109New section 56A and cross-headings inserted

1. After the Part 5 heading, insert:

   Auckland Council

   56ALimits on Auckland Council

   1. The Auckland Council—

   2. has no right, title, or interest (legal or equitable) in the assets, security, debts, or liabilities of an Auckland water organisation; and
   3. must not receive any equity return, directly or indirectly, from an Auckland water organisation; and
   4. must not give an Auckland water organisation any financial support or capital; and
   5. must not lend money or provide credit to an Auckland water organisation; and
   6. must not give any person any guarantee, indemnity, or security in relation to the performance of any obligation by an Auckland water organisation; and
   7. must not direct an Auckland water organisation in relation to any borrowing of any sort by that organisation.

   8. To avoid doubt, nothing in this section precludes the Auckland Council and an Auckland water organisation entering into a contract for shared services.

   9. In this section,—

      borrowing—

      1. means the incurring by any means of debt to raise money; and
      2. includes the incurring of debt—
         1. under any contract or arrangement for hire purchase, deferred payment, instalment payment, sale and lease-back or buy-back, financial lease, loan, overdraft, or other arrangement for obtaining debt finance; or
         2. by the drawing, acceptance, making, endorsement, issue, or sale of bills of exchange, promissory notes, and other negotiable instruments and debt securities; or
         3. by the use, for any purpose, of funds received or invested by the Auckland water organisation for any other purpose if the Auckland water organisation has resolved to repay, with or without interest, the funds used; or
         4. under any contract for services; but
      3. does not include debt incurred in connection with the hire purchase of goods, the deferred purchase of goods or services, or the giving of credit for the purchase of goods or services if—
         1. the period for which the indebtedness is outstanding is less than 91 days and the indebtedness is not incurred again promptly after payment; or
         2. the goods or services are obtained in the ordinary course of the Auckland water organisation’s performance of its lawful responsibilities, on terms and conditions available generally to parties of equivalent creditworthiness, for amounts not exceeding in aggregate an amount—
            1. determined by resolution of the Auckland water organisation as not being so significant as to require specific authorisation; or
            2. recorded for the purposes of this subsubparagraph in the then current borrowing management policy of the Auckland water organisation; and
      4. does not include a contract for services that is entered into (or that was entered into before this section came into force)—
         1. in the ordinary course of the Auckland Council’s or an Auckland water organisation’s performance of its lawful responsibilities; and
         2. on terms and conditions generally available to other parties of equivalent creditworthiness

      capital includes uncalled capital

      equity return means—

      1. profits of an Auckland water organisation; or
      2. distributions from an Auckland water organisation; or
      3. any benefit derived, directly or indirectly, from an Auckland water organisation that represents, is calculated by reference to, or is determined by—
         1. a share in or proportion of an Auckland water organisation’s capital; or
         2. an Auckland water organisation’s surplus or residual economic value (after satisfying prior contractual claims); or
         3. an Auckland water organisation’s profitability or any other indicator of its success

      give financial support or capital does not include to enter into any contract for services to sell or supply goods or services on credit—

      1. in the ordinary course of the Auckland Council’s, or an Auckland water organisation’s, performance of its lawful responsibilities; and
      2. on terms and conditions generally available to other parties of equivalent creditworthiness

      lend money or provide credit—

      1. includes, without limiting the generality of that expression,—
         1. to defer payment for any goods or services supplied or works constructed for any person, organisation, or government; and
         2. to enter into hire purchase agreements or agreements that are of the same or a substantially similar nature; and
         3. to enter into finance lease arrangements or arrangements that are of the same or a substantially similar nature; and
         4. to subscribe for any debt securities or uncalled capital; but
      2. does not include to enter into any contract for services to sell or supply goods or services on credit—
         1. in the ordinary course of the Auckland Council’s, or an Auckland water organisation’s, performance of its lawful responsibilities; and
         2. on terms and conditions generally available to other parties of equivalent creditworthiness

      security has the meaning set out in section 6(1) of the Financial Markets Conduct Act 2013.

   Auckland water organisations