Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill

Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill

Member’s Bill

253—1

Explanatory note

General policy statement

The Friendly Societies and Credit Unions Act 1982 is an old piece of legislation that is not fully suitable for the environment in which credit unions operate today.

Under the current Act, credit unions have a very complex supervisory and oversight regime. This inhibits the efficiency and effectiveness of the unions, adds unnecessary operating and compliance costs, and results in confusion for union members and for the public.

Credit unions are unable to incorporate, and must have internal trustees to hold property and conduct business. This is not in line with other financial institutions.

Credit unions are unable to provide financing to SMEs that are related to members of that credit union. Currently, the loan must be made to the member who on-lends it to the SME, with the credit union taking collateral security from the SME as well.

A further issue is the number of credit unions necessary to form an association. The need to gain economies of scale has seen the number of credit unions decline to 20, while under the current Act a minimum of 7 is needed to form an association.

The Bill aims to—

  • remove unnecessary operating and compliance costs

  • promote greater efficiency, innovation, and accountability

  • bring credit unions into alignment with other financial service providers in New Zealand

  • maintain the element of mutuality and the requirement of a common bond between members.

To achieve these aims, the Bill include measures to—

  • simplify the statutory objects of an association of credit unions to cover generally the conduct of activities for the benefit of its members and as authorised by its rules

  • provide for the incorporation of credit unions

  • enable credit unions and associations of credit unions in the pursuance of their objects to have all the powers of a natural person

  • permit credit unions to provide financing to SMEs that are owned by or otherwise closely associated with a member of the credit union

  • reduce the minimum number of credit union members needed for an association of credit unions to be validly constituted from 7 to 2.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 provides for the Bill to come into force: a few provisions come into force on the day after the date on which the Bill receives the Royal assent, with the other provisions coming into force 18 months after the Royal assent, or earlier than that by Order in Council.

Clause 3 provides that the Bill amends the Friendly Societies and Credit Unions Act 1982 (the principal Act).

Part 1Amendments to principal Act

Clause 4 makes amendments to section 2 that are consequential on other amendments made by the Bill that relate to credit unions. Section 2 is the interpretation provision.

Clause 5 inserts new section 2A to give effect to new Schedule 1AA inserted by clause 50. New Schedule 1AA contains transitional, savings, and related provisions (see notes below on clause 50).

Clause 6 makes an amendment to section 5 that is consequential on other amendments made by the Bill that relate to credit unions.

Clause 7 to 10 make amendments to sections 28, 49, 50, and 82 to clarify that members of societies registered under Part 2 of the Act do not necessarily have to be present at a meeting for the purpose of voting on matters considered at the meeting. These amendments relate to the amendment made by clause 43.

Clause 11 replaces the cross-heading above section 98 in consequence of the amendment made by clause 14.

Clause 12 amends section 98, which sets out the circumstances in which a society must register as a credit union under Part 3 of the Act. The amendments made by clause 12(1), (2), (4), and (5) relate to the amendment made by clause 14. The amendments made by clause 12(3) and (6) extend the scope of section 98 to cover cases where a society is making loans for the purposes of small businesses related to members of the society (for example, a small business carried on by a body corporate that is controlled by a member).

Clause 13 makes amendments to section 99 that relate to the amendment made by clause 14.

Clause 14 replaces section 100 with new sections 100, 100A, and 100B. These new sections provide for the incorporation of credit unions. New section 100B is broadly based on sections 8 to 10 of the Incorporated Societies Act 1908 and sections 13 to 15 of the Companies Act 1993. Credit unions are currently unincorporated societies.

Clause 15 repeals section 101(2). Section 101(2) provides that a credit union has no power to do anything unless it is within its objects and authorised by its rules or the Act. The repeal relates to the amendment made by clause 24.

Clause 16 makes an amendment to section 102 that relates to the amendment made by clause 14.

Clause 17 amends section 103 to reformulate, with some modifications, the provisions of the Act relating to a credit union’s name.

Clause 18 repeals section 104 in consequence of the amendments made by clauses 14 and 21.

Clause 19 replaces section 105(1), which relates to the binding effect of a credit union’s rules. New section 105(1) is based on section 31(2) of the Companies Act 1993 and relates to the amendment made by clause 14.

Clause 20 makes amendments to section 106 that relate to the amendment made by clause 14.

Clause 21 inserts new sections 106A, 106B, and 106C. New section 106A, which is based on section 97(1) of the Companies Act 1993, provides that a member of a credit union is not liable for an obligation of the credit union by reason only of being a member. New section 106A relates to the amendment made by clause 14. New sections 106B and 106C reformulate provisions of the Act relating to a credit union’s rules.

Clause 22 replaces the cross-heading above section 107 and clause 23 amends section 107A. These amendments relate to the amendments made by clauses 14 and 24.

Clause 24 inserts new sections 107B, 107C, 107D, and 107E. These new sections, which are based on Part 3 of the Companies Act 1993, provide for the following:

  • a credit union has full capacity to do any act, subject to any enactment, the general law, and the credit union’s rules:

  • an act of a credit union is not invalid merely because the credit union did not have the capacity to do the act:

  • generally, a credit union may not assert against a person dealing with the credit union that the Act or the credit union’s rules have not been complied with or that there has been some other irregularity in the credit union’s processes.

Clause 25 to 30 repeal provisions of, and make other amendments to, the Act in consequence of the amendments made by clauses 14 and 24. In particular, clause 29 inserts new sections 133A and 133B, which are based on sections 180 and 181 of the Companies Act 1993. These new sections set out how a credit union may enter into contracts and appoint attorneys.

Clause 31 replaces section 135, which relates to how credit unions may amalgamate with each other. The new amalgamation provisions contained in new sections 135 to 135G are based on Part 13 of the Companies Act 1993. The new amalgamation provisions do not apply to associations of credit unions (see notes below on clause 39).

Clause 32 repeals section 136 in consequence of the amendment made by clause 31.

Clause 33 amends the cross-heading above section 137 in consequence of the amendments made by clauses 36 and 37.

Clause 34 inserts new section 137A to give members of a credit union the power to resolve to put the credit union into liquidation under Part 16 of the Companies Act 1993.

Clause 35 amends section 138. Section 138 gives the Registrar of Friendly Societies and Credit Unions the power to apply to the High Court to put a credit union into liquidation under Part 16 of the Companies Act 1993. The amendments expand the grounds on which an application may be made and also permit an application to be made by the credit union itself or a member or creditor of the credit union.

Clause 36 repeals section 139, which gives the Registrar of Friendly Societies and Credit Unions power to suspend certain activities of a credit union.

Clause 37 replaces section 140, which currently gives the Registrar of Friendly Societies and Credit Unions power to suspend or cancel a credit union’s registration under Part 3 of the Act. New sections 140 to 140M, which are broadly based on Part 17 of the Companies Act 1993, give the Registrar a more limited power to remove a credit union from the register and make provision for a credit union to be restored to the register in certain circumstances. A credit union that is incorporated under the new provision inserted by clause 14 ceases to exist if it is removed from the register (subject to the powers to restore a credit union to the register).

Clause 38 makes amendments to section 141 that are consequential on the amendments made by clauses 21 and 34.

Clause 39 amends section 143. Section 143 requires associations of credit unions to be registered under Part 3 of the Act. The amendment made by clause 39(3) reduces the minimum number of members of an association of credit unions from 7 to 2 and expands the scope of the objects that an association may have, including objects that relate to co-operative or mutual bodies that are not credit unions. Clause 39(1) and (2), together with clauses 41 and 42 that amend sections 145 and 146, make amendments for associations of credit unions that correspond to the amendment made by clause 14. Except as set out in new section 146(8) (inserted by clause 42), the Act applies to associations of credit unions in the same way as it applies to credit unions.

Clause 40 makes an amendment to section 144 that relates to the amendment made by clause 31.

Clause 43 inserts new sections 147A and 147B. New section 147A clarifies that the rules of a society registered under Part 2 of the Act or the rules of a credit union may provide for meetings to be held using audio, audio and visual, or electronic communication. New section 147B clarifies that the rules of a society registered under Part 2 of the Act or the rules of a credit union may permit voting by its members by post or electronic means or by proxy.

