Local Government Act 2002

Savings

Schedule 8: Statements of intent for council-controlled organisations

You could also call this:

"Plans for companies controlled by local councils"

The Local Government Act 2002 has rules for council-controlled organisations. You need to know what a council-controlled organisation is. It is a company or organisation that a local council controls. The board of a council-controlled organisation must give its shareholders a draft statement of intent. This draft must be given to the shareholders by 1 March each year. The draft statement of intent is a plan that says what the organisation wants to achieve and how it will achieve it.

The shareholders can comment on the draft statement of intent. The board must think about these comments and then make a final statement of intent. The final statement of intent must be given to the shareholders before the start of the financial year. A council-controlled organisation's statement of intent must include certain information, such as the organisation's objectives and how it will be governed. It must also include information about the organisation's activities and how its performance will be measured.

Some council-controlled organisations, like those that provide water or roads, must include extra information in their statement of intent. This extra information can include performance measures and targets. Council-controlled trading organisations must also include information about their accounting policies and financial forecasts. Non-trading organisations must include forecast financial statements. You can find more information about these rules in the Local Government Act 2002, which is empowered by s 64.

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8Statements of intent for council-controlled organisations Empowered by s 64

1Adoption of statement of intent

1Draft statement of intent

  1. The board of a council-controlled organisation must deliver a draft statement of intent—

  2. to its shareholders; and
    1. in the case of an organisation that is indirectly controlled by 1 or more local authorities (for example, a subsidiary of a holding company owned by a local authority), to each local authority that indirectly controls the organisation.
      1. The draft statement of intent must be delivered on or before 1 March in the year preceding the financial year to which the draft statement of intent relates.

      Notes
      • Schedule 8 clause 1: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

      2Consideration of shareholder comments

      1. The board must consider any comments on the draft statement of intent that are made by the shareholders, and by local authorities with indirect control, or by any of them, on or before 1 May in the year preceding the year to which the draft statement relates.

      Notes
      • Schedule 8 clause 2: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

      3Final statement of intent

      1. The board must deliver the completed statement of intent to the shareholders before the commencement of the financial year to which it relates.

      Notes
      • Schedule 8 clause 3: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

      4Shareholding local authority may extend deadlines by up to 1 month

      1. The shareholders of a council-controlled organisation may, by written notice, extend a deadline specified in clause 1(2), 2, or 3 for a period or periods not exceeding in total 1 calendar month.

      Notes
      • Schedule 8 clause 4: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

      4A2023/2024 statement of intent (Repealed)

        Notes
        • Schedule 8 clause 4A: repealed, on the , by clause 4A(3).

        5Modifications of statements of intent

        1. The board may, by written notice, modify a statement of intent at any time if the board has first—

        2. given written notice to the shareholders of the proposed modification; and
          1. considered any comments made on the proposed modification by the shareholders or by any of them within—
            1. 1 month after the date on which the notice under paragraph (a) was given; or
              1. any shorter period that the shareholders may agree.
              Notes
              • Schedule 8 clause 5: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

              6Modifications of statements of intent by resolution of shareholders

              1. The shareholders of a council-controlled organisation may, by resolution, require the board to modify the statement of intent in the manner specified in the resolution.

              2. Every modification that is required by a resolution under subclause (1) must be—

              3. consistent with the objectives of the constitution; and
                1. lawful.
                  1. Before making a resolution under subclause (1), the shareholders must consult the board as to the proposed content of the resolution.

                  2. As soon as practicable after receiving a resolution that complies with subclause (2), the board must—

                  3. prepare and adopt a modified statement of intent that incorporates the modifications in the resolution; and
                    1. deliver the modified statement of intent to each shareholder within 1 month of the date of its adoption; and
                      1. make the modified statement of intent publicly available within 1 month of the date of its adoption.
                        1. Subclause (1) applies despite any other provision of this Act or of the constitution of the council-controlled organisation.

                        Notes
                        • Schedule 8 clause 6: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

                        2Content of statements of intent: all council-controlled organisations

                        7Content of statement of intent

                        1. The statement of intent for a council-controlled organisation must include the information described in subclause (2)—

                        2. for the group comprising the council-controlled organisation and its subsidiaries (if any); and
                          1. in respect of the financial year to which it relates and each of the immediately following 2 financial years.
                            1. The information required by subclause (1) is—

                            2. the objectives of the group; and
                              1. a statement of the board’s approach to the governance of the group; and
                                1. the nature and scope of the activities to be undertaken by the group; and
                                  1. the non-financial performance targets and other measures by which the performance of the group may be judged in relation to its objectives; and
                                    1. any additional information that is required to be included in the statement of intent.
                                      Notes
                                      • Schedule 8 clause 7: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

                                      8Additional content of statement of intent

                                      1. This clause applies to a council-controlled organisation that provides services, other than under a contract or similar arrangement, in relation to the following groups of activities:

                                      2. water supply:
                                        1. sewerage and the treatment and disposal of sewage:
                                          1. stormwater drainage:
                                            1. flood protection and control works:
                                              1. the provision of roads and footpaths.
                                                1. The council-controlled organisation’s statement of intent must state the matters in subclause (3) in relation to each group of activities described in subclause (1).

                                                2. The matters required by subclause (2) are—

                                                3. any performance measures specified in a rule made under section 261B in relation to a group of activities described in subclause (1); and
                                                  1. the performance target or targets of the council-controlled organisation for each performance measure.
                                                    Notes
                                                    • Schedule 8 clause 8: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

                                                    3Additional content of statements of intent of council-controlled trading organisations

                                                    9Additional content of statement of intent of council-controlled trading organisations

                                                    1. The statement of intent for a council-controlled trading organisation must include, as well as the information required by Part 2 of this schedule, the following information:

                                                    2. the major accounting policies of the organisation or group; and
                                                      1. the ratio of consolidated shareholders’ funds to total assets, and the definitions of those terms; and
                                                        1. an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders; and
                                                          1. the board’s estimate of the commercial value of the shareholders’ investment in the group and the manner in which, and the times at which, that value is to be reassessed.
                                                            Notes
                                                            • Schedule 8 clause 9: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).

                                                            4Additional content of statements of intent of council-controlled organisations that are not trading organisations

                                                            10Additional content of statement of intent of council-controlled organisations that are not trading organisations

                                                            1. The statement of intent for a council-controlled organisation that is not a council-controlled trading organisation must include, as well as the information required by Part 2 of this schedule, the following information:

                                                            2. the major accounting policies of the organisation or group; and
                                                              1. forecast financial statements of the organisation for the financial year to which the statement of intent relates, and each of the 2 following financial years.
                                                                Notes
                                                                • Schedule 8 clause 10: replaced, on , by section 35 of the Local Government Act 2002 Amendment Act 2019 (2019 No 54).