Plain language law

New Zealand law explained for everyone

Local Government Act 2002

Preliminary provisions

6: Meaning of council-controlled organisation and council organisation

You could also call this:

“Explaining what organisations councils control or have a say in running”

In this law, a council-controlled organisation is a company or entity that a local authority (like a city council) has a big say in running. This can happen in two main ways:

  1. For a company:
    • The local authority owns or controls at least half of the voting rights.
    • The local authority can appoint at least half of the company’s directors.
  2. For other types of organisations (like partnerships or trusts):
    • The local authority controls at least half of the votes at meetings.
    • The local authority can appoint at least half of the people in charge (like trustees or managers).

A council-controlled trading organisation is a special type that tries to make money.

A council organisation is similar, but the local authority has less control. It only needs to have some voting rights or be able to appoint at least one person in charge.

The law also explains that some organisations, like electricity companies or port companies, are not counted as council-controlled organisations.

When the law talks about these organisations, it uses words like “shareholders” and “directors” even if the organisation isn’t a company. This helps the law apply to different types of groups.

If you want to know more about specific terms used in this law, you can look them up in the Companies Act 1993.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM171482.

Topics:
Government and voting > Local councils
Business > Industry rules
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Part 1 Preliminary provisions

6Meaning of council-controlled organisation and council organisation

  1. In this Act, unless the context otherwise requires,—

    council-controlled organisation means a council organisation that is—

    1. a company—
      1. in which equity securities carrying 50% or more of the voting rights at a meeting of the shareholders of the company are—
        1. held by 1 or more local authorities; or
          1. controlled, directly or indirectly, by 1 or more local authorities; or
          2. in which 1 or more local authorities have the right, directly or indirectly, to appoint 50% or more of the directors of the company; or
          3. an entity in respect of which 1 or more local authorities have, whether or not jointly with other local authorities or persons,—
            1. control, directly or indirectly, of 50% or more of the votes at any meeting of the members or controlling body of the entity; or
              1. the right, directly or indirectly, to appoint 50% or more of the trustees, directors, or managers (however described) of the entity

              council-controlled trading organisation means a council-controlled organisation that operates a trading undertaking for the purpose of making a profit

                council organisation means—

                1. a company—
                  1. in which equity securities carrying voting rights at a meeting of the shareholders of the company are—
                    1. held by 1 or more local authorities; or
                      1. controlled, directly or indirectly, by 1 or more local authorities; or
                      2. in which 1 or more local authorities have the right, directly or indirectly, to appoint 1 or more of the directors (however described) of the company; or
                      3. an entity in respect of which 1 or more local authorities have, whether or not jointly with other local authorities or persons,—
                        1. control, directly or indirectly, of 1 or more of the votes at any meeting of the members or controlling body of the entity; or
                          1. the right, directly or indirectly, to appoint 1 or more of the trustees, directors, or managers (however described) of the entity.

                        2. For the purposes of subsection (1), entity means any partnership, trust, arrangement for the sharing of profits, union of interest, co-operation, joint venture, or other similar arrangement; but does not include a company, or a committee or joint committee of a local authority.

                        3. If a council organisation is not a company, references in this Act, in relation to the council organisation, to—

                        4. equity securities include any form of voting rights in that organisation; and
                          1. the directors and the board include trustees, managers, or office holders (however described in that organisation); and
                            1. shareholders include any persons with an interest or right in the entity that is comparable to the rights of a shareholder in a company, for example, partners, joint venture partners, members, or other persons holding equity securities in relation to that organisation; and
                              1. the constitution include any rules or other documents constituting that organisation or governing its activities; and
                                1. subsidiaries include any entity that would be a council-controlled organisation if the references to local authority or local authorities in subsection (1) read council-controlled organisation or council-controlled organisations.

                                  1. The following entities are not council-controlled organisations:

                                  2. a body corporate that carries on an electricity business (whether or not that business is its principal or only business) or a trust that is constituted for purposes which include owning or controlling, directly or indirectly, all or part of an electricity company that carries on that business; or
                                    1. an energy company within the meaning of the Energy Companies Act 1992; or
                                      1. a port company or subsidiary of a port company within the meaning of the Port Companies Act 1988; or
                                        1. a company in which a port company (within the meaning of the Port Companies Act 1988) holds or controls 50% of the shares; or
                                            1. New Zealand Local Government Association Incorporated; or
                                              1. New Zealand Local Government Insurance Corporation Limited and its subsidiaries; or
                                                  1. a company or other organisation (as defined in subsection (2)) of which the New Zealand Local Government Association Incorporated has control directly or indirectly by whatever means; or
                                                    1. an organisation exempted under section 7.

                                                      1. In this section, terms not defined in this Act, but defined in the Companies Act 1993, have the same meaning as in that Act.

                                                      Compare
                                                      Notes
                                                      • Section 6(1) council-controlled organisation paragraph (b): amended, on , by section 3(1) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council-controlled organisation paragraph (b)(i): amended, on , by section 3(1) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council-controlled organisation paragraph (b)(ii): amended, on , by section 3(1) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council organisation paragraph (a)(ii): amended, on , by section 3(2) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council organisation paragraph (b): amended, on , by section 3(3) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council organisation paragraph (b)(i): amended, on , by section 3(3) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(1) council organisation paragraph (b)(ii): amended, on , by section 3(3) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(2): amended, on , by section 3(4) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(3)(c): replaced, on , by section 5 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).
                                                      • Section 6(4)(a): substituted, on , by section 166 of the Electricity Industry Act 2010 (2010 No 116).
                                                      • Section 6(4)(ca): inserted, on , by section 3(5) of the Local Government Act 2002 Amendment Act 2004 (2004 No 63).
                                                      • Section 6(4)(d): repealed, on , by section 48(1)(b) of the Local Government (Auckland) Amendment Act 2004 (2004 No 57).
                                                      • Section 6(4)(g): repealed, on , by section 113(2) of the Local Government (Auckland Transitional Provisions) Act 2010 (2010 No 37).