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Part 4
Settlement quota interests, sales and exchanges of settlement quota, related restrictions, and option to purchase

155 Outline of this Part

This Part provides for the following matters:

(a) the registration under the Fisheries Act 1996 of a settlement quota interest against quota shares owned by asset-holding companies or subsidiaries of asset-holding companies; and

(b) a general restriction on the transfer of settlement quota; and

(c) the basis on which settlement quota may be disposed of; and

(d) exceptions to the general constraint on disposal, including provisions for the exchange, of settlement quota; and

(e) an option to purchase (right of first refusal), with a procedure for selling bundles of assets that include settlement quota; and

(f) a power for Te Ohu Kai Moana Trustee Limited to make further rules for the sale or exchange of settlement quota.

156 Interpretation

In this Part, bundle of assets means a bundle that contains 1 or more stocks of settlement quota and may contain other assets, including non-quota settlement assets and non-settlement assets.

Subpart 1—Registration of settlement quota interests

157 Registration of settlement quota interests

(1) Te Ohu Kai Moana Trustee Limited must, in accordance with section 152A of the Fisheries Act 1996, apply to the chief executive of the Ministry of Fisheries for registration of settlement quota interests —

(a) within 20 working days after the appointed day and before any transactions are made involving the specified shares, against—

(i) quota shares listed in Schedule 1; and

(ii) quota shares allocated, before the appointed day, under section 44 of the Fisheries Act 1996; and

(b) against further quota shares allocated under section 44 of the Fisheries Act 1996 after the appointed day.

(2) The quota shares referred to in subsection (1) become settlement quota when the settlement quota interest is registered under section 152A of the Fisheries Act 1996.

158 General restriction on transfer of settlement quota

(1) Settlement quota must not be transferred except—

(a) on application under subsection (2), with the authorisation of Te Ohu Kai Moana Trustee Limited (which must not be withheld if it is satisfied that the requirements of this Part for the transfer have been met by the registered owner of the settlement quota); or

(b) as ordered by the Court; or

(c) through forfeiture to the Crown under the Fisheries Act 1996.

(2) An application to transfer settlement quota must be submitted to the chief executive of the Ministry of Fisheries by the registered owner and Te Ohu Kai Moana Trustee Limited jointly in the prescribed form.

159 Quota may be treated as settlement quota

(1) A mandated iwi organisation may request Te Ohu Kai Moana Trustee Limited in writing to treat any quota owned by the asset-holding company of that mandated iwi organisation as settlement quota.

(2) A request must not be made under subsection (1) until the mandated iwi organisation has—

(a) notified the proposal to the adult members of the iwi in accordance with subclause (3) of kaupapa 4 of Schedule 7; and

(b) obtained the approval of not less than 75% of the adult members of the iwi who vote—

(i) at a general meeting of the mandated iwi organisation called for the purpose; or

(ii) by postal ballot; and

(c) obtained the approval of any party that holds a mortgage or caveat registered against the quota.

(3) A public notice given under subsection (2)(a) must specify the quota management stock and the number of quota shares affected by the proposal.

160 Application for registration

(1) This section applies if Te Ohu Kai Moana Trustee Limited—

(a) is acting in accordance with its duty under section 157; or

(b) is satisfied that a mandated iwi organisation making a request under section 159(1) has complied with section 159(2) and (3); or

(c) has consented to a proposal for an exchange under section 174 of settlement quota for quota other than settlement quota.

(2) Te Ohu Kai Moana Trustee Limited and the registered owner of the quota jointly (or Te Ohu Kai Moana Trustee Limited alone if it is the registered owner of the quota) must—

(a) request the chief executive of the Ministry of Fisheries to register a settlement quota interest against the quota shares; and

(b) specify which quota management stock is the subject of the request; and

(c) specify the number of quota shares to which the request applies.

(3) If, in the case of an exchange contemplated by subsection (1)(c), a request is made to remove a settlement quota interest from settlement quota, Te Ohu Kai Moana Trustee Limited and the registered owner of the quota jointly (or Te Ohu Kai Moana Trustee Limited alone if it is the registered owner of the quota) must—

(a) request the chief executive of the Ministry of Fisheries to remove the settlement quota interest from the quota shares; and

(b) specify which quota management stock is the subject of the request; and

(c) specify the number of quota shares to which the request applies.

