Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698848059333.pdf (New Zealand)
Reprint as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 (SR 2005/68) Silvia Cartwright, Governor­General Order in Council At Wellington this 21st day of March 2005 Present: Her Excellency the Governor­General in Council Pursuant to section 173 of the Crown Entities Act 2004, Her Excel­ lency the Governor­General, acting on the advice and with the con­ sent of the Executive Council, makes the following regulations.
Note Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

These regulations are administered by the Treasury.
1 Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 Contents Title Commencement Interpretation Bank accounts Purpose of regulations 5 to 8 Minimum requirement for bank accounts Minimum requirement for banks outside New Zealand Credit­rating test for registered banks and registered building societies Bank account at bank outside New Zealand Acquisition of debt securities Credit­rating test for issuer of debt securities Period of grace Borrowing Deﬁnitions relating to borrowing Authority for school board of trustees to borrow Authority for district health boards to borrow Guarantees and indemnities 14 Permitted guarantees and indemnities 15 Permitted derivative transactions Derivative transactions Page 2 2 2 3 3 3 4 5 5 6 7 7 7 8 9 Regulations Title These regulations are the Crown Entities (Financial Powers) Regulations 2005.
Commencement These regulations come into force on 1 April 2005.

Interpretation In these regulations, unless the context otherwise requires, Act means the Crown Entities Act 2004.

