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Reserve Bank of New Zealand Act 2021

Reserve Bank of New Zealand - Subsidiaries

112: Duties relating to performance, remuneration of directors, and chief executives

You could also call this:

"The Reserve Bank's job is to ensure its teams work well and pay their leaders fairly."

Illustration for Reserve Bank of New Zealand Act 2021

The Reserve Bank of New Zealand has to make sure its subsidiaries work well. You can think of subsidiaries like smaller teams that work under the Bank. The Bank must ensure these teams work efficiently and effectively. The Bank also has to make sure its subsidiaries pay their directors fairly. The rate and type of pay must be decided by the Bank or after talking to the Minister. The subsidiaries must also follow rules about their chief executives. A chief executive of a subsidiary is like the boss of the team. This boss must be appointed by the team's board for a term of not more than 5 years. The boss's employment terms must be agreed upon by the board and the boss. If a subsidiary's boss does not follow these rules, it does not mean their work is invalid. The Bank must also follow other rules, like those in section 111, and the Public Audit Act 2001. You can find more information about public entities in the Public Audit Act 2001.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS287151.

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111: General duty relating to subsidiaries, or

"The Reserve Bank must ensure its subsidiaries follow the rules and help the Bank do its job."

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113: Acquisition of shares or interests in companies, trusts, and partnerships, etc, or

"The Reserve Bank can buy shares or get involved in companies and groups if it follows the rules."

Part 2Reserve Bank of New Zealand
Subsidiaries

112Duties relating to performance, remuneration of directors, and chief executives

  1. The Bank must ensure, to the extent that it is reasonably able to do so, that each of its subsidiaries—

  2. performs its functions—
    1. efficiently and effectively; and
      1. in a manner consistent with the spirit of service to the public; and
        1. in collaboration with other public entities (within the meaning of that term in the Public Audit Act 2001) where practicable; and
        2. pays remuneration to directors of the subsidiary only at a rate and of a kind determined by the Bank in accordance with the fees framework or after consulting with the Minister; and
          1. complies with the requirements for chief executives set out in subsection (2).

            1. The requirements are as follows:

            2. a chief executive of a subsidiary must be appointed by its board for a term of not more than 5 years, but may be reappointed:
              1. the terms and conditions of employment of a chief executive of a subsidiary must be determined by agreement between its board and the chief executive.

                1. A failure to comply with subsection (2) does not invalidate the acts of a chief executive of a subsidiary.

                2. If a director of a subsidiary (A) is an employee of the Bank, subsection (1)(b) does not apply to A’s remuneration as an employee of the Bank.

                3. The requirements of this section are additional to those in section 111.

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