Ownership Reviews Does the Tail Wag the Dog? and Changing Tablets of Stone Karen Sherry and Ross Inder. Ownership Reviews Does the Tail Wag the Dog? . 22 energy/electricity trusts in nz which own 28 nz lines companies
Does the Tail Wag
Changing Tablets of Stone
Karen Sherry and Ross Inder
Typical Ownership Review Clauses
4.1 Within 3 years from the date of this Deed the Trustees shall require the Directors to prepare a report discussing proposals and options for future ownership of the shares in the Company. Such report shall contain the following details:
(a)an analysis of the performance of the Company to the date of the report together with a discussion of the advantages and disadvantages of trust ownership;
(b)an analysis of the various ownership options considered including without limitation, a share distribution to Consumers or Electors, a sale of Shares to the Public, a sale of Shares to institutional investors and retention by the Trust;
(c)a comparison of the performance of the Company with the performance of other similar companies;
(d)the conclusions of the directorsas to the most appropriate form of ownership together with an indication as to whether the conclusions are unanimous and if the decision is not unanimous, a summary of the views of the dissenting directors shall be included;
(e)the matters set out in Clause 4.6 if a distribution of Shares is recommended;
(f)a summary of the professional advise (if any ) obtained in respect of the preparation of the report; and
(g)a statement as to whether or not the directors have had regard to any views expressed by the public with respect to ownership...”
The clause continues:
“4.10If following the initial review provided for in this Clause 4 any or all of the Shares of the Company are retained by the Trustees, the Trustees shall thereafter procure that a review in accordance with Clause 4 is held at no more that five yearly intervals until the Termination date so that the first review commences no later than five years after the completion of the first review.”
“Distribution of Shares
4.1The Trustees may not sell, charge or otherwise dispose of or deal with any shares unless the proposed sale charge of disposal has been approved by a Poll conducted pursuant to clause 4.3….
4.3The Trustees shall…every 6 years …and may at any other time, conduct a Poll in accordance with clause 4.5 to determine whether Customers voting on the Poll wish to Shares to continue to be held by Trust or to be transferred to Customers or to be transferred to Local Authorities or in accordance with any additional proposal of the Trustees pursuant to clause 4.2.
4.4At least one month prior to the conducting of the Poll the Trustees shall prepare and publish a report containing:
(a)an analysis of the performance of the Trust to the date of the report together with a discussion of the advantages and disadvantages of continued Trust ownership of the Share….
(b)a discussion of the advantages and disadvantages of a transfer of the Shares to Customers or to Local Authorities or a sale of the Shares and a transfer of the proceeds to Customers or to Local Authorities;
(c)any comments by the directors of the Company as to the most appropriate form of ownership of the Shares.”
Or “the once in the “life-time offer:
“Within five years of the commencement of this trust the Trustees shall meet with the directors of the Company to discuss the continuing need for this trust.”
(1)The is unanimity of the Trustees with respect to such amendment or variation;
(2)Approval in writing of the amendment by the Directors;
(3)The Amendment has been subject to public consultation.
“Notwithstanding clause 14.1 no alteration or amendment may be made to this Deed that has the effect of limiting or restricting the obligations or powers of the trustees under this deed to:
Trustee Act 1956
“64(1) Subject to any contrary intention expressed in the instrument creating the trust, where in the opinion of the Court any sale lease … or other disposition or any purchase investment …or other transaction it is expedient in the management or administration of any property vested in a trustee or would be in the best interests of the persons beneficially interested under the trust but it is inexpedient or difficult or impracticable to effect the same without the assistance of the Court… the Court may by order confer upon the trustee…the necessary power for the purpose.”
“Subject to any contrary intention expressed in the instrument”
“Any [transaction]is expedient in the management or administration of trust property “
“Or would be in the best interests of the persons beneficially entitled.”
“Section 64A (1) Without limiting any other powers of the Court…the Court may if it thinks fit by order approve [three named classes of beneficiary] ..any arrangement …varying or revoking all or any of the trusts, or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts”
How to effect a change ?
“Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power or discretion vested in the trustee.” section 66(1) Trustee Act 1956