1 2 3 2 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 r 6 4 5 (1) Bank accounts Purpose of regulations 5 to 8 The purpose of regulations 5 to 8 is to provide for the establish­ ment, maintenance, and operation of bank accounts by Crown entities.
Minimum requirement for bank accounts The minimum requirement in order to be a bank account under these regulations and sections 158 and 161 of the Act is that there is a contract with a registered bank, registered building society, or a bank outside New Zealand that— (a) contains a covenant by the bank or building society to keep a record of the amount it owes its account cus­ tomer by reason of the deposit of money with the bank or building society for the account of its account cus­ tomer; and provides that that amount is repayable in whole or in any part upon demand by the account customer; and does not comprise— (i) (ii) (iii) a cash or term deposit; or a fund; or any other form of investment in the debt secur­ ities of the bank or building society consisting of a speciﬁed amount of debt that is repayable only in whole.
(b) (c) (2) Other contracts or accounts are not bank accounts for the pur­ poses of these regulations or sections 158 and 161 of the Act.
6 (1) Minimum requirement for banks outside New Zealand The minimum requirement in order to be a bank outside New Zealand under these regulations and section 158 of the Act is that the ﬁnancial institution must be entitled by the laws of the jurisdictions in which it operates to include, in its name or title,— (a) (b) (c) the word “bank”, “banker”, or “banking”; or any of those words as part of another word; or a translation of those words into another language (whether or not the translation of those words is part of any other word).
3 r 7 Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 (2) Other ﬁnancial institutions are not banks outside New Zealand for the purposes of these regulations or section 158 of the Act.
7 Credit­rating test for registered banks and registered building societies (1) A registered bank or registered building society satisﬁes the credit­rating test referred to in section 158(1)(a) of the Act only if— (a) it satisﬁes one of the speciﬁed tests and does not have a credit rating assigned to it by any other speciﬁed credit­ rating organisation; or it satisﬁes the speciﬁed test that applies to each of the speciﬁed credit­rating organisations that have assigned a credit rating to it.
(b) The following are speciﬁed tests for the purposes of section 158 of the Act: (a) Standard & Poor’s Ratings Group (or its successors or assigns) rates the credit of the relevant registered bank or registered building society “A−” or higher or, if that credit is short term, “A−1” or higher; or (b) Moody’s Investors Service, Inc (or its successors or as­ signs) rates the credit of the relevant registered bank or registered building society “A3” or higher or, if that credit is short term, “Prime−1” or higher.
In this regulation,— credit means— (a) (b) long­term unsubordinated unsecured New Zealand dol­ lar debt obligations payable in New Zealand; or if a registered bank or registered building society does not issue long­term debt as set out in paragraph (a), short­term unsubordinated unsecured New Zealand dol­ lar debt obligations payable in New Zealand speciﬁed credit­rating organisation means a credit­rating or­ ganisation referred to in a speciﬁed test speciﬁed test means a credit­rating test that is speciﬁed in— (a) (b) subclause (2); or a notice in the Gazette published by the Minister of Fi­ nance under section 158(1)(a) of the Act.
(2) (3) 4 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 r 9 Bank account at bank outside New Zealand 8 (1) A bank account at a bank outside New Zealand is approved for (c) (b) the purposes of section 158(2)(b)(ii) of the Act if— (a) the bank account comprises debt owed and payable in New Zealand currency; and except as set out in subclause (2), the credit of the bank satisﬁes the credit­rating test for registered banks and registered building societies stipulated in regulation 7(1) as if it were a registered bank or a registered building society; and the laws of the jurisdiction under which the bank op­ erates the bank account do not discriminate between classes of unsecured creditors except upon grounds, and only to the extent, set out in a subordination covenant; and the central bank of the jurisdiction in which the bank operates the bank account is a shareholder in the Bank for International Settlements.
In subclause (1)(b), credit means— (a) (d) long­term unsubordinated unsecured foreign currency debt obligations payable in the home jurisdiction of that foreign currency; or if a bank outside New Zealand does not issue long­ term debt as set out in paragraph (a), short­term un­ subordinated unsecured foreign currency debt obliga­ tions payable in the home jurisdiction of that foreign currency.
(b) Acquisition of debt securities (2) Credit­rating test for issuer of debt securities 9 (1) A registered bank, or any other entity, satisﬁes the credit­rating test referred to in section 161(1)(a) of the Act only if— (a) it satisﬁes one of the speciﬁed tests and does not have a credit rating assigned to it by any other speciﬁed credit­ rating organisation; or it satisﬁes the speciﬁed test that applies to each of the speciﬁed credit­rating organisations that have assigned a credit rating to it.
(b) 5 Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 The following are speciﬁed tests for the purposes of section 161(1)(a) of the Act: (a) Standard & Poor’s Ratings Group (or its successors or assigns) rates the debt securities to be issued by the relevant registered bank, or other entity, to the relevant Crown entity “A−” or higher or, if those debt securities are short term, “A−1” or higher; or (b) Moody’s Investors Service, Inc (or its successors or as­ signs) rates the debt securities to be issued by the rele­ vant registered bank, or other entity, to the relevant Crown entity “A3” or higher or, if those debt securities are short­term, “Prime−1” or higher.
In this regulation,— speciﬁed credit­rating organisation means a credit­rating or­ ganisation referred to in a speciﬁed test speciﬁed test means a credit­rating test that is speciﬁed in— (a) (b) subclause (2); or a notice in the Gazette published by the Minister of Fi­ nance under section 161(1)(a) of the Act.
Period of grace There is a period of grace if a change in the credit rating as­ signed to a debt security (the debt security) by a credit­rating organisation results in a registered bank, or any other entity, ceasing to satisfy the credit­rating test stipulated in regulation 9(1).
The period of grace ends on the earlier of— (a) 2 months after the registered bank, or other entity, ceases to satisfy the credit­rating test stipulated in regulation 9(1); or a date speciﬁed by the Minister of Finance and notiﬁed to the relevant Crown entity in writing.
(b) From the time that the Crown entity becomes aware that the registered bank, or other entity, ceases to satisfy the credit­rat­ ing test stipulated in regulation 9(1), the Crown entity must— diligently monitor the credit rating of the debt security; (a) and r 10 (2) (3) 10 (1) (2) (3) 6 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 r 13 (b) take all prudent steps necessary to avoid loss to the Crown entity, including (if necessary) transferring the debt security to a third party.
(4) By the end of the period of grace the Crown entity must not hold the debt security.
Borrowing 11 Deﬁnitions relating to borrowing For the purposes of these regulations and section 162 of the Act,— accepting debt on assignment (as that phrase is used in the deﬁnition of borrow in section 136(1) of the Act) includes a Crown entity (entity A) recording the indebtedness of another entity (whether or not a Crown entity) in the ﬁnancial state­ ments that entity A is required to prepare in accordance with section 154 of the Act, whether or not entity A incurs the legal obligation to repay that indebtedness by way of novation or otherwise borrow— (a) includes the issuance of any security or any other ﬁnan­ cial instrument; but does not include an operating lease or bailment by way of hire.
(b) Authority for school board of trustees to borrow 12 (1) A school board of trustees may, in any calendar year, borrow any amount of money it thinks ﬁt from any sources it thinks ﬁt provided that the total annual cost to the board of trustees in repaying all outstanding borrowings (including both principal and interest repayments) is equal to or less than one­tenth of the value of the grants determined by the Minister of Education to be paid to the board for operational activities for that year.
(2) A school board of trustees may borrow in accordance with sub­ clause (1) without the consent of either the Minister of Finance or the Minister of Education.
Authority for district health boards to borrow 13 (1) A district health board may borrow money from— 7 r 14 Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 (a) (b) (c) the Residual Health Management Unit; or a registered bank or registered building society that sat­ isﬁes the credit­rating test stipulated in regulation 7(1), provided that the total amount of any loans from those banks or building societies does not exceed the provider arm planned monthly revenue as deﬁned in that district health board’s Crown funding agreement; or the Energy Efﬁciency and Conservation Authority.
(2) Money may be borrowed under subclause (1)(b) only for the purpose of funding working capital.

