Plain language law

New Zealand law explained for everyone

Local Government Act 2002

Council-controlled organisations and council organisations - Directors

62: Prohibition on guarantees, etc

You could also call this:

“Local councils can't promise to cover the costs of businesses they control”

You are not allowed to give a guarantee, indemnity, or security for a council-controlled trading organisation. This means you can’t promise to cover their debts or responsibilities if they can’t do it themselves. It’s important to remember that this rule applies to all local authorities, which are the groups that run your local area. The trading organisations mentioned here are businesses that the council controls. This law helps make sure that your local authority doesn’t take on extra risks by backing these businesses.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM171885.

Topics:
Government and voting > Local councils
Business > Industry rules
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61: Activities undertaken on behalf of local authorities, or

“Rules about what groups working for councils can do”

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63: Restriction on lending to council-controlled trading organisation, or

“Councils can't give special deals when lending money to their trading groups”

Part 5 Council-controlled organisations and council organisations
Directors

62Prohibition on guarantees, etc

  1. A local authority must not give any guarantee, indemnity, or security in respect of the performance of any obligation by a council-controlled trading organisation.

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