of the general meeting of members at which their successors are elected.

9. Executive Committee

POWERS OF EXECUTIVE COMMITTEE

There shall be an executive committee charged with the management and control of the society’s affairs other than as are required to be exercised by the Society in General Meeting. The Executive Committee shall have the powers of delegation.

MEMBERSHIP OF EXECUTIVE COMMITTEE 

The executive committee shall consist of those holding the office of Chairman and Vice Chairman and four representatives of ordinary members elected at the Annual General Meeting. Executive Committee members shall hold office until the close of the general meeting of members at which their successors are elected.

QUORUM OF MEETING OF EXECUTIVE COMMITTEE

At any meeting of the Executive Committee four (4) executive committee members shall form a quorum.

ADJOURNMENT OF MEETINGS OF EXECUTIVE COMMITTEE

In the event of the absence of a quorum of executive committee members within fifteen (15) minutes of the appointed time for the commencement of a meeting of members of the executive committee the meeting shall stand adjourned to such time, date and place as those executive committee members present determine being not less than two (2) days later and of which notice shall be given in the same manner as for general meetings of executive committee members save that one (1) days notice shall suffice. At such adjourned meeting those executive committee members present at the appointed time shall constitute a quorum.

CONDUCT OF MEETINGS OF THE EXECUTIVE COMMITTEE

The Executive Committee shall meet at least annually. Meetings of the Executive Committee shall be at such times, dates and places as the committee determines. A meeting may be summoned by the Secretary and shall be called by him/her on receipt of a requisition in writing stating the business of the meeting signed by the Chairman or by three (3) members of the Executive Committee. The meeting shall be summoned by notice posted to all committee members giving no less than seven (7) days notice, unless notice is waived by all committee members present in New Zealand at the time of the meeting. The notice shall specify the business of the meeting. The chairman, or in his absence the vice chairman, or in the absence of both the chairman and vice chairman a member elected by the meeting shall preside at all meetings of the Executive Committee. A member elected by the meeting shall retire from the chair on the arrival of the chairman or vice chairman. The chairman of the meeting shall have a deliberative vote only. There shall be no casting vote. Voting shall be on the voices or by a show of hands and shall be by a minimum of three (3) votes. A vote by ballot shall be taken on the request of any committee member. Meetings of the Executive Committee or of any Sub Committee may be held by teleconference.

CONTROL OF FUNDS

The Executive Committee shall be responsible for the control and investment of the funds of the Society. All monies received shall be banked in such registered Bank as the Executive Committee determines and all monies drawn on the bank account shall be authorised by resolution of the Executive Committee. All cheques and other payment authorities shall be signed by any two persons who shall be members of the Executive Committee or the Secretary/Treasurer. Surplus funds may be invested in “Trustee Securities” on the authority of a resolution of the Executive Committee.

10. Borrowing and Lease Commitments

The society may borrow such sums of money such as total in excess of ten thousand dollars ($10,000) and enter into lease commitments in excess of five hundred dollars ($500) per month and/or of twelve (12) months or more duration as may from time to time be necessary or desirable to fulfil its objects only on the recommendation of the Executive Committee after it having taken written legal advice and such other professional advice as the Society’s solicitor recommends on a resolution of members in General Meeting carried by a majority of seventy five percent (75%) of those present and voting.

11. Common Seal

The Common Seal shall be held by the Society’s Solicitor and shall be affixed to any necessary documents only on the written advice of the Society’s Solicitor and on the authority of a minute passed by the Executive Committee by a majority of seventy five percent (75%) of those present and voting. The affixing of the Common Seal shall be attested by the Secretary or Treasurer and any one of the Chairman or vice chairman.

12. Registered Office

The registered office of the society shall be at such place as the Executive Committee determines.

13. Winding Up

In the event of the winding up of the society then any surplus funds may be disposed of in such manner as is determined by the members in General Meeting at the time of winding up save that no surplus funds shall be distributed to individual persons. In the absence of any such decision then any surplus funds shall be paid to the New Zealand Government.

LEGISLATION APPLYING TO TRUSTS

The following outline of relevant legislation covers the various Acts that define the role and responsibilities of the trusts and trustees that make up ETNZ’s membership. Other more general legislation may also be relevant.

1. Electricity Industry Act 2010

Background

This Act set in place the current regulatory framework for the wider electricity industry. It established the Electricity Authority, in place of the old Electricity Commission, and gave the Authority quasi-regulatory powers within its defined role of managing the electricity industry.

Electricity Industry Act 2010: sections 99-104

These provisions require trusts owning electricity distributors to:

  • Prepare annual financial statements in accordance with generally accepted accounting practice. Audited financial statements must be published and made available to beneficiaries.
  • Hold an annual meeting of beneficiaries, with a quorum minimum of 20 beneficiaries. There are only two items of mandatory official business at annual meetings. These are:
  • The appointment of an auditor; and
  • The fixing of the remuneration of the auditor.

