New Zealand Legislation: Acts

20 Non-specific interests rule

• (1) The purpose of subsections (2) to (5) is to ensure that ownership separation is required of trust-like entities where there are significant levels of membership overlap.

  (2) No person (person A) may exceed the overlap threshold with another person (person B) where—

  • (a) Person A is involved in business A; and

  • (b) Person B is involved in business B; and

  • (c) Either or both of person A or person B is a trust-like entity; and

  • (d) Person B has a reverse overlap with person A or members of person A;—

  and, if person A is in breach of this requirement, so is person B.

  (3) Reverse overlap in subsection (2)(d) means person B exceeds the overlap threshold with person A as if that term had the meaning set out in section 3, but applied also to person B and as if all references in that definition to non-specific interests in person A were references to interests in person B.

  (4) No local authority with an involvement in business A may, after 23 June 1998, establish a local overlap with a trust-like entity involved in business B.

  (5) For the purposes of subsection (4), local overlap exists with the trust-like entity when the members of the trust-like entity substantially comprise people or organisations in the community of the local authority.

  (6) The purpose of subsections (7) and (8) is to prevent avoidance of the ownership separation rules where interests in a trust-like entity are equivalent to an involvement.

  (7) No person may participate in a trust-like entity which is involved in business A if that person is also involved in business B, or participates in a trust-like entity which is involved in business B.

  (8) For the purposes of subsection (7), a person participates in a trust-like entity when it has—

  • (a) Expectancies receivable alone, or with any group of associates, in respect of benefits from the trust-like entity which are equivalent in significance to 10% or more of all equity return rights available from the trust-like entity; or

  • (b) A material influence over the trust-like entity where the definition of material influence in section 11 is read as if its references to the electricity business were references to the trust-like entity.

  (9) For the purposes of this section, trust-like entity means any person in which non-specific interests are held.

  (10) This section is subject to section 34 (which relates to companies with direct ownership).