Clause 44 amends section 151 in consequence of the amendments made by clauses 36 and 37.

Clause 45 amends section 152 in consequence of the amendments made by clauses 31 and 37.

Clause 46 to 49 make amendments to sections 154 to 157 in consequence of the amendment made by clause 14.

Clause 50 inserts new Schedule 1AA, which is set out in the Schedule of the Bill. New Schedule 1AA contains transitional, savings, and related provisions that apply to credit unions (including associations of credit unions) that are registered under Part 3 of the Act immediately before the amendments made by clauses 4, 6, 11 to 42, 44 to 49, and 51 to 53 come into force. All these amendments are connected (directly or indirectly) with the incorporation of credit unions (see notes above on clause 14). In general terms, the following rules apply to existing credit unions:

  • the amendments in question do not apply immediately to existing credit unions:

  • existing credit unions have 6 months to apply for incorporation under the new provision:

  • the amendments in question apply to an existing credit union after it has been incorporated following its application for incorporation under the new provision:

  • an existing credit union that fails to apply for incorporation under the new provision within the 6-month period, or whose application is refused where the refusal is not overruled on appeal, loses its registration.

New Schedule 1AA also contains provision for the undertaking of an existing credit union to be transferred to the new body corporate when the credit union is incorporated.

Clause 51 makes consequential amendments to Schedule 4.

Part 2Consequential amendments

Clause 52 makes a consequential amendment to the Insurance (Prudential Supervision) Act 2010.

Clause 53 makes a consequential amendment to the Financial Reporting Act 2013.

Stuart Smith

Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill

Member’s Bill

253—1

Contents

Explanatory note
1Title
2Commencement
3Principal Act
4Section 2 amended (Interpretation)
5New section 2A inserted (Transitional, savings, and related provisions)
2ATransitional, savings, and related provisions
6Section 5 amended (Registry Office and registers)
7Section 28 amended (Appointment of trustees)
8Section 49 amended (Duties of trustees in relation to investments)
9Section 50 amended (Trustees of society may make investments for branch, etc)
10Section 82 amended (Special resolutions)
11Cross-heading above section 98 replaced
12Section 98 amended (Credit unions to be registered)
13Section 99 amended (Exemptions from registration)
14Section 100 replaced (Society may register as credit union)
100Persons eligible to incorporate credit union
100AApplication for incorporation of credit union
100BIncorporation of credit union
15Section 101 amended (Objects of credit union)
16Section 102 amended (Qualifications for admission to membership of credit union)
17Section 103 amended (Name to contain words “credit union”)
18Section 104 repealed (Registration and rules of credit union)
19Section 105 amended (Effect of rules on members of credit union)
20Section 106 amended (Membership of credit union, voting rights)
21New sections 106A to 106C inserted
106AMembers not liable for obligations of credit union
106BAmendment of credit union’s rules
106CCredit union to supply copy of rules
22Cross-heading above section 107 replaced
23Section 107A amended (Credit union may offer credit union securities)
24New sections 107B to 107E and cross-heading inserted
107BCapacity and powers of credit union
107CValidity of actions
107DDealings between credit union and other persons
107ENo constructive notice
25Sections 109 to 110 repealed
26Sections 112 to 117 repealed
27Section 127 amended (Annual return)
28Section 133 amended (Credit union to be insured against fraud or other dishonesty)
29New sections 133A and 133B inserted
133AMethod of contracting
133BAttorneys
30Section 134 repealed (Guarantee funds)
31Section 135 replaced (Amalgamation of credit unions and transfer of engagements)
135Amalgamation of credit unions
135AAmalgamation proposal
135BInformation relating to amalgamation proposal for members, creditors, and public
135CApproval of amalgamation proposal
135DDocuments to be sent to Registrar
135ERegistration of amalgamation
135FOther registers
135GPowers of court in relation to proposed amalgamation
32Section 136 repealed (Registrar may approve amalgamations or transfers of engagements of credit unions)
33Cross-heading above section 137 amended
34New section 137A inserted (Members may resolve to put credit union into liquidation)
137AMembers may resolve to put credit union into liquidation
35Section 138 amended (Registrar may apply to put credit union into liquidation)
36Section 139 repealed (Registrar may suspend business of credit union)
37Section 140 replaced (Cancellation or suspension of registration, and dissolution of credit union)
140Removal from register
140ANotice of intention to remove from register
140BObjection to removal from register
140CObjections under section 140B(1)(a), (b), or (c)
140DObjections under section 140B(1)(d) or (e)
140ERegistrar must send information to person who requests removal
140FHigh Court may order that credit union not be removed
140GLiability of officers, members, and others to continue
140HRestoration of credit union to register
140IRegistrar may restore credit union to register
140JNotice of proposed restoration
140KHigh Court may order restoration of credit union
140LRegistrar or High Court may require requirements to be complied with
140MOther High Court orders
38Section 141 amended (Liability of members on winding up)
39Section 143 amended (Associations of credit unions to be registered)
40Section 144 amended (Membership of association)
41Section 145 amended (Application for registration of association)
42Section 146 replaced (Registration of association)
146Incorporation of association
43New sections 147A and 147B inserted
147AMeetings may be held using audio, audio and visual, or electronic communication
147BPostal, electronic, and proxy voting
44Section 151 amended (Appeals)
45Section 152 amended (Regulations)
46Section 154 amended (Recovery of fines, etc, imposed on society, branch, or credit union)
47Section 155 amended (Status of trustees and officers for purposes of Crimes Act 1961)
48Section 156 amended (Liability of officers and of members of committee on commission of offence)
49Section 157 amended (Institution of legal proceedings by or against society or branch or credit union)
50New Schedule 1AA inserted
51Schedule 4 amended
52Amendment to Insurance (Prudential Supervision) Act 2010
11Application of Act to friendly societies
53Amendment to Financial Reporting Act 2013

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Act 2017.

2 Commencement

(1)

Sections 3, 7 to 10, and 43 come into force on the day after the date on which this Act receives the Royal assent.

(2)

The rest of this Act comes into force on the earlier of the following days:

(a)

a date appointed by the Governor-General by Order in Council:

(b)

the date immediately after the expiry of the period of 18 months that commences on the date on which this Act receives the Royal assent.

3 Principal Act

This Act amends the Friendly Societies and Credit Unions Act 1982 (the principal Act).

Part 1 Amendments to principal Act

4 Section 2 amended (Interpretation)

(1)

In section 2, definition of association, replace “registered as such under Part 3” with “incorporated under Part 3 in accordance with section 146.

(2)

In section 2, definition of committee and committee of management, after “branch”, insert “or a credit union”.

(3)

In section 2, replace the definition of credit union with:

credit union

(a)

means a credit union incorporated under Part 3 in accordance with section 100B; and

(b)

subject to section 146(8) and with any necessary modifications, includes an association of credit unions incorporated under Part 3 in accordance with section 146

(4)

In section 2, insert in its appropriate alphabetical order:

financial product has the meaning given in section 7(1) of the Financial Markets Conduct Act 2013

(5)

In section 2, replace the definition of officer with:

officer,—

(a)

in relation to a registered society or branch, includes any trustee, treasurer, secretary, or member of the committee of management of the society or branch, and any person appointed by the society or branch to sue and be sued on its behalf; and

(b)

in relation to a credit union, means a person who—

(i)

is a member of the credit union’s committee of management; or

(ii)

holds any other office provided for in the credit union’s rules

5 New section 2A inserted (Transitional, savings, and related provisions)

After section 2, insert:

2A Transitional, savings, and related provisions

The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.

6 Section 5 amended (Registry Office and registers)

Replace section 5(3)(b) with:

(b)

in respect of any credit union,—

(i)

the rules and any amendments, notices of change of registered office and of the appointment of officers, annual returns, and notices of change of name:

(ii)

if the credit union is removed from the register under section 140, the notice of the removal issued by the Registrar:

(iii)

if the credit union is restored to the register under section 140H, the notice of the restoration issued by the Registrar.