Subpart 2—Restrictions on, and procedures for, disposal of settlement quota

161 Restrictions on disposal of settlement quota

(1) A mandated iwi organisation must not—

(a) sell its settlement quota, except to—

(i) another mandated iwi organisation; or

(ii) an entity within Te Ohu Kai Moana Group; or

(b) gift its settlement quota.

(2) A mandated iwi organisation must not sell any settlement quota earlier than 2 years after the date of the first transfer of settlement quota by Te Ohu Kai Moana Trustee Limited to the mandated iwi organisation.

(3) If an entity within Te Ohu Kai Moana Group or a mandated iwi organisation sells or relinquishes control over a subsidiary, subcompany, asset-holding company, or subsidiary of an asset-holding company that holds settlement quota, that quota must be treated as the property of Te Ohu Kai Moana Trustee Limited or of the mandated iwi organisation, as appropriate.

(4) Unless the exceptions under subpart 3 of this Part apply, a sale of settlement quota must be made in accordance with—

(a) this subpart; and

(b) any rules made by Te Ohu Kai Moana Trustee Limited under section 176.

162 Prerequisites to sale of settlement quota

(1) A mandated iwi organisation may sell settlement quota only if, before sale, the mandated iwi organisation selling the quota has—

(a) notified the proposal to the adult members of the iwi in accordance with subclause (3) of kaupapa 4 of Schedule 7; and

(b) obtained the prior approval of not less than 75% of the adult members of the iwi who vote—

(i) at a general meeting of the mandated iwi organisation called for the purpose; or

(ii) by postal ballot.

(2) A notice given under subsection (1)(a) must specify,—

(a) in the public notice, the approximate proportion of the total value of the settlement quota of the iwi that is affected by the proposal; and

(b) in the case of a private notice to an adult member of the iwi,—

(i) the amount of settlement quota of the iwi affected by the proposal; and

(ii) a reasonable estimate of the likely market value of that settlement quota.

(3) An approval obtained under subsection (1)(b) may give a power for the mandated iwi organisation to sell—

(a) specified settlement quota; or

(b) settlement quota generally up to a specified limit that must not exceed 10% of the total value of the settlement quota held by the asset-holding companies or any subsidiary of the asset-holding companies of the mandated iwi organisation; or

(c) settlement quota approved for sale in accordance with a programme set out in the annual plan approved under kaupapa 11(b)(iii) of Schedule 7.

(4) For transactions involving settlement quota, an approval obtained under subsection (1)(b) is valid from the date on which it is given—

(a) for a term not exceeding 15 months; or

(b) in the case of an approval of the kind referred to in subsection (3)(b), for the term specified in the approval, which must not exceed 12 months.

(5) The terms referred to in subsection (4) do not limit the term of a transaction or series of transactions referred to in section 167.

Option to purchase

163 Offer of option to purchase

(1) A mandated iwi organisation may sell settlement quota in accordance with this subpart only if it first offers every other mandated iwi organisation and Te Ohu Kai Moana Group an opportunity to bid for the settlement quota.

(2) In offering an opportunity to bid under subsection (1), a mandated iwi organisation that wishes to sell, as a single lot, a bundle of assets that includes 1 or more stocks of settlement quota must provide for—

(a) single bids to be made for the total bundle of assets; and

(b) a set of bids to be made for lots covering all the assets in the bundle, including separate bids for each individual settlement quota stock.

(3) However, a mandated iwi organisation that wishes to sell freshwater settlement quota must not include that quota in a bundle of assets that contains inshore or deepwater settlement quota.

(4) A bid submitted under subsection (1) is binding until the conclusion of the sale process required by this subpart.

164 Procedure for selling bundle of assets

If bids have been received under section 163(1) to purchase a bundle of assets as a single lot, the mandated iwi organisation offering to sell must—

(a) calculate the sum of the highest bids received under section 163(2)(b) for each of the asset lots; and

(b) either—

(i) notify all bidders of its intention to proceed with the sale as a bundle of assets or as separate lots, whichever yields the higher total cash return based on the bids received; or

(ii) withdraw the settlement quota from sale.

