Plain language law

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Local Government Act 2002

Council-controlled organisations and council organisations - Directors

63: Restriction on lending to council-controlled trading organisation

You could also call this:

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

You need to know about a rule for local authorities when they lend money to council-controlled trading organisations. A local authority can’t give better deals to these organisations than they would get if they were borrowing money themselves. This means the local authority can’t offer easier terms or lower interest rates to the council-controlled trading organisation than what the local authority would get if they were borrowing the money. The local authority also can’t use rates or money from rates as security when lending to these organisations. This rule helps make sure that council-controlled trading organisations don’t get unfair advantages when borrowing money from local authorities.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM171886.

Topics:
Government and voting > Local councils
Money and consumer rights > Banking and loans
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Part 5 Council-controlled organisations and council organisations
Directors

63Restriction on lending to council-controlled trading organisation

  1. A local authority must not lend money, or provide any other financial accommodation, to a council-controlled trading organisation on terms and conditions that are more favourable to the council-controlled trading organisation than those that would apply if the local authority were (without charging any rate or rate revenue as security) borrowing the money or obtaining the financial accommodation.

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