7 Section 28 amended (Appointment of trustees)

Replace section 28(1) with:

(1)

Every registered society and branch is to have 1 or more trustees to be appointed from time to time by a resolution of a majority of the members of the society or branch entitled to vote and voting on the matter.

8 Section 49 amended (Duties of trustees in relation to investments)

In section 49(1), replace “majority of the members of the society or branch present and entitled to vote in general meeting” with “resolution of a majority of the members of the society or branch entitled to vote and voting on the matter”.

9 Section 50 amended (Trustees of society may make investments for branch, etc)

(1)

In section 50(2), replace “majority” with “resolution of a majority”.

(2)

In section 50(2), replace “present and entitled to vote in general meeting” with “entitled to vote and voting on the matter”.

10 Section 82 amended (Special resolutions)

(1)

In section 82(1)(b), replace “either in person or by proxy at the meeting” with “on the matter”.

(2)

In section 82(1)(b), replace “vote at the meeting” with “vote on the matter”.

(3)

Repeal section 82(2).

11 Cross-heading above section 98 replaced

Replace the cross-heading above section 98 with:

Incorporation

12 Section 98 amended (Credit unions to be registered)

(1)

In the heading to section 98, replace registered with “incorporated under this Part”.

(2)

Replace section 98(1) with:

(1)

No person, other than a credit union incorporated under this Part in accordance with section 100B, may trade or carry on business as a credit union.

(3)

Replace section 98(2)(a) with:

(a)

administering a fund into which members of a group contribute money that is to be applied wholly or principally—

(i)

in loans to those members; or

(ii)

in both of the following:

(A)

loans to those members:

(B)

loans to SMEs in cases where the SME is related to a member and the loan is to be used for the purposes of a business being carried on by the SME:

(4)

In section 98(2)(b), delete “, society, or body of persons”.

(5)

In section 98(2)(c), “delete society, or body of persons,”.

(6)

After section 98(2), insert:

(2A)

In this section, SME means any of the following that has no more than 19 full-time equivalent employees:

(a)

a body corporate:

(b)

a firm under the Partnership Act 1908:

(c)

a limited partnership under the Limited Partnerships Act 2008:

(d)

the trustee or trustees of a trust.

(2B)

For the purposes of this section, an SME is related to a member (member M) if—

(a)

the SME is a body corporate and member M has the power, directly or indirectly, to exercise, or to control the exercise of, the rights to vote attaching to 25% or more of the voting products (as defined in section 6(1) of the Financial Markets Conduct Act 2013) of the body corporate; or

(b)

the SME is a firm under the Partnership Act 1908 in which member M is a partner; or

(c)

the SME is a limited partnership under the Limited Partnerships Act 2008 in which member M is a partner; or

(d)

the SME is the trustee or trustees of a trust and member M is—

(i)

the trustee or one of the trustees; or

(ii)

a beneficiary under the trust.

13 Section 99 amended (Exemptions from registration)

(1)

In the heading to section 99, replace registration with incorporation under this Part.

(2)

In section 99(1)(a) and (b) and (2), delete “, society, or body of persons (whether corporate or unincorporate)”.

(3)

In section 99(3), delete “, society, or body of persons” in each place.

14 Section 100 replaced (Society may register as credit union)

Replace section 100 with:

100 Persons eligible to incorporate credit union

(1)

Any 21 or more persons falling within subsection (2) may apply to the Registrar in accordance with section 100A for the incorporation of a credit union under this Part.

(2)

The persons referred to in subsection (1) are as follows:

(a)

an adult:

(b)

a charitable entity as defined by the Charities Act 2005:

(c)

an incorporated society registered under the Incorporated Societies Act 1908.

100A Application for incorporation of credit union

(1)

An application under section 100 for the incorporation of a credit union must—

(a)

be signed by each of the applicants; and

(b)

include a copy of the credit union’s proposed rules; and

(c)

include a list of the names, addresses, and designations of the officers proposed for the credit union; and

(d)

include such information or evidence as the Registrar may reasonably require in relation to any of the matters referred to in section 100B(1)(a) to (f).

(2)

The credit union’s proposed rules must either—

(a)

contain provisions in respect of the matters mentioned in Schedule 4; or

(b)

accord with any model rules applicable to credit unions produced by the Registrar under section 9.

(3)

Section 16 applies (with any necessary modifications) to a credit union’s proposed rules received by the Registrar under this section as it applies to a society’s rules received by the Registrar under section 12.

100B Incorporation of credit union

(1)

Subsection (2) applies if an application is made under section 100for the incorporation of a credit union and the Registrar is satisfied—

(a)

that the credit union will have at least 21 members who fall within section 100(2); and

(b)

that the only objects of the credit union will be those of a credit union specified in section 101; and

(c)

that the credit union will have a common bond as defined in section 102; and

(d)

that the credit union’s name will comply with section 103; and

(e)

that there is no reason to expect that the credit union will not be operated in accordance with its rules and this Part; and

(f)

that the requirements of this Part as to incorporation have otherwise been satisfied.

(2)

The Registrar must—

(a)

register the credit union’s name; and

(b)

issue a certificate of incorporation; and

(c)

register the credit union’s rules (together with any other documents or information relating to the credit union that the Registrar thinks appropriate).

(3)

The credit union is, on and after the date of incorporation set out in the certificate of incorporation, a body corporate that has—

(a)

perpetual succession; and

(b)

the capacity, rights, powers, and privileges provided for in section 107B.

(4)

The credit union continues in existence until it is removed from the register under section 140.

(5)

The certificate of incorporation is conclusive evidence that—

(a)

all the requirements of this Part as to incorporation have been complied with; and

(b)

on and after the date of incorporation set out in the certificate, the credit union is registered and incorporated under this Part.

(6)

If the Registrar refuses to act under subsection (2) in relation to an application, the applicants may, within 3 months after the date on which they are notified of the refusal, appeal against the refusal to the High Court.

(7)

If the refusal is overruled on appeal, then, subject to such terms and conditions as the court may impose or otherwise in pursuance of the court order, the Registrar must act under subsection (2) as soon as practicable.

15 Section 101 amended (Objects of credit union)

Repeal section 101(2).

16 Section 102 amended (Qualifications for admission to membership of credit union)

In section 102(1)(e), replace “forming a society to be registered as” with “incorporating”.

17 Section 103 amended (Name to contain words “credit union”)

(1)

In the heading to section 103, replace to contain words “credit union” with of credit union.

(2)

In section 103, delete “society registered as a”.

(3)

In section 103, insert as subsections (2) and (3):

(2)

A credit union’s name must not—

(a)

be identical, or almost identical, to that of—

(i)

any other credit union; or

(ii)

any other body corporate established or registered in New Zealand or carrying on activities in New Zealand; or

(b)

be, in the Registrar’s opinion, likely to mislead the credit union’s members or the public as to the credit union’s nature or identity; or

(c)

be, in the Registrar’s opinion, offensive; or

(d)

be a name the use of which by the credit union contravenes any other enactment.

(3)

If, at any time, a credit union’s name contravenes (through inadvertence or otherwise) this section,—

(a)

the Registrar may by notice to the credit union require the credit union to change its name so that the name does not contravene this section; and

(b)

if the Registrar does so, the credit union must change its name accordingly within the period of 4 weeks from the date on which it receives the Registrar’s notice or within such longer period as the Registrar may allow.

18 Section 104 repealed (Registration and rules of credit union)

Repeal section 104.

19 Section 105 amended (Effect of rules on members of credit union)

Replace section 105(1) with:

(1)

The rules of a credit union are binding, in accordance with their terms, as between—

(a)

the credit union and each member; and

(b)

each member.

(1A)

Subsection (1) is subject to the rest of this Act.

20 Section 106 amended (Membership of credit union, voting rights)

(1)

In section 106(1)(a), replace “39” with “39(1) and (2)”.

(2)

After section 106(1)(a), insert:

(aa)

no person under the age of 18 years can be an officer of a credit union; and

(3)

Repeal section 106(7).

21 New sections 106A to 106C inserted

After section 106, insert:

106A Members not liable for obligations of credit union

(1)

A member of a credit union is not liable for an obligation of the credit union by reason only of being a member.

