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Local Government Act 2002

Planning, decision-making, and accountability - Borrowing and security - Miscellaneous provisions

122: Disclosure document and loan documents to contain statement that the Crown does not guarantee financial products or loan

You could also call this:

"The government does not promise to pay back money borrowed by local councils or Watercare Services Limited, and they must say so in their loan documents and information about financial products."

When a local authority or Watercare Services Limited issues a disclosure document, it must say that the financial products are not guaranteed by the Crown, unless the Crown has expressly guaranteed them under the Public Finance Act 1989. You need to know what a disclosure document is, it is a document that tells you about a financial product, like a product disclosure statement. A local authority or Watercare Services Limited must follow the rules in the Financial Markets Conduct Act 2013.

If a local authority or Watercare Services Limited borrows money, the loan agreement must say that the loan is not guaranteed by the Crown. This rule does not apply to certain types of loans, which are described in section 49 of the Public Finance Act 1989. You should look at the loan agreement to see if it says the loan is not guaranteed by the Crown.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM172907.

Topics:
Government and voting > Local councilsMoney and consumer rights > Banking and loans
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"The Government does not have to pay debts owed by local councils or water services companies, except in special cases."

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"This part explains the rules and duties for local councils about water, parks, and libraries"

Part 6Planning, decision-making, and accountability
Borrowing and security: Miscellaneous provisions

122Disclosure document and loan documents to contain statement that the Crown does not guarantee financial products or loan

  1. If a local authority or Watercare Services Limited is named as the issuer, or is otherwise named with its consent, in a disclosure document, that disclosure document must, unless the financial products being offered under the disclosure document are expressly guaranteed by the Crown under the Public Finance Act 1989, contain a statement that the financial products being offered under the disclosure document are not guaranteed by the Crown.

  2. In subsection (1), disclosure document means a product disclosure statement (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) or a disclosure document under clause 26 of Schedule 1 of that Act.

  3. If a local authority or Watercare Services Limited enters into any loan agreement or incidental arrangement, that agreement or arrangement must include a statement that the loan or other liability under the incidental arrangement is not guaranteed by the Crown.

  4. Subsection (3) does not apply in relation to liability for any sum of a kind described in section 49 of the Public Finance Act 1989.

Notes
  • Section 122: replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
  • Section 122(1): amended, on , by section 99 of the Local Government (Water Services Preliminary Arrangements) Act 2024 (2024 No 31).
  • Section 122(3): amended, on , by section 99 of the Local Government (Water Services Preliminary Arrangements) Act 2024 (2024 No 31).