165 Procedure to determine right to purchase

If assets offered for sale under section 163 include inshore or freshwater settlement quota, the first option to purchase must be given—

(a) in the case of inshore settlement quota, to Te Ohu Kai Moana Group and every mandated iwi organisation that holds a registered coastline entitlement for any inshore stock offered:

(b) in the case of freshwater settlement quota, to Te Ohu Kai Moana Group and every mandated iwi organisation whose territory is wholly or partly within a relevant quota management area.

166 Basis on which sale must proceed

(1) The vendor must sell to a party that, having been offered the settlement quota under section 165, matches the highest bid obtained under section 163(1), unless—

(a) the vendor decides not to sell; or

(b) an alternative procedure has been provided for in rules made under section 176.

(2) If the highest bid is matched by bids from more than 1 party referred to in section 165, the vendor may—

(a) negotiate with those parties; or

(b) conduct a second bidding process between or amongst those other bidders; or

(c) withdraw the settlement quota from sale.

(3) If no party referred to in section 165 matches the highest bid obtained under section 163(1), the vendor must sell to the party that submitted the highest bid under section 163(1), unless—

(a) the vendor decides not to sell; or

(b) an alternative procedure has been provided for in rules made under section 176.

(4) If there are 2 matching highest bids obtained under section 163(1) that are not matched by a party referred to in section 165, the vendor may—

(a) negotiate with those parties; or

(b) conduct a second bidding process between or amongst those other bidders; or

(c) withdraw the settlement quota from sale.

(5) To avoid doubt, subsections (3) and (4) apply to any sale of settlement quota to which section 165 does not apply.

167 Other constraints on disposal

(1) Section 162 applies if a mandated iwi organisation proposes to enter into a transaction with any party by way of, for example, an option, security, mortgage, or guarantee or series of transactions that could, if the rights under the transaction were exercised, result in—

(a) the sale of settlement quota; or

(b) the iwi being disentitled, for a period of more than 5 years, to—

(i) the income from annual catch entitlements arising from that quota; or

(ii) the control or use of the annual catch entitlements arising from that quota.

(2) Section 162 must be complied with before a transaction referred to in subsection (1) is entered into, but the other provisions of this subpart do not apply at that time.

(3) If a third party to a transaction referred to in subsection (1) exercises a right to sell, or requires a sale of, settlement quota, sections 161(1) and 163 to 166 apply as if the seller were the mandated iwi organisation referred to in subsection (1).

(4) In this section, third party means a party not entitled to hold settlement quota.

168 Application of this subpart to Te Ohu Kai Moana Group

(1) If an entity within Te Ohu Kai Moana Group acquires settlement quota under this subpart, sections 161(1) and 163 to 166 apply to that entity as if it were a mandated iwi organisation.

(2) An entity within Te Ohu Kai Moana Group must not sell settlement quota unless it—

(a) passes a special resolution, in compliance with its constitutional documents, authorising it to exercise, in relation to settlement quota, either—

(i) a specific power of sale; or

(ii) a general power of sale; and

(b) complies with any rules made under section 176.

169 When sale of settlement quota must be allowed

(1) Te Ohu Kai Moana Trustee Limited must allow a sale of settlement quota if it has ascertained that—

(a) in the case of a sale by a mandated iwi organisation,—

(i) the 2-year period referred to in section 161(2) has elapsed; and

(ii) the mandated iwi organisation has obtained the approval required by section 162(1)(b); and

(b) in the case of a sale by a mandated iwi organisation or by an entity within Te Ohu Kai Moana Group, the offer of an option to purchase has been made as required by sections 163 to 166.

(2) If a mandated iwi organisation or an entity within Te Ohu Kai Moana Group proposes to sell settlement quota, it must provide documentation to Te Ohu Kai Moana Trustee Limited, supported by a statutory declaration if Te Ohu Kai Moana Trustee Limited so requires, to establish the matters relevant under subsection (1).

(3) Te Ohu Kai Moana Trustee Limited—

(a) must include in the iwi register a record of all transfers of settlement quota to or by asset-holding companies or their subsidiaries; and

(b) may make or amend rules under section 176 regarding the evidence required to establish the matters referred to in subsection (1).

170 Remedy for breach of requirements under this subpart

(1) If a contract for the sale of settlement quota, including a transaction or series of transactions referred to in section 167(1), is in breach of sections 161 to 168 or rules made under section 176, the Court may make orders as it thinks fit, including orders—

(a) to cancel the contract or transaction:

(b) to vest in the vendor the settlement quota that was the subject of the contract or transaction:

(c) to vest in the buyer the consideration for the contract or transaction:

(d) consistent with section 161, if the buyer has on-sold, or has granted any interest in, or security over, the settlement quota:

(e) that the costs of the applicant be met by the parties to the sale or transaction.

