Any 20 or more persons engaged in farming operations may apply for registration as a company with limited liability under the Companies Act 1993 under the name of “The [Distinctive name of association] Co-operative Rural Intermediate Credit Association Limited”, by complying with the requirements of that Act in relation to registration, as modified by this Act.

At least 25 shares must be issued to each person named in the application for registration as a shareholder.

Every person named in the application for registration as a shareholder shall, when required by the Corporation (being not later than 1 year after the incorporation of the association and before the grant to the shareholder of a loan under this Act), pay in cash not less than 5% of the amount required to be paid under the constitution or by the terms of issue of the shares for the shares issued to that person.

It shall not be necessary to state in the constitution, the number of shares with which the association proposes to be registered.

The directors of the association may issue additional shares at any time to any—

No association shall be registered under this section except with the consent of the Corporation.

Four persons who shall be named as directors in an application for registration shall be the first directors of the association.

Notwithstanding anything in the constitution of the association, the District Intermediate Credit Supervisor appointed by the Corporation for the district in which the registered office of the association is situated shall, by virtue of his or her office, be and continue to be a director of the association.

The constitution shall be delivered to the Registrar, who shall retain and register the same.

A statutory declaration by the District Intermediate Credit Supervisor to the effect that the requirements of the Companies Act 1993 or of this Act in respect of registration and of matters precedent or incidental thereto have been complied with shall be produced to the Registrar, who may accept the same as sufficient evidence of such compliance.

On the incorporation of any association under this Part the Registrar shall cause a notice thereof to be published in the Gazette.

No fees shall be charged by the Registrar in respect of any matter or thing arising out of the requirements of this section.

The Registrar shall keep as part of the Register of Companies under the Companies Act 1993, but in a separate list, a register of all associations registered under this Part.

Every association shall have 4 directors.

The Corporation may from time to time appoint a member or shareholder of the association to be an additional director who shall hold office at the pleasure of the Corporation.

Nothing in this section limits or affects section 41(2).

The directors elected or appointed as provided in the last preceding section shall as soon as practicable elect one of their number to be the chairman of directors, and another director to be the deputy of the chairman.

The directors may appoint a suitable person, whether a director or not, to be the secretary and treasurer of the association, or may appoint 1 such person as secretary and another such person as treasurer:

provided that not more than 1 person shall be paid any salary or other remuneration in respect of the duties of the secretary and the treasurer.

The secretary of the association shall forthwith send written notice to the Corporation of all appointments made pursuant to this or the last preceding section, and of all subsequent appointments that may thereafter be made.

Except as provided in the last preceding section, no director of an association shall be entitled to receive any payment from the association other than a refund of travelling expenses actually and reasonably incurred by him or her in attending meetings of the directors or otherwise in attending to the business of the association.

The Corporation may from time to time prepare and promulgate model regulations and bylaws applicable to all associations incorporated under this Act.

Every such association, when required by the Corporation so to do, shall by resolution adopt such regulations or bylaws, with such variations (if any) as may be approved by the Corporation, having regard in any particular case to the special circumstances of the association.

Despite anything to the contrary in the Companies Act 1993, the regulations of an association incorporated under this Act may not come into force or be amended except with the approval of the Corporation.

The principal object of an association incorporated under this Act shall be to borrow money from the Corporation, or from any bank or other approved financial institution, and to lend such money to its shareholders on the security of mortgages or other charges on land or chattels, or on approved personal security, for any of the following purposes, namely:

No person shall be entitled to receive under the provisions of this Part any loan or loans so that the amount for the time being outstanding in respect thereof exceeds an amount—

whichever is the lesser.

If application for a loan is made to an association by any person who is not a member or shareholder of the association, the application is deemed to include an application for shares in the association on which the amount payable under the constitution or by the terms of issue equals 10% of the amount of the loan, but in no case less than 25 shares.

Before any such application is approved the applicant shall be required to pay to the association in respect of his or her shares an amount not less than 5% of the amount payable under the constitution or by the terms of issue, as the case may be.

Applications for loans from any association under this Part shall be in writing in the prescribed form, addressed to the secretary of the association.

