Trustees Executors Limited Amendment Bill

I move, That the Trustees Executors Limited Amendment Bill be now read a second time. I also give notice now that following the second reading I will be seeking leave from the House to move directly to the third reading of the bill.

This bill is a private bill promoted by Trustees Executors Limited. Trustees Executors was previously known as TOWER Trust Limited. The company was incorporated in 1881, and is New Zealand’s oldest trustee company. Trustees Executors has its own private Act and is a statutory trustee company under the Trustee Companies Act 1967.

The Commerce Committee has given careful consideration to the bill and recommends that it be passed with only minor drafting amendments. The bill has three objectives: to amend the title of the TOWER Trust Limited Act 2002 to reflect Trustees Executors’ current name; to ensure that the TOWER Trust Limited Act reflects Trustees Executors’ current ownership structure; and, most important, to allow Trustees Executors to transact trust and estate business with its current and future parent companies and their subsidiaries.

The bill achieves this last-mentioned objective by adding a mechanism to the principal Act in order to allow Trustees Executors’ future parent companies to be named by Order in Council. Such orders can be made only on the recommendation of the Minister of Justice after consultation with the Minister of Commerce. That sensible, business-friendly approach is supported by the committee. As a result, Trustees Executors will not need to seek an amendment to the name of its parent company shown in the principal Act, should its parent company change. But there remains appropriate scrutiny of each new parent company before Trustees Executors can transact business with it. That scrutiny will ensure that beneficiaries’ interests are preserved. As the committee concludes, on page 3 of its report: “We are satisfied that there are sufficient protections in trust law to protect the interests of beneficiaries. We consider that the Government scrutiny entailed in the regulation-making process may also be beneficial.”

In conclusion, Trustees Executors has advised me that it supports the committee’s conclusions, and endorses the bill as reported back. The bill is a sensible approach to the naming of parent companies in the future, which in no way will affect the protections for beneficiaries. I commend the committee’s report to the House, and in doing so I want to thank the Commerce Committee and the House for their cooperation and work on this matter.

I rise to speak to the Trustees Executors Limited Amendment Bill, and firstly to congratulate the Commerce Committee, under the leadership of Katherine Rich, on the way it proceeded with that bill. I think we worked well together, and got through it very quickly and in due course.

The purpose of the bill is to expressly authorise Trustees Executors Limited to transact business with its current parent company, Sheffield Investments Inc. (NZ) Holdings Ltd, whose name has changed to Sterling Grace (NZ) Limited, and with the parent company’s subsidiaries. It also introduces, as Marian Hobbs said, a regulation-making power that authorises the Governor-General to amend by Order in Council the schedule to the principal Act, by adding, amending, or deleting the name of a body corporate that is a holding company of Trustees Executors Ltd.

In looking at Trustees Executors Ltd, and given the proposed change to the Act, which will require less scrutiny in the future, the select committee did have to go through a scrutiny process in relation to the company in this particular case. So for the benefit of the House I will go through a little bit of what Trustees Executors Ltd actually does. There is some confusion, I imagine, for those of the listening public, too, as to what it does and how it got there.

Trustees Executors Ltd is a provider of specialist investment administration services. It provides a whole range of outsourced services to financial institutions, charities, pension schemes, investment managers, and managed fund providers. The custody and investment accounting teams hold more than $20 billion of client assets, so the company is significant. Some of the other services it provides include custody and settlement reporting, trade capture and settlement, safe keeping, cash management, corporate actions, portfolio valuation, financial reporting, and unit pricing.

Trustees Executors Ltd is an interesting company in its very own right. In fact, it was first established back in 1881. Back in the 1880s it was the practice of people to appoint friends or acquaintances as their trustees when they drew up a will or a trust deed, and often the most able business people were used in that instance. But in 1881 a prominent Dunedin businessman looked to Australia and decided to adopt the concept of a trustee company, so Trustees Executors Ltd was born, known then as the Trustees, Executors and Agency Co. of New Zealand (Ltd). In 1882 a private Act of Parliament was passed, enabling that company to become a statutory trust company.

In the early 1980s Trustees Executors Ltd was acquired by the National Insurance Company of New Zealand Ltd. In 1988, along with that company, Trustees Executors became a wholly owned subsidiary of the Government Life Insurance Corporation Ltd, which became the Tower Corporation. One can look back at the number of changes that have happened in the last 100 years, and see that there have not been many. So the arguments that have been put forward by the Commerce Committee about enabling changes in the future to be handled by Orders in Council make some sense.

In 2002 Trustees Executors started trading as the TOWER Trust Ltd, but in 2003 TOWER Trust was purchased by Sterling Grace Corporation, which is a US-based private investment company. That purchase prompted a return to the name of Trustees Executors Ltd. Interestingly, in 2006 the company will be 125 years old—the oldest trustee company in the country.

Let us deal with the current ownership change. The current Act defines Trustees Executors’ parent company as being TOWER Trust Ltd. However, TOWER Trust sold Trustees Executors to Sterling Grace, and that has brought about the necessity for the current bill.