(2) Orders made under subsection (1) may be made—

(a) on the application of—

(i) any party; or

(ii) an adult member of an iwi whose mandated iwi organisation is a party; or

(iii) a mandated iwi organisation; or

(iv) an entity within Te Ohu Kai Moana Group; and

(b) on the terms and conditions that the Court thinks fit, so long as the quota shares are not vested other than in a mandated iwi organisation or an entity within Te Ohu Kai Moana Group.

(3) In the case of a breach of sections 161 to 168 or rules made under section 176, the Illegal Contracts Act 1970 does not apply.

Subpart 3—Exceptions to application of subpart 2

Quota sold to wholly-owned entities

171 Settlement quota sold to wholly-owned entities

Subpart 2 does not apply to—

(a) Te Ohu Kai Moana Group if the sales are to 1 or more of the entities within Te Ohu Kai Moana Group; or

(b) transfers between or among asset-holding companies wholly owned by the same mandated iwi organisation or subsidiaries of those asset-holding companies.

Small parcels of settlement quota

172 Rationalisation of small parcels of settlement quota

(1) In this section, small parcel of settlement quota means an amount of settlement quota that has—

(a) an estimated value of less than $100 or a greater amount as set in a rule made under section 176; and

(b) been allocated to an iwi but not yet transferred to it under section 130.

(2) A mandated iwi organisation may request Te Ohu Kai Moana Trustee Limited to retain a small parcel of settlement quota allocated to its iwi to be consolidated with other small parcels and subsequently offered for sale by tender.

(3) A mandated iwi organisation must, before making a request under this section, comply with section 162, but is otherwise not bound by the provisions of subpart 2.

(4) Te Ohu Kai Moana Trustee Limited must—

(a) record in the iwi register—

(i) the number of quota shares of each quota stock retained by it under this section; and

(ii) the iwi to which the quota shares are allocated; and

(b) before the end of the year that is 5 years after the commencement of this Act, offer for sale the consolidated settlement quota shares, in accordance with sections 163 to 166; and

(c) pay the net proceeds of the quota shares sold under paragraph (b) to the mandated iwi organisation of the iwi to which the settlement quota was first allocated, in proportion to the number of quota shares so allocated.

Quota exchange

173 Exception for quota exchanges

(1) Subpart 2 does not apply to the exchange of settlement quota for any other quota of the same market value.

(2) A mandated iwi organisation or an entity within the Te Ohu Kai Moana Group, in offering settlement quota in an exchange referred to in subsection (1), may do so only in exchange for quota that is either—

(a) entirely settlement quota; or

(b) entirely quota other than settlement quota.

(3) To avoid doubt, settlement quota may be used in exchanges with parties other than the entities within Te Ohu Kai Moana Group or mandated iwi organisations.

174 Procedure and criteria for exchange

(1) Before a mandated iwi organisation may exchange settlement quota under section 173, it must—

(a) advise Te Ohu Kai Moana Trustee Limited, for each quota management stock, of—

(i) the number of settlement quota shares it proposes to offer for exchange; and

(ii) an estimate of the fair market value of those shares, determined in accordance with any rules made under section 176(2)(g); and

(iii) the stock and the number of shares to be received by the mandated iwi organisation in exchange for the settlement quota referred to in subparagraph (i); and

(iv) whether the quota to be received is settlement quota; and

(v) an estimate of the fair market value of the quota shares to be received, determined in accordance with any rules made under section 176(2)(g); and

(b) obtain the consent of Te Ohu Kai Moana Trustee Limited to the exchange; and

(c) ensure that the exchange complies with the policy on exchanges, as expressed in the annual plan of the mandated iwi organisation.

(2) The mandated iwi organisation must provide to Te Ohu Kai Moana Trustee Limited documentation, supported by a statutory declaration if Te Ohu Kai Moana Trustee Limited so requires, to establish the matters referred to in subsection (1).

(3) Te Ohu Kai Moana Trustee Limited must not allow an exchange involving settlement quota unless it is satisfied that—

(a) the exchange is for quota or bundles