(2)

Subsection (1) does not affect—

(a)

section 141; or

(b)

any liability that a member of a credit union has to the credit union—

(i)

under its rules or a contract; or

(ii)

for any tort, breach of a fiduciary duty, or other actionable wrong committed by the member.

106B Amendment of credit union’s rules

(1)

A credit union’s rules may be amended by a resolution of a majority of its members entitled to vote and voting on the matter.

(2)

Section 26 (which permits the Registrar to amend rules) applies (with any necessary modifications) to a credit union’s rules as it applies to a registered society’s rules.

(3)

An amendment of a credit union’s rules has no effect until the amendment is registered.

(4)

For the purposes of subsection (3), a copy of the amendment, signed by 3 members, must be sent to the Registrar for registration (unless the amendment is made by the Registrar under section 26).

(5)

Subsections (3) and (4) do not apply to a change in the situation of a credit union’s registered office, but notice of the change must be sent promptly to the Registrar for registration.

(6)

An amendment of a credit union’s rules may be registered only if the rules as amended either—

(a)

contain provisions in respect of the matters mentioned in Schedule 4; or

(b)

accord with any model rules applicable to credit unions produced by the Registrar under section 9.

(7)

Section 24(1) applies (with any necessary modifications) to an amendment of a credit union’s rules as it applies to an amendment of a registered society’s rules.

(8)

Before registering an amendment of a credit union’s rules, the Registrar may require from the credit union such information or evidence as may be reasonable to show that, after the amendment takes effect, the credit union will be operated in accordance with its rules and this Part.

106C Credit union to supply copy of rules

A credit union must deliver to any person on request, on payment of any reasonable charge imposed by the credit union, a copy of the rules of the credit union.

22 Cross-heading above section 107 replaced

Replace the cross-heading above section 107 with:

Shares and securities

23 Section 107A amended (Credit union may offer credit union securities)

In section 107A(1), delete “and trust deed”.

24 New sections 107B to 107E and cross-heading inserted

After section 107A, insert:

Capacity, powers, and validity of actions

107B Capacity and powers of credit union

(1)

A credit union has, both within and outside New Zealand,—

(a)

full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and

(b)

for the purposes of paragraph (a), full rights, powers, and privileges.

(2)

Subsection (1) is subject to this Act, any other enactment, and the general law.

(3)

The credit union’s rules may contain a provision relating to the capacity, rights, powers, or privileges of the credit union only if the provision restricts the capacity of the credit union, or its rights, powers, and privileges.

107C Validity of actions

(1)

An act of a credit union or the transfer of property to or by a credit union is not invalid merely because the credit union did not have the capacity, right, or power to do the act or to transfer or take a transfer of the property.

(2)

Subsection (1) does not limit—

(a)

section 118; or

(b)

any proceedings that may otherwise be taken—

(i)

by a member of a credit union against the credit union or an officer of the credit union to prevent an act of, or a transfer of property to or by, the credit union that would be invalid apart from subsection (1); or

(ii)

by a credit union or a member or former member of a credit union against an officer or a former officer of the credit union in relation to an act of, or a transfer of property to or by, the credit union that would have been invalid apart from subsection (1).

(3)

The fact that an act is not, or would not be, in the best interests of a credit union does not affect the capacity of the credit union to do the act.

107D Dealings between credit union and other persons

(1)

A credit union may not assert against a person dealing with the credit union that—

(a)

this Act has not, or the credit union’s rules have not, been complied with; or

(b)

a person named as an officer of the credit union in any register—

(i)

is not an officer of the credit union; or

(ii)

has not been duly appointed; or

(iii)

does not have authority to exercise a power that, given the nature of the credit union, an officer customarily has authority to exercise; or

(c)

a person held out by the credit union as an officer, employee, or agent of the credit union—

(i)

has not been duly appointed; or

(ii)

does not have authority to exercise a power that, given the nature of the credit union, a person appointed to that capacity customarily has authority to exercise; or

(d)

a person held out by the credit union as an officer, employee, or agent of the credit union does not have the authority to exercise a power that the credit union holds the person out as having; or

(e)

a document issued on behalf of the credit union by an officer, employee, or agent of the credit union with actual or usual authority to issue the document is not valid or not genuine.

(2)

However, a credit union may assert any of the matters referred to in subsection (1)(a) to (e) against a person dealing with the credit union if that person had, or ought to have had, by virtue of the person’s position with or relationship to the credit union, knowledge of those matters.

(3)

Subsection (1) applies even though a person of a kind referred to in subsection (1)(b) to (e) acts fraudulently or forges a document that appears to have been signed on behalf of the credit union, unless the person dealing with the credit union has actual knowledge of the fraud or forgery.

(4)

In this section, person dealing

(a)

means, in the case of a transaction with a credit union, the other party to the transaction; and

(b)

includes a person who has acquired property, rights, or interests from a credit union.

107E No constructive notice

A person is not affected by, or deemed to have notice or knowledge of the contents of, the rules of, or any other document relating to, a credit union merely because—

(a)

the rules are, or the document is,—

(i)

registered; or

(ii)

available to the public under section 5(3) or (4); or

(iii)

available for inspection at an office of the credit union; or

(b)

in the case of the rules, a copy of them can be requested under section 106C.

25 Sections 109 to 110 repealed

Repeal sections 109 to 110.

26 Sections 112 to 117 repealed

Repeal sections 110 to 117.

27 Section 127 amended (Annual return)

Replace section 127(3)(d) with:

(d)

must have attached a list containing the names, addresses, and designations of the officers of the credit union; and

28 Section 133 amended (Credit union to be insured against fraud or other dishonesty)

(1)

Replace section 133(1) with:

(1)

A credit union must have a policy of insurance that complies with the requirements of this section.

(2)

Repeal section 133(4).

29 New sections 133A and 133B inserted

After section 133, insert:

133A Method of contracting

(1)

A contract or other enforceable obligation may be entered into by a credit union as follows:

(a)

an obligation that, if entered into by a natural person, would, by law, be required to be by deed may be entered into on behalf of the credit union in writing signed under the name of the credit union by—

(i)

2 or more officers of the credit union; or

(ii)

if the credit union’s rules so provide, an officer, or other person or class of persons, whose signature or signatures must be witnessed; or

(iii)

1 or more attorneys appointed by the credit union in accordance with section 133B:

(b)

an obligation that, if entered into by a natural person, is, by law, required to be in writing may be entered into on behalf of the credit union in writing by a person acting under the credit union’s express or implied authority:

(c)

an obligation that, if entered into by a natural person, is not, by law, required to be in writing may be entered into on behalf of the credit union in writing or orally by a person acting under the credit union’s express or implied authority.

(2)

A credit union may, in addition to complying with subsection (1), affix its common seal, if it has one, to the contract or document containing the enforceable obligation.

(3)

Subsection (1) applies to a contract or other obligation—

(a)

whether or not that contract or obligation was entered into in New Zealand; and

(b)

whether or not the law governing the contract or obligation is the law of New Zealand.

133B Attorneys

(1)

A credit union may, by an instrument in writing executed in accordance with section 133A(1)(a), appoint a person as its attorney either generally or in relation to a specified matter.

(2)

Subsection (1) is subject to the credit union’s rules.

(3)

An act of the attorney in accordance with the instrument binds the credit union.

(4)

Sections 19 to 21 of the Property Law Act 2007 apply, with all necessary modifications, in relation to a power of attorney executed by a credit union—

(a)

to the same extent as if the credit union were a natural person; and

(b)

as if the commencement of the liquidation of the credit union or, if there is no liquidation, the removal of the credit union from the register under section 140 were an event revoking the power of attorney within the meaning of those sections.

30 Section 134 repealed (Guarantee funds)

Repeal section 134.

31 Section 135 replaced (Amalgamation of credit unions and transfer of engagements)

Replace section 135 with:

Amalgamations

135 Amalgamation of credit unions

(1)

Two or more credit unions may amalgamate as 1 credit union under sections 135A to 135E.

