Appropriate structures critical to iwi growth & development

Bell Gully is well-recognised for its contribution to New Zealand's major corporate restructurings including the recent significant Fletcher Challenge and Fisher and Paykel restructurings. Recently, the Bell Gully Maori Services team has undertaken some ground breaking restructuring work with Ngati Ruanui whom, at the time Tu Mai went to press, were the only iwi to have their structure approved by the Treaty of Waitangi Fisheries Commission (TOKM) for fisheries allocation.

While it is quite common to hear about issues associated with Treaty settlements, their progress (or lack thereof), in contrast less is known about issues relevant to post settlement iwi structures. Given the high political and public interest in Treaty settlements, this is perhaps understandable. To receive settlement assets from the Treaty of Waitangi Fisheries Commission (TOKM) the same istrue of iwi structures.

There is also significant public discussion on the various methods of TOKM allocation, however, hardly any discussion on the various structural options and the underlying need for structural change for most iwi has taken place.

It is staggering to realise that if allocation were to proceed tomorrow, only one of over 70 TOKM -recognised iwi would in fact be in a position to receive their fisheries settlement assets!

When iwi structural and associated governance matters are given public attention, it is usually only to highlight the perceived economic performance highs (i.e. Ngai Tahu) or lows (Tainui). Rightly or wrongly, iwi can expect similar comparisons in the future. Appropriate iwi structure has a huge part to play in the successful future, or otherwise, of iwi organisations.

The nature and extent of any restructuring can vary greatly and is fundamentally driven by what an iwi want, Although external drivers are, of course, relevant. For instance, before settlement can be completed the iwi needs to have a structure in place which is acceptable to the Crown.

In addition, any iwi that wishes to be allocated fisheries assets by TOKM (whether they are in settlement negotiations with the Crown or not) will have to satisfy TOKM's mandate and structure requirements.

Perhaps the best time for an iwi to restructure is when it is in negotiations with the Crown, as all issues can be addressed at one time. This can be important as restructuring is usually complex, time consuming and consequentially, costly.

This approach assisted Ngati Ruanui in the delivery of a significant Treaty settlement package and the development of the Te Runanga o Ngati Ruanui structure which satisfied iwi requirements. Consequently, it was acceptable to the Crown for the purposes of settlement assets transfer. But iwi can benefit from restructuring advice whether they are in Treaty settlement negotiations or not. No matter what stage an iwi is at, the restructuring process cannot be rushed, and all relevant issues must be addressed head on. This is due partly to the fact that a consequence of repeated Crown Treaty breaches for many iwi is that the underlying historical iwi structures have been effectively torn to pieces. To fully construct or reconstruct a modern legal base for iwi from this position is no simple task.

While there is no set model for restructuring and one size does NOT fit all, a number of fundamental principles have emerged over the years as being relevant for most iwi in their structures.

These include:

  • the need to establish a structure where the individual iwi members have ultimate control;

  • the legal capacity and powers of the structure are certain; and

  • ownership and management functions are kept separate, as are commercial and non-commercial objectives.

It is important that these matters are addressed up front and all options canvassed at an early stage. Once that is done, the extent to which any "external" i.e. Crown and/or TOKM requirements or criteria need to be taken into account can be considered and provided for in the iwi structure.

The criteria set by TOKM fall within two categories; those that relate to mandate (representation) and those that relate to organisational structure. Obviously, the mandate criteria are aimed at ensuring that the constitution of any organisation claiming to represent an iwi provides for all its members to participate. TOKM'scriteria in this regard is based on the premise that participation is best ensured through the ability of iwi members to participate in the election of representatives to the governing entity.

In relation to structural criteria, TOKM has identified concepts such as the separation of ownership and management, and commercial and social functions, that are likely to assist iwi in managing settlement assets. The theory behind these criteria is to avoid, as far as possible, any potential conflicts that may arise in one entity fulfilling different, often competing, functions.

The Crown also sets criteria that is aimed at ensuring governing entities are representative of the iwi and are structured so as to avoid potential conflicts in functions. In this regard, many of the Crown's criteria are similar to TOKM's criteria.

There are, however, some differences between the Crown's and TOKM's criteria that need to be accounted for. A significant one is the Crown's recent requirement that constitutions for governing entities include a major transaction clause, similar to that found in the Companies Act 1993. In essence, this requirement provides that the governing entity must not enter into a major transaction without first gaining the approval of iwi members.

This requirement may have been included as a result of reported experiences of a number of iwi whose structures, and hence performance, has been questionable. Such a criterion is therefore politically driven and upon further analysis, one is likely to find that such a mechanism may in fact be contrary to long term iwi interest.

Another major difference between the respective approaches of the Crown and TOKM is that the Crown requires iwi members to approve any structure, usually through a postal ballot of all registered members. Therefore, constitutions can be amended to comply with TOKM'srequirements according to the amendment provisions contained in the existing constitution (if one exists). Constitutions can also, only be amended or adopted to comply with the Crown's requirements with the approval of the members of the claimant group.

Constitutional certainty is critical for any organisation to succeed, that is, the rules of operation are clear and unambiguous. This is no less true for iwi.

To not provide this certainty in any restructuring will be extremely detrimental to iwi over time and will potentially provide a feeding ground for litigious challenges which are aimed more at individual political leverage within the iwi rather than overall iwi wellbeing. The importance of constitutional certainty can not be over emphasised. Iwi will not be able to successfully utilise the benefits of any Treaty settlement or fisheries redress, or any other assets for that matter, unless and until, underlying legal structures have been investigated thoroughly and, if necessary, restructured.


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.