On receipt of any such application the directors shall proceed to consider the same, and if the application is approved shall apply to the Corporation to advance to the association the amount required to enable it to comply with the application:

provided that where the application is for a loan for a term not exceeding 6 months the association may, with the approval of the Corporation, arrange with any bank carrying on business in New Zealand, or with any other approved financial institution, for a loan to the association to enable it to grant the application:

provided further that where the application is for a longer term than 6 months the association, with the approval of the Corporation, may make temporary arrangements with any such bank or financial institution as aforesaid, and may defer application for an advance from the Corporation so long as satisfactory arrangements can be made with such bank or financial institution.

The association shall not grant any application for a loan under this Part except on such security and subject to such terms and conditions as the Corporation may approve.

All advances made by a bank or other financial institution to an association for the purposes of this Part shall be secured in such manner as the bank or other institution aforesaid may require.

All advances made by the Corporation to an association for the purposes of this Part shall be secured in such manner as the Corporation may require.

Without limiting the foregoing provisions of this section, the Corporation, or any bank or other financial institution as aforesaid, may require an association to assign or hypothecate, as security for any advance made to it as aforesaid, any securities given or to be given to the association by any of its shareholders in respect of loans under this Part.

All securities given to an association by a shareholder therein in respect of any loan granted under this section out of moneys borrowed by the association from the Corporation shall be delivered to the District Intermediate Credit Supervisor and forwarded by him or her to the Corporation for safe custody.

Save as provided in this section, an association shall have no power to borrow money or to create any charge or encumbrance on its assets.

The interest payable on any loan granted by an association to a shareholder therein, as provided in this section, shall not exceed a rate from time to time fixed by the Corporation.

Every loan granted under this Act by the Corporation or an association may be made repayable upon demand or by such instalments at such times and generally upon such conditions as the Corporation or the association, with the consent of the Corporation, thinks fit.

All moneys received by an association in repayment of any loan shall be forthwith applied in reduction of the indebtedness of the association incurred in respect of the moneys out of which such loan was granted.

The paid up capital of any association shall be invested by the association, and shall be so invested only in Government securities or in securities approved by the Corporation:

provided that where the association is indebted to the Corporation in respect of any loan the paid up capital of the association, or a portion thereof, not exceeding the amount of the loan, may be placed on deposit with the Corporation and shall bear interest at the same rate as is payable by the association on the amount of the loan.

The income derived from such investments shall be available to meet the current expenditure of the association.

Any profits derived by an association in carrying out its objects under this Act may be applied as follows:

If any shareholder intimates to the association by notice in writing that he or she does not wish to obtain a loan from the association, or if the application for a loan duly made by a shareholder is declined by the association, or when any shareholder of an association has repaid to the association the full amount of his or her loan, with interest and other charges (if any) thereon, he or she shall be entitled to surrender his or her shares and to receive from the association out of its assets such amount as, with the approval of the Corporation, is agreed upon between the association and the shareholder by way of consideration for such surrender, and upon the acceptance of such surrender by the association the shareholder shall cease to be a member of the association:

provided that no surrender of shares shall be accepted under this section so as to reduce the number of shareholders remaining in the association below 20:

provided also that no shareholder shall be entitled to surrender any shares unless all calls previously made in respect thereof have been paid or satisfied.

All shares surrendered pursuant to this section shall be forthwith cancelled by the association.

No shares in an association under this Part shall be assigned or transferred except with the precedent approval of the Corporation.

No share certificate shall be made or issued in respect of any shares in an association under this Part.

Every association under this Part is exempt from all fees payable by companies under the Companies Act 1993.

Despite anything to the contrary in the Personal Property Securities Act 1999, any security interest within the meaning of that Act given for the purpose of securing a loan granted by the Corporation, or by any association under this Act, has priority over any security interest that has previously been perfected by registration (as defined in that Act), comprising in whole or in part any of the same chattels, as regards the title to or right to the possession of those chattels, if the secured party under the previously perfected security interest agrees that the security interest given for the purposes of this Act has priority over that previously perfected security interest.

Any officer of the Corporation shall at all reasonable times have full and free access to all lands, buildings, places, books, and documents being the property of or in the possession of any association indebted to the Corporation in respect of a loan under this Act for the purpose of inspecting the same, and for that purpose may make extracts from or copies of any such books or documents.

Every person who obstructs any such officer in the exercise of his or her powers under this section commits an offence, and is liable on conviction to a fine of £50.

The Rural Credit Associations Act 1922 is hereby repealed.