(2)

The amalgamated credit union may continue as—

(a)

one of the amalgamating credit unions; or

(b)

a new credit union.

(3)

A credit union must not amalgamate with another body, except as permitted by this section.

135A Amalgamation proposal

An amalgamation proposal must set out the terms of the amalgamation and all other prescribed information (if any).

135B Information relating to amalgamation proposal for members, creditors, and public

The committee of management of each amalgamating credit union must, not less than 20 working days before the amalgamation is to become effective,—

(a)

send to each member of that credit union a copy of the amalgamation proposal and all other prescribed information (if any); and

(b)

send a copy of the amalgamation proposal to every secured creditor of the credit union; and

(c)

give public notice of the proposed amalgamation in the prescribed manner.

135C Approval of amalgamation proposal

(1)

The committee of management of each amalgamating credit union must resolve that,—

(a)

in its opinion, the amalgamation is in the best interests of the amalgamating credit union; and

(b)

the committee is satisfied, on reasonable grounds, that the amalgamated credit union will, on amalgamation, satisfy the solvency test under subsection (4).

(2)

Every committee member of an amalgamating credit union who votes in favour of a resolution under subsection (1) must sign a certificate stating—

(a)

that, in the member’s opinion, the conditions set out in that subsection are satisfied; and

(b)

the grounds for that opinion.

(3)

The amalgamation proposal must be approved by each amalgamating credit union by a resolution of a majority of its members entitled to vote and voting on the matter.

(4)

For the purposes of subsection (1)(b),—

(a)

a credit union satisfies the solvency test if—

(i)

the credit union is able to pay its debts as they become due in the normal course of its operations; and

(ii)

the value of the credit union’s assets is greater than the value of its liabilities, including contingent liabilities:

(b)

section 4(3) and (4) of the Companies Act 1993 applies with all necessary modifications as if references to a company were references to a credit union and references to directors were references to officers.

(5)

A committee member who fails to comply with subsection (2) commits an offence and is liable on conviction to a fine not exceeding $5,000.

135D Documents to be sent to Registrar

The following must be sent to the Registrar to give effect to the amalgamation:

(a)

the approved amalgamation proposal:

(b)

all certificates required under section 135C:

(c)

all other prescribed information (if any).

135E Registration of amalgamation

(1)

Subsection (2) applies if the Registrar, after receiving the information required under section 135D, is satisfied—

(a)

that the requirements of section 100B(1)(a) to (f) are met in relation to the amalgamated credit union; and

(b)

that each amalgamating credit union has approved the amalgamation in accordance with section 135C.

(2)

The Registrar must—

(a)

issue a certificate of amalgamation; and

(b)

if the amalgamated credit union is one of the amalgamating credit unions, make any necessary changes to that credit union’s registration (for example, registering its new rules); and

(c)

if the amalgamated credit union is a new credit union, act under section 100B(2) (and section 100B(3) to (5) applies accordingly); and

(d)

remove from the register under section 140 any amalgamating credit union that is not the amalgamated credit union.

(3)

On and after the date set out in the certificate of amalgamation,—

(a)

the amalgamation is effective in accordance with the amalgamation proposal; and

(b)

the amalgamated credit union succeeds to all the property, rights, powers, and privileges of each of the amalgamating credit unions; and

(c)

the amalgamated credit union succeeds to all the liabilities and obligations of each of the amalgamating credit unions; and

(d)

proceedings pending by, or against, an amalgamating credit union may be continued by, or against, the amalgamated credit union; and

(e)

a conviction, ruling, order, or judgment in favour of, or against, an amalgamating credit union may be enforced by, or against, the amalgamated credit union.

(4)

The date set out in the certificate of amalgamation must be—

(a)

the date on which it is issued; or

(b)

if later, the date set out in the amalgamation proposal as the date on which the amalgamation is to become effective.

(5)

In this Part, the term non-qualifying member, in relation to an amalgamated credit union, includes a person who does not fulfil the qualifications for admission to membership of that credit union but became a member of it by virtue of the amalgamation, having been, immediately before the amalgamation became effective, a member of one of the amalgamating credit unions.

135F Other registers

(1)

No Registrar-General of Land, nor any other person charged with keeping any books or registers, is obliged to change the name of an amalgamating credit union to that of an amalgamated credit union in those books or registers or in any documents solely because an amalgamation has been effected under sections 135A to 135E.

(2)

The presentation to a Registrar or any other person of a specified instrument is, in the absence of evidence to the contrary, sufficient evidence that the property to which the instrument relates has become the property of the amalgamated credit union.

(3)

In subsection (2), a specified instrument is an instrument that—

(a)

is executed or purports to be executed by the amalgamated credit union; and

(b)

relates to any property held immediately before the amalgamation by an amalgamating credit union; and

(c)

states that the property has become the property of the amalgamated credit union by virtue of sections 135A to 135E.

(4)

Subsection (5) applies if—

(a)

any financial products issued by a person (A) or any rights or interests in property of a person (A) become, by virtue of sections 135A to 135E, the property of an amalgamated credit union; and

(b)

a certificate signed on behalf of the committee of management of the amalgamated credit union is presented to A, stating that those products, rights, or interests have by virtue of sections 135A to 135E become the property of the amalgamated credit union.

(5)

Despite subsections (1) and (2) and any other enactment or rule of law, A, on presentation of the certificate, must register the amalgamated credit union as the holder of the financial products or as the person entitled to the rights or interests.

(6)

Except as provided in this section, nothing in sections 135A to 135E derogates from the provisions of the Land Transfer Act 1952.

135G Powers of court in relation to proposed amalgamation

(1)

A creditor of an amalgamating credit union, or a person to whom an amalgamating credit union is under an obligation, who believes that he, she, or it would be unfairly prejudiced by a proposed amalgamation under sections 135A to 135E may, before the date on which the amalgamation becomes effective, apply to a District Court for an order under subsection (2).

(2)

The court may, if it is satisfied that the creditor or person who is owed the obligation would be unfairly prejudiced by the proposed amalgamation, make any order the court thinks fit in relation to the proposal, including—

(a)

directing that effect must not be given to the proposal:

(b)

modifying the proposal in any manner specified in the order:

(c)

directing the amalgamating credit union or its committee of management to reconsider the proposal or any part of it.

(3)

An order may be made under subsection (2) on the conditions that the court thinks fit.

32 Section 136 repealed (Registrar may approve amalgamations or transfers of engagements of credit unions)

Repeal section 136.

33 Cross-heading above section 137 amended

In the cross-heading above section 137, replace and suspension of business with removal from register, and restoration to register.

34 New section 137A inserted (Members may resolve to put credit union into liquidation)

After section 137, insert:

137A Members may resolve to put credit union into liquidation

(1)

A credit union may be put into liquidation by the appointment of a liquidator by a resolution of a majority of the credit union’s members entitled to vote and voting on the matter.

(2)

Part 16 of the Companies Act 1993 applies to the liquidation of a credit union under subsection (1), with all necessary modifications, as if the credit union were a company that has been put into liquidation under section 241(2)(a) of that Act.

35 Section 138 amended (Registrar may apply to put credit union into liquidation)

(1)

In the heading to section 138, replace Registrar may apply to with High Court may.

(2)

In section 138, replace “the application of the Registrar” with “an application under this section”.

(3)

In section 138, delete “in accordance with the Companies Act 1993”.

(4)

Replace section 138(a) with:

(a)

the credit union is unable to pay its debts; or

(aa)

the credit union has not commenced operations within 1 year of incorporation or has suspended its operations for more than 6 months; or

(ab)

incorporation has been obtained for the credit union by fraud or mistake; or

(ac)

the credit union exists for an illegal purpose; or

(ad)

the requirement about membership in section 100B(1)(a) or 146(1)(a) is not met in relation to the credit union; or

(5)

In section 138, insert as subsections (2) and (3):

(2)

An application under this section may be made by any of the following:

(a)

the credit union:

(b)

a member of the credit union:

(c)

a creditor of the credit union:

(d)

the Registrar.