(4) (3) Money may be borrowed under subclause (1)(c) only for the purpose of investment in energy efﬁciency (within the mean­ ing of that term in section 3 of the Energy Efﬁciency and Con­ servation Act 2000).
For the purposes of this regulation,— Crown funding agreement has the same meaning as in sec­ tion 10 of the New Zealand Public Health and Disability Act 2000 district health board means a district health board established by or under section 19 of the New Zealand Public Health and Disability Act 2000 Energy Efﬁciency and Conservation Authority means the Energy Efﬁciency and Conservation Authority established by section 20 of the Energy Efﬁciency and Conservation Act 2000 Residual Health Management Unit means the Residual Health Management Unit continued by section 57 of the New Zealand Public Health and Disability Act 2000.
Regulation 13(1)(c): amended, on 26 October 2006, by regulation 4 of the Crown Entities (Financial Powers) Amendment Regulations 2006 (SR 2006/294).

Guarantees and indemnities Permitted guarantees and indemnities 14 (1) A Crown entity may give a guarantee— (a) (b) that is limited to a covenant to perform personally an­ other entity’s non­monetary covenant to perform; or in respect of any of the contracts or instruments referred to in subclauses (2) and (3).
8 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 r 15 (2) A Crown entity may give an indemnity relating to, and con­ tained in,— (a) (b) (c) (d) (e) (f) (g) (h) a loan agreement lawfully entered into by the Crown entity as borrower, or an agreement ancillary to that loan agreement: a contract to lease, or a lease of, real property entered into by the Crown entity as lessee, tenant, or the as­ signee of the lessee or tenant: a contract (including a deed) executed by the Crown entity to settle litigation brought against it by a third party: a contract of bailment by way of hire executed by the Crown entity in the ordinary course of its operations: a contract of insurance entered into by the Crown entity as the insured party in the ordinary course of its oper­ ations: a contract for the sale and purchase of goods entered into by the Crown entity in the ordinary course of its operations: a contract for the procurement of services entered into by the Crown entity in the ordinary course of its oper­ ations: a contract for the purchase of an intangible (including intellectual property or a licence of intellectual prop­ erty) entered into by the Crown entity in the ordinary course of its operations.
(3) An indemnity given by a Crown entity that relates to a class of contract referred to in subclause (2)(d) to (h) may be con­ tained in an ancillary contract or instrument (including a trust) relating to that class of contract, but only if that indemnity is contained in the standard printed terms and conditions of the Crown entity or the counterparty as the case may be.
Derivative transactions Permitted derivative transactions 15 (1) A Crown entity may enter into the following derivative trans­ actions: (a) a foreign exchange transaction with a registered bank or registered building society that satisﬁes the credit­rating 9 r 15 Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 (ii) (iii) test stipulated in regulation 7(1), or a bank outside New Zealand that satisﬁes the credit­rating test stipulated in regulation 8(1)(b), for the purpose of— (i) procuring foreign exchange (including nego­ tiable instruments and other documentary choses in action) for use by Crown entity members, ofﬁcials, or employees while in the country of that foreign currency or while en route to that country: procuring foreign exchange in order to discharge a liability arising under any of the classes of con­ tract or instrument referred to in regulation 14: procuring foreign exchange in order to— deposit funds into a bank account: (A) invest in debt securities: (B) repay borrowing: (C) pay a guarantee or indemnity: (D) a futures contract having the sole purpose of cover­ ing any foreign exchange transaction authorised by this regulation: a foreign exchange transaction undertaken with a for­ eign exchange dealer on a cash­for­cash basis: the sale and purchase of goods or intangibles (including intellectual property rights, but not including securities) that are not traded in the commodities or the capital markets, delivery of which is to occur in the future: an option to purchase or lease, or renew the lease of, real property: an option to purchase or bail, or to renew the bailment by way of hire of, goods that are not traded in the com­ modities markets: a covenant to assign intellectual property rights, or other property rights, contained in a contract of employment: a contract to acquire debt securities lawfully entered into in accordance with section 161 of the Act and, if applicable, regulation 9, where delivery must take place in the future.
(b) (c) (d) (e) (f) (g) (h) 10 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 (2) A Crown entity may procure foreign exchange for the pur­ poses set out in subclause (1)(a)(iii) only if the bank account, investment, borrowing, guarantee, or indemnity is— (a) (b) in a currency other than New Zealand currency; and authorised by— (i) (ii) the Act; or the Minister of Finance (either individually or jointly with a responsible Minister).
Rebecca Kitteridge, Acting for Clerk of the Executive Council.

Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notiﬁcation in Gazette: 24 March 2005.


11 Notes Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 Contents 1 2 3 4 General Status of reprints How reprints are prepared Changes made under section 17C of the Acts and Regulations Publication Act 1989 List of amendments incorporated in this reprint (most recent ﬁrst) General This is a reprint of the Crown Entities (Financial Powers) Regulations 2005.
The reprint incorporates all the amend­ ments to the regulations as at 26 October 2006, as speciﬁed in the list of amendments at the end of these notes.

Relevant provisions of any amending enactments that have yet to come into force or that contain relevant transitional or savings provisions are also included, after the principal enact­ ment, in chronological order.
Status of reprints Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment.

This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.
This presumption may be rebutted by producing the ofﬁcial volumes of statutes or statutory regulations in which the prin­ cipal enactment and its amendments are contained.

How reprints are prepared A number of editorial conventions are followed in the prep­ aration of reprints.

For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted.
For a detailed list of the editorial conventions, see 5 Notes 1 2 3 12 Reprinted as at 26 October 2006 Crown Entities (Financial Powers) Regulations 2005 Notes http://www.pco.parliament.govt.nz/legislation/reprints.shtml or Part 8 of the Tables of Acts and Ordinances and Statutory Regulations, and Deemed Regulations in Force.
4 Changes made under section 17C of the Acts and Regulations Publication Act 1989 Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice.

Changes that would alter the effect of the legislation are not permitted.
A new format of legislation was introduced on 1 January 2000.

Changes to legislative drafting style have also been made since 1997, and are ongoing.

To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all le­ gislation reprinted after 1 January 2000 is in the new format for legislation and reﬂects current drafting practice at the time of the reprint.
In outline, the editorial changes made in reprints under the au­ thority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint: • omission of unnecessary referential words (such as “of this section” and “of this Act”) typeface and type size (Times Roman, generally in 11.5 point) layout of provisions, including: • • indentation position of section headings (eg, the number and heading now appear above the section) format of deﬁnitions (eg, the deﬁned term now appears in bold type, without quotation marks) format of dates (eg, a date formerly expressed as “the 1st day of January 1999” is now expressed as “1 January 1999”) position of the date of assent (it now appears on the front page of each Act) 13 • • • • • Notes Crown Entities (Financial Powers) Regulations 2005 Reprinted as at 26 October 2006 • • • • • • punctuation (eg, colons are not used after deﬁnitions) Parts numbered with roman numerals are replaced with arabic numerals, and all cross­references are changed accordingly case and appearance of letters and words, including: • format of headings (eg, headings where each word formerly appeared with an initial cap­ ital letter followed by small capital letters are amended so that the heading appears in bold, with only the ﬁrst word (and any proper nouns) appearing with an initial capital letter) small capital letters in section and subsection ref­ erences are now capital letters • schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross­references are changed accord­ ingly running heads (the information that appears at the top of each page) format of two­column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chrono­ logical).
List of amendments incorporated in this reprint (most recent ﬁrst) Crown 2006 (SR 2006/294) Entities (Financial Powers) Amendment Regulations Wellington, New Zealand: Published under the authority of the New Zealand Government—2009 5 12 14