If this is not done at the annual meeting then the auditor will be the Auditor-General.

These provisions also deal with notices and other procedural requirements for the annual meeting. (Sections 207B and 207T to 207W of the Companies Act 1993, on the reappointment or termination of auditors also apply.)

 

2. Trustee Act 1956

Until the Trusts Bill introduced in 2017 becomes law, this is the main piece of legislation governing the conduct of trustees. It covers a wide range of issues including:

  • Trustees’ powers of investment.
  • The appointment and discharge of trustees.
  • The powers of the Court in relation to the supervision of trusts and trustees.

The Trustee Act is not a complete code of the rules that apply to trusts and trustees. Each trust has a Trust Deed that can modify some of the provisions of the Trustee Act.

Some areas are not covered by either the Trust Deed or the Trustee Act. Other legislation can apply to trusts and there is a substantial body of general law that has been built up over several centuries by the Courts.

 

3. Electricity Act 1992

This is a very substantial Act covering a wide range of issues including:

  • The powers and duties of electricity operators and owners of electrical works.
  • Codes of practice for the industry.
  • Registration and licensing of electrical workers.

 

4. Energy Companies Act 1992

This is the Act that provided for the formation of the original energy companies that controlled electricity distribution and retailing through to 1998, and the vesting of the undertakings of their predecessors – the electricity power boards – in those companies. It is the Act that laid the foundation for the lines companies (electricity distributors) existing today.

The ownership of the new companies by Lines Trusts was the most favoured form of ownership and establishment plans for all companies were submitted to and approved by the Minister of Energy.

Sections 36 to 46 set out provisions relating to the operation of the companies and include the requirement for statements of corporate intent (“SCI”) (section 39). SCIs are submitted by the directors of the company to the trustee shareholders in draft. Trustee shareholders are entitled to make comments on the draft, and the directors are required to take those statements into account. Shareholders have the power from time to time by resolution passed at any general meeting of the company to require the directors to modify, to a limited extent, the SCI.

 

5. Electricity Industry Reform Act 1998 (replaced by Electricity Industry Act 2010)

This legislation implemented the so-called Bradford reforms, that forced the separation of line and energy businesses. A succession of subsequent changes to the 1998 Act and its incorporation into the Electricity Industry Act now enable lines businesses to re-enter the generation and retail markets subject to various internal governance arrangements being in place in those lines business, although a 75 GWh limit on annual retail sales remains as a constraint (the average lines network handles over 1000 GWh annually).

 

6. Commerce Act 1986

Part 4 of the Commerce Act defines the Commerce Commission’s role and powers as the main regulator of lines businesses. There are several clauses in the Commerce Act that are of particular relevance to Trustees:

  • Section 54G exempts most trust-owned electricity lines companies from price and quality regulation under the Act (Secton 54D of the Act sets out the requirements for trustee elections that must be met to maintain exempt status, defines ‘consumer-owned’, ‘community trust, ‘customer co-operative’, etc. and sets a maximum size limit for exemption of 150,000 ICPs). Note that all lines companies remain subject to the information disclosure requirements of the Act.
  • A number of clauses give the Commerce Commission wide information-gathering powers. In particular, s98 gives the Commission the power to require any person – including a Trustee or Trust – to provide any information that it considers necessary or desirable to allow it to carry out its functions.
  • Section 53Z etc. allows a regulated company to apply for a ‘customised price path’ if it feels it is unduly disadvantaged by the normal ‘default price path’ arrangements. See Part II for discussion on this.
  • Section 54Q requires the Commissin to provide incentives and avoid imposing disincentives for energy efficiency and demand-side management investments.

 

7. Health & Safety Legislation 

Workplace and public safety are critical issues for the electricity industry. The Electricity Act 1992 requires regulations to be in place for electricity safety management systems, and – significantly for Trustees – the Health and Safety at Work Act 2015 creates clear lines of reponsibility for workplace safety, reaching up to senior staff and directors of all companies.

 

8. Companies Act 1993

In general the Energy Companies Act 1992 specifically cover some of the ‘Companies Act’ types of provisions as these relate to Trusts. However, sections 207B and 207T to 207W of the Companies Act apply as if references to a company were to a trust, references to a director were to a trustee, references to a board were to the trustees, etc. Also, directors of all companies must have responsibilities under the Companies Act, including the requirement to act in the best interests of the company.

 

9. Financial Reporting Act 2013

Any trust auditor must be qualified in terms of the Financial Reporting Act.

THE ELECTRICITY AUTHORITY’S CODE

The Electricity Industry Act 2010 requires the Electricity Authority to maintain an Electricity Industry Participation Code, covering matters such as the efficient operation of the electricity industry, the supply of power to consumers, and competition in the industry. The Code is a long, complex document, divided into sections that cover everything from metering through to distribution companies’ use of system agreements and tariffs. Under the Act the Authority has wide powers to effectively impose regulatory controls at all levels of the electricity industry.

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