(3)

Part 16 of the Companies Act 1993 applies, with any necessary modifications,—

(a)

to an application under this section as if the application were an application under section 241(2)(c) of that Act; and

(b)

to the liquidation as if the liquidator had been appointed under section 241(2)(c) of that Act.

36 Section 139 repealed (Registrar may suspend business of credit union)

Repeal section 139.

37 Section 140 replaced (Cancellation or suspension of registration, and dissolution of credit union)

Replace section 140 with:

140 Removal from register

(1)

A credit union is removed from the register when the Registrar, acting under subsection (2), registers a notice issued by the Registrar stating that the credit union is removed from the register.

(2)

The Registrar may remove a credit union from the register if—

(a)

the credit union is an amalgamating credit union, other than an amalgamated credit union, on the date set out in the certificate of amalgamation issued by the Registrar under section 135E; or

(b)

a request that the credit union be removed from the register on a ground specified in subsection (3) is given to the Registrar in accordance with the credit union’s rules; or

(c)

the credit union has been put into liquidation, and—

(i)

no liquidator is acting; or

(ii)

the documents referred to in section 257(1)(a) of the Companies Act 1993 (as applied by section 137A or 138 of this Act) have not been sent or delivered to the Registrar within 6 months after the liquidation is completed; or

(d)

a liquidator sends or delivers to the Registrar—

(i)

the documents referred to in section 257(1)(a) of the Companies Act 1993 (as applied by section 137A or 138 of this Act); and

(ii)

a copy of the notice referred to in section 140A(a).

(3)

A request may be made on the grounds—

(a)

that the credit union has ceased to operate, has discharged in full its liabilities to all its known creditors, and has distributed its remaining assets to those persons entitled to them or otherwise in accordance with its rules; or

(b)

that the credit union has no assets remaining after paying its debts in full or in part, and no creditor has applied to the High Court under section 138 for an order putting the credit union into liquidation.

(4)

A request must be made in the prescribed manner (if any).

140A Notice of intention to remove from register

The Registrar may remove a credit union from the register under section 140(2)(b) to (d) only if—

(a)

the Registrar is satisfied that notice of the intention to remove the credit union from the register has been given in the prescribed manner to the public and all other prescribed persons (if any); and

(b)

the Registrar—

(i)

is satisfied that no person has objected to the removal under section 140B; or

(ii)

if an objection to the removal has been received, has complied with sections 140C and 140D.

140B Objection to removal from register

(1)

If a notice is given under section 140A, any person may deliver to the Registrar, not later than the date specified in the notice, an objection to the removal on any of the following grounds:

(a)

that the credit union is still operating or there is other reason for it to continue in existence:

(b)

that the credit union is a party to a legal proceeding:

(c)

that the credit union is in receivership or liquidation, or both:

(d)

that the person is a creditor who has an undischarged claim against the credit union:

(e)

that, for any other reason, it would not be just and equitable to remove the credit union from the register.

(2)

Section 321(2)(a) of the Companies Act 1993 applies for the purposes of subsection (1)(d), with all necessary modifications, as if the credit union were a company.

140C Objections under section 140B(1)(a), (b), or (c)

If an objection is made under section 140B(1)(a), (b), or (c), the Registrar must not proceed with the removal unless the Registrar is satisfied that—

(a)

the objection has been withdrawn; or

(b)

any facts on which the objection is based are not, or are no longer, correct; or

(c)

the objection is frivolous or vexatious.

140D Objections under section 140B(1)(d) or (e)

(1)

If an objection is made under section 140B(1)(d) or (e), the Registrar may give notice to the person objecting that, unless notice of a specified application is given to the Registrar not later than 20 working days after the date of the notice, the Registrar intends to proceed with the removal.

(2)

In this section, specified application means an application under section 138 or 140F.

(3)

The Registrar may proceed with the removal if—

(a)

notice of a specified application is not served on the Registrar; or

(b)

the specified application is withdrawn; or

(c)

on the hearing of the specified application, the court refuses to grant either an order putting the credit union into liquidation or an order that the credit union not be removed from the register.

(4)

Every person who makes a specified application must give the Registrar notice in writing of the decision of the court within 5 working days after the decision is given.

140E Registrar must send information to person who requests removal

The Registrar must send the following to a person who delivered a request under section 140(2)(b) or a liquidator referred to in section 140(2)(d):

(a)

a copy of an objection under section 140B:

(b)

a copy of a notice given by or to the Registrar under section 140D:

(c)

if the credit union is removed from the register, notice of the removal.

140F High Court may order that credit union not be removed

(1)

A person who gives a notice objecting to the removal of a credit union from the register on a ground specified in section 140B(1)(d) or (e) may apply to the High Court for an order that the credit union is not to be removed from the register.

(2)

The court may, if it is satisfied that the credit union should not be removed from the register on any of the grounds in section 140B(1), make an order that the credit union is not to be removed from the register.

140G Liability of officers, members, and others to continue

The removal of a credit union from the register does not affect the liability of any former officer or member of the credit union or any other person in respect of any act or omission that took place before the credit union was removed from the register, and that liability continues and may be enforced as if the credit union had not been removed from the register.

140H Restoration of credit union to register

(1)

A credit union is restored to the register when the Registrar, acting under section 140I or an order made under section 140K, registers a notice issued by the Registrar stating that the credit union is restored to the register.

(2)

A credit union that is restored to the register must be treated as having continued in existence as if it had not been removed from the register.

140I Registrar may restore credit union to register

(1)

The Registrar must, on an application made in the prescribed manner, and may, on the Registrar’s own motion, restore a credit union to the register if the Registrar is satisfied that, at the time the credit union was removed from the register,—

(a)

the credit union was still operating or another reason existed for the credit union to continue in existence; or

(b)

the credit union was a party to a legal proceeding; or

(c)

the credit union was in receivership or liquidation, or both.

(2)

This section does not limit section 140K.

140J Notice of proposed restoration

(1)

Before the Registrar restores a credit union to the register under section 140I, the Registrar must be satisfied that notice of the intention to restore the credit union to the register has been given in the prescribed manner to the public and all other prescribed persons (if any).

(2)

The Registrar must not restore a credit union to the register if the Registrar receives an objection to the restoration within the period stated in the notice.

140K High Court may order restoration of credit union

(1)

The High Court may, on the application of a person referred to in subsection (2), order that a credit union be restored to the register if it is satisfied that,—

(a)

at the time the credit union was removed from the register,—

(i)

the credit union was still operating or another reason existed for the credit union to continue in existence; or

(ii)

the credit union was a party to a legal proceeding; or

(iii)

the credit union was in receivership or liquidation, or both; or

(iv)

the applicant was a creditor or another person who had an undischarged claim against the credit union; or

(b)

for any other reason it is just and equitable to restore the credit union to the register.

(2)

The following persons may make an application:

(a)

any person who is prescribed for the purposes of this subsection:

(b)

the Registrar:

(c)

with the leave of the court, any other person.

140L Registrar or High Court may require requirements to be complied with

The Registrar or the High Court may, before restoring a credit union to the register under section 140I or ordering its restoration to the register under section 140K, require any of the provisions of this Act to be complied with (being provisions with which the credit union had failed to comply before it was removed from the register).

140M Other High Court orders

(1)

This section applies if a credit union is restored to the register under section 140I or its restoration to the register is ordered under section 140K.

(2)

The High Court may, on the application of the Registrar or the applicant for restoration or on its own motion, give any directions or make any orders that may be necessary or desirable for the purpose of placing the credit union and any other persons as nearly as possible in the same position as if the credit union had not been removed from the register.

(3)

However, a direction or an order may not require the return to the credit union of any assets that have been properly transferred in accordance with any provision of the credit union’s rules that falls within clause 17 of Schedule 4.

38 Section 141 amended (Liability of members on winding up)

(1)

In section 141, replace “section 138” with “section 137A or 138”.

(2)

In section 141, delete “qualified”.

39 Section 143 amended (Associations of credit unions to be registered)

(1)

In the heading to section 143, replace registered with incorporated under this Part.

(2)

In section 143(1), replace “registered as an association under this Part” with “an association of credit unions incorporated under this Part in accordance with section 146.

(3)

Replace section 143(2) to (4) with:

(2)

Any 2 or more credit unions may apply to the Registrar in accordance with section 145 for the incorporation of an association of credit unions under this Part.

(3)

The objects of an association must be, or fall within, the objects set out in subsection (4).

(4)

The objects referred to in subsection (3) are as follows:

(a)

to promote the interests of the association’s members:

(b)

otherwise, to provide products or services or carry out other activities for the benefit, or in the interests, of relevant bodies.

(5)

For the purposes of subsection (4), a relevant body is a credit union or another type of co-operative or mutual body.

40 Section 144 amended (Membership of association)

Repeal section 144(2).

41 Section 145 amended (Application for registration of association)

(1)

In the heading to section 145, replace registration with incorporation.

(2)

Replace section 145(1) and (2) with:

(1)

An application under section 143(2) for the incorporation of an association of credit unions must be signed by each of the applicants.

(2)

The application must include—

(a)

a copy of the association’s proposed rules; and

(b)

a list of the names, addresses, and designations of the officers proposed for the association.

(2A)

Section 16 applies (with any necessary modifications) to an association’s proposed rules received by the Registrar under this section as it applies to a society’s rules received by the Registrar under section 12.

(3)

Repeal section 145(4).

42 Section 146 replaced (Registration of association)

Replace section 146 with:

146 Incorporation of association

(1)

Subsection (2) applies if an application is made under section 143(2) for the incorporation of an association of credit unions and the Registrar is satisfied—

(a)

that the association will have at least 2 members:

(b)

that the rules as submitted are not contrary to the provisions of this Act and may be reasonably approved by the Registrar; and

(c)

that there are reasonable grounds for believing that the association will be able to carry out its objects successfully; and

(d)

that there is no reasonable cause why the association should not be incorporated.

(2)

The Registrar must—

(a)

register the association’s name; and

(b)

issue a certificate of incorporation; and

(c)

register the association’s rules (together with any other documents or information relating to the association that the Registrar thinks appropriate).

(3)

The association is, on and after the date of incorporation set out in the certificate of incorporation, a body corporate that has—

(a)

perpetual succession; and

(b)

the capacity, rights, powers, and privileges provided for in section 107B.

(4)

The association continues in existence until it is removed from the register under section 140.

(5)

The certificate of incorporation is conclusive evidence that—

(a)

all the requirements of this Part as to incorporation have been complied with; and

(b)

on and after the date of incorporation set out in the certificate, the association is registered and incorporated under this Part.

(6)

If the Registrar refuses to act under subsection (2) in relation to an application, the applicants may, within 3 months after the date on which they are notified of the refusal, appeal against the refusal to the High Court.

(7)

If the refusal is overruled on appeal, then, subject to such terms and conditions as the court may impose or otherwise in pursuance of the court order, the Registrar must act under subsection (2) as soon as practicable.

(8)

Sections 98 to 102, 103(1), 106(1) to (7), 106B(6), 107, 107A, 131, 135 to 135G, 138(1)(c), and 142 do not apply to associations.

(9)

Section 103(3) applies to an association as if section 145(3) were in section 103.

43 New sections 147A and 147B inserted

After section 147, insert:

147A Meetings may be held using audio, audio and visual, or electronic communication

The rules of a registered society or branch or of a credit union may (without limitation) provide for meetings to be held using audio, audio and visual, or electronic communication.

147B Postal, electronic, and proxy voting

(1)

This section applies to any matter that is to be determined by a vote of members of a registered society or branch or of a credit union

(2)

The rules of the registered society or branch or of the credit union—

(a)

may (without limitation) permit voting in 1 or more of the following ways:

(i)

by post:

(ii)

by electronic means (for example, by email or by the use of an Internet site):

(iii)

by proxy; and

(b)

must set out the procedures to be followed in relation to any voting permitted under paragraph (a).

(3)

Rules under this section that permit voting by post or electronic means may permit or require votes cast by post or electronic means to be cast in advance of any meeting at which the matter in question is to be determined.

(4)

Subsection (3) applies despite any enactment (for example, sections 64(3), 65(1)(a), and 82(1) of this Act) that requires a resolution to be passed, or a matter to be otherwise determined, at a meeting.

44 Section 151 amended (Appeals)

In section 151(3), after “Registrar”, insert “under Part 2”.

45 Section 152 amended (Regulations)

After section 152(c), insert:

(ca)

prescribing matters as referred to in section 135A, 135B(a) or (c), 135D(c), 140(4), 140A(a), 140I(1), 140J(1), or 140K(2)(a):

46 Section 154 amended (Recovery of fines, etc, imposed on society, branch, or credit union)

(1)

In the heading to section 154, replace , branch, or credit union with or branch.

(2)

In section 154, replace “or branch, or credit union” with “or branch”.

(3)

In section 154, replace “, branch, or credit union” with “or branch” in each place.

47 Section 155 amended (Status of trustees and officers for purposes of Crimes Act 1961)

In section 155(1), delete “or credit union”.

48 Section 156 amended (Liability of officers and of members of committee on commission of offence)

In section 156, delete “or credit union” in each place.

49 Section 157 amended (Institution of legal proceedings by or against society or branch or credit union)

(1)

In the heading to section 157, delete or credit union.

(2)

In section 157, delete “or credit union” in each place.

(3)

In section 157(2), delete “or (credit union)”.

50 New Schedule 1AA inserted

Insert the Schedule 1AA set out in the Schedule of this Act as the first schedule to appear after the last section of the principal Act.

51 Schedule 4 amended

(1)

In Schedule 4, replace clause 6 with:

6

The appointment and removal of a committee of management (by whatever name known) and of other officers.

(2)

In Schedule 4, replace clause 9 with:

9

The mode and circumstances, expressed either generally or specifically, in which loans by the credit union are to be made and repaid, including any special provision for the insurance of persons to whom loans are made.

(3)

In Schedule 4, after clause 16, insert:

16A

Provision about when, and by whom, a request may be made under section 140(2)(b).

(4)

In Schedule 4, replace clause 17 with:

17

Provision requiring, on the credit union’s winding-up under section 137A or 138 or on or before its removal from the register under section 140, any assets remaining after the payment of debts, repayment of share capital, and discharge of other liabilities—

(a)

to be transferred to another credit union, or an association of credit unions; or

(b)

if not so transferred, to be applied for charitable purposes.

Part 2 Consequential amendments

52 Amendment to Insurance (Prudential Supervision) Act 2010

(1)

This section amends the Insurance (Prudential Supervision) Act 2010.

(2)

Replace section 11 with:

11 Application of Act to friendly societies

This Act applies to a friendly society (as that term is defined in section 2 of the Friendly Societies and Credit Unions Act 1982) as if the friendly society were a body corporate.

53 Amendment to Financial Reporting Act 2013

(1)

This section amends the Financial Reporting Act 2013.

(2)

In section 5(1), definition of entity, paragraph (f), replace “society, a branch of a society, or a credit union” with “society or a branch of a society”.

Schedule New Schedule 1AA inserted

s 50

Schedule 1AA Transitional, savings, and related provisions

s 2A

Part 1 Provisions relating to Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Act 2017

1 Interpretation

In this Act,—

application period means the period of 6 months beginning with the main commencement date

existing credit union means a credit union that is registered under Part 3 immediately before the main commencement date

liabilities means liabilities, debts, charges, duties, and obligations, whether present or future, whether actual or contingent, and whether payable in, or to be observed or performed in, New Zealand or elsewhere

main commencement date means the date on which the main regulatory systems provision comes into force

main regulatory systems provision means sections 4, 6, 11 to 42, 44 to 49, and 51 to 53 of the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Act 2017

property means real or personal property in New Zealand or elsewhere and includes—

(a)

choses in action and money; and

(b)

goodwill; and

(c)

rights, interests, and claims in or to property, whether arising from or accruing under, or created or evidenced by, or the subject of, an instrument or otherwise, and whether liquidated or unliquidated, actual, contingent, or prospective

relevant post-commencement date, in relation to an existing credit union, means the date of incorporation set out in the existing credit union’s certificate of incorporation in accordance with clause 3(6)

rights means rights, powers, privileges, and immunities, whether actual, contingent, or prospective, and whether arising or conferred in New Zealand or elsewhere.