I want briefly to touch on the fact that the bill will add a schedule to the Act that lists the authorised parent companies of Trustees Executors Ltd, but the name of the company’s present parent company, Sterling Grace (NZ) Ltd, is the only name set out in the new schedule. So the bill, as I said earlier, provides the ability for the Governor-General, by Order in Council, to amend that schedule by adding to it the name of a body corporate, which means a name listed in the schedule—that is, a holding company or Trustees Executors Ltd—or removing a name from it. In future that will make it a lot easier to change the name of the company.

A concern was raised—by only one submitter, to be honest—that allowing a name change by an Order in Council would not provide the parliamentary scrutiny that we might like in the future. On that point, it was interesting to note that in my own electorate back in Napier and Hawke’s Bay a situation arose between Trustees Executors Ltd and the Wine Country Credit Union. The Wine Country Credit Union was attached as a trustee to Trustees Executors Ltd, and the credit union had significant issues with the company in trying to get out of that relationship. In fact, it had a relationship with Trustees Executors Ltd that ended up being somewhat dysfunctional, and over a 3-year period when it tried to get out of that relationship it continually came up against a brick wall from Trustees Executors Ltd in allowing it to do so. I have an 18-page letter here from the Wine Country Credit Union that was written to John Grace of the Sterling Grace Corporation, which goes into all sorts of detail regarding its issues with Trustees Executors Ltd. Principally, Trustees Executors Ltd had had an agreement with the Wine Country Credit Union that said it could not change its trustee company. From the point of view of the Wine Country Credit Union, that situation was somewhat insane, because it was unable to go out and look at other trustees—like Perpetual Trust Ltd—to see whether it could get better fees or better management of its trust. That situation, to me, was a concern.

So I have to say that when I sat in the Commerce Committee and considered whether Parliament should continue to have the scrutiny of those types of organisations or whether we should allow amendments to be enacted by an Order in Council, I was somewhat concerned and took some convincing that the latter should be the case. However, the officials did a good job of convincing me of that. Given the regular number of changes that those organisations go through, it was appropriate that we moved on with the matter and went to an Order in Council situation.

In summary, the bill allows the name of the Act to be changed, and we see that clearly. It allows Trustees Executors Ltd to transact business with its parent company. We note that the bill removes the ability of Parliament to scrutinise any future company name changes, although there are underlying methods of doing that through Orders in Council and through the officials at the Ministry of Economic Development. As I said, I am assured that the process is robust enough to ensure that that scrutiny will happen in the future. So the National Party is supporting this particular bill, and we are pleased to do so.

New Zealand First supports the Trustees Executors Limited Amendment Bill, which is in the name of Marian Hobbs. But in supporting this bill, I want to say a couple of things. We always worry a little bit when these sorts of things are in the hands of American corporations, but, by and large, trustees in New Zealand have done a marvellous job in many areas of business, and people give of their time and effort to them.

I know that this bill provides that charges can be made and the head company can receive some remuneration, and for that reason we support the fact that Parliament continues to keep some oversight of those sorts of organisations. It is always particularly necessary to do so because those kinds of organisations are less public, if I may say so, than some others that we see listed on the stock exchange, and so on and so forth, and their tentacles reach into so many corners of our economy.

There was concern as we went through the 1980s and early 1990s, when we had a bit of a Wild West situation in New Zealand’s economic markets. There are people around now who are saying we are entering a time of some instability. We are seeing financial lending institutions getting into trouble. Nobody is predicting that the end of the world is nigh, or anything like that, but there are warning signs, and in our view it is time for some prudence.

We are convinced that the Commerce Committee has given this bill the once over. I am pleased to hear that Chris Tremain was not immediately wedded to the idea, and that he required some undertakings to give his name to the approval. I am pleased that the bill has received that sort of scrutiny.

I wish we were giving our OK to a New Zealand company—to something that was staying in the hands of all the people in this country. That is not the case, but we will have to put up with that fact. Parliament still has overall jurisdiction of these things, and that is as it should be. So we support the bill.

Tēnā koe, Madam Speaker. Tēnā tātou katoa. I will take a very brief call on the Trustees Executors Limited Amendment Bill. The Māori Party supports the bill for its purpose of tidying up the technical aspects of legislation and, hopefully, avoiding the need for yet another retrospective omnibus bill to be introduced at a later point. We think it is a thoroughly sensible idea to correct the preamble to the bill in order to recognise that the current owner of the company has changed its name from Sheffield Investments Inc. (NZ) Holdings Ltd to Sterling Grace (NZ) Ltd.

The recommendations from the Commerce Committee, as I understood them, make sense. Sterling Grace (NZ) Ltd is the current owner of the company, which the bill recognises. The mechanism also removes the need for parliamentary approval of a new parent company, should Trustees Executors Ltd be sold. We are happy to support that change, because we recognise that the procedure will still allow appropriate scrutiny of future parent companies before transactions with them are authorised.

We have some familiarity with the concept of parent companies and trustees through our experiences with what are called whānau trusts. In the whānau trust, the rights of individual owners are submerged beneath the trustees’ powers to manage the property, and to select suitable beneficiaries of the profits gained from the land.

A very interesting part of the bill concerns future-proofing with an Order in Council mechanism, so that we will not have to relitigate matters in the House. We are very supportive of that sort of notion, and we will be behind the bill when the time comes for voting. Kia ora tātou.

Bill read a second time.

Procedure