2 Application of main regulatory systems provision to existing credit unions

Except as provided for in clause 3, the main regulatory systems provision applies to an existing credit union—

(a)

only if a certificate of incorporation is issued for the existing credit union on an application for its incorporation sent to the Registrar in accordance with clause 3; and

(b)

only on and after the relevant post-commencement date.

3 Existing credit unions to apply for incorporation

(1)

An existing credit union must, during the application period, send to the Registrar an application for its incorporation.

(2)

The application must be made on behalf of the existing credit union by, as the case may be,—

(a)

the members of its committee of management acting under section 100 as replaced by the main regulatory systems provision; or

(b)

at least 2 of its members acting under section 143(2) as replaced by the main regulatory systems provision.

(3)

For the purposes of subclause (2)(a), it does not matter if the number of the members of the committee of management is less than the minimum number of applicants that would normally be required.

(4)

The application is to be dealt with in accordance with this Act as amended by the main regulatory systems provision.

(5)

For the purposes of section 100B(1)(d) (if applicable), it is to be assumed that the existing credit union’s name immediately before the main commencement date complies with section 103.

(6)

If a certificate of incorporation is issued on the application, the date of incorporation set out in the certificate is to be—

(a)

the first day of the existing credit union’s first financial year to begin after the end of the application period; or

(b)

if later, the date on which the certificate is issued. 4

4 Failure of existing credit union to apply for incorporation, etc

(1)

Subclause (2) applies if an existing credit union fails to send to the Registrar an application for its incorporation in accordance with clause 3.

(2)

The existing credit union’s registration is cancelled at the end of the application period.

(3)

Subclause (4) applies if—

(a)

an existing credit union sends an application to the Registrar for its incorporation in accordance with clause 3; and

(b)

the Registrar refuses to act under section 100B(2) or 146(2); and

(c)

the Registrar’s refusal is not appealed against under section 100B(6) or 146(6) or, if it is appealed against under section 100B(6) or 146(6), it is not overruled.

(4)

The existing credit union’s registration is cancelled at the end of the application period or, if later,—

(a)

the end of the period of 3 months referred to in section 100B(6) or 146(6), if there is no appeal; or

(b)

the end of the day on which the appeal is finally determined, if there is an appeal.

(5)

The cancellation of an existing credit union’s registration by this clause is to be treated as a cancellation by the Registrar under section 140 (as in force before its replacement by the main regulatory systems provision) and this Act and all other relevant enactments apply accordingly (disregarding the main regulatory systems provision), except that sections 92(2) to (6) and 151 of this Act do not apply to the cancellation.

5 Vesting of existing credit union’s property, rights, and liabilities in body corporate, etc

(1)

This clause and clauses 6 to 12 apply to an existing credit union for which a certificate of incorporation is issued on an application for its incorporation that is sent to the Registrar in accordance with clause 3.

(2)

At the beginning of the relevant post-commencement date, the property, rights, and liabilities of the existing credit union belong to, and vest in, the body corporate established by section 100B(3) or 146(3).

(3)

Clauses 6 to 11 do not limit the generality of subclause (2) of this clause.

6 Status of contracts and other instruments

(1)

Subclause (2) applies to contracts, agreements, guarantees, conveyances, deeds, leases, licences, financial products, and other instruments, undertakings, and notices (whether in writing or not), entered into by, made with, given to or by, or addressed to the existing credit union (whether alone or with another person) before the relevant post-commencement date and subsisting immediately before that date.

(2)

The instruments to which this subclause applies are, on and after the relevant post-commencement date, binding on, and enforceable by, against, or in favour of, the existing credit union as the body corporate as if the body corporate had been the person by whom they were entered into, with whom they were made, or to or by whom they were given or addressed.

(3)

A reference (express or implied) to the existing credit union in an instrument made, given, passed, or executed before the relevant post-commencement date is a reference to the existing credit union as the body corporate on and after that date.

7 Continuation of legal and other proceedings

(1)

A proceeding that was pending or that existed by, against, in favour of, or otherwise in relation to, the existing credit union or to which the existing credit union was a party before the relevant post-commencement date must be continued and enforced by, against, in favour of, or otherwise in relation to, the existing credit union as the body corporate or with the body corporate as the party.

(2)

It is not necessary to amend an application, notice, or other document to do so.

(3)

In subclause (1), proceeding includes action, arbitration, cause of action, conviction, judgment, liquidation, order, and ruling.

8 Employees

(1)

At the beginning of the relevant post-commencement date, each employee of the existing credit union becomes an employee of the existing credit union as the body corporate.

(2)

For the purposes of an enactment, rule of law, contract, or agreement relating to the employee, the contract of employment of the employee must be treated as unbroken and a period of service with the existing credit union before the relevant post-commencement date must be treated as a period of service with the existing credit union as the body corporate.

(3)

The terms and conditions of employment of the employee must remain the same as the terms and conditions of his or her employment with the existing credit union immediately before the relevant post-commencement date, but they may be varied in the same manner.

(4)

The employee is not entitled to receive a payment or benefit by reason only of the change in the employee’s employment status under this clause.

9 Taxes and duties

For the purposes of the Inland Revenue Acts (as that term is defined in section 3 of the Tax Administration Act 1994),—

(a)

the existing credit union as the body corporate is the same person as the existing credit union before the relevant post-commencement date; and

(b)

a transaction entered into by, or as an act of, the existing credit union at a time (the relevant time) before the relevant post-commencement date must be treated—

(i)

as having been entered into by, or as an act of, the existing credit union as the body corporate; and

(ii)

as having been entered into, or performed by, the existing credit union as the body corporate at the relevant time.

10 Other registers

(1)

No Registrar-General of Land, nor any other person charged with keeping any books or registers, is obliged to make any changes to those books or registers or in any other documents solely because any property of the existing credit union belongs to, and vests in, the body corporate at the beginning of the relevant post-commencement date.

(2)

The presentation to a Registrar or any other person of a specified instrument is, in the absence of evidence to the contrary, sufficient evidence that the property to which the instrument relates belongs to, and is vested in, the existing credit union as the body corporate.

(3)

In subclause (2), a specified instrument is an instrument that—

(a)

is executed or purports to be executed by the existing credit union as the body corporate; and

(b)

relates to any property of the existing credit union before the relevant post-commencement date; and

(c)

states that the property belongs to, and is vested in, the existing credit union as the body corporate by virtue of this schedule.

(4)

Subclause (5) applies if—

(a)

any financial products issued by a person (A) or any rights or interests in property of a person (A) belong to, and vest in, the body corporate at the beginning of the relevant post-commencement date; and

(b)

a certificate signed on behalf of the committee of management of the existing credit union as the body corporate is presented to A, stating that those products, rights, or interests have become the property of the existing credit union as the body corporate.

(5)

Despite subclauses (1) and (2) and any other enactment or rule of law, A, on presentation of the certificate, must register the body corporate as the holder of the financial products or as the person entitled to the rights or interests.

(6)

Except as provided in this clause, nothing in this schedule derogates from the provisions of the Land Transfer Act 1952.

11 Effect of clauses 5 to 10 and things done under them

Nothing in clauses 5 to 10 and nothing done under them—

(a)

places the existing credit union or any other person in breach of contract or confidence or makes any of them liable for a civil wrong; or

(b)

entitles a person to terminate or cancel a contract or arrangement or to accelerate the performance of an obligation; or

(c)

places the existing credit union or any other person in breach of an enactment, a rule of law, or a provision of a contract that prohibits, restricts, or regulates the assignment or transfer of property or the disclosure of information; or

(d)

releases a surety from an obligation; or

(e)

invalidates or discharges a contract or security.

12 Termination of security provided under section 114

(1)

Despite clauses 5(2) and 6 to 11, any security provided under section 114 before the relevant post-commencement date terminates at the beginning of that date.

(2)

Subclause (1) does not prevent the body corporate from enforcing the security in relation to any failure or other event that occurs before the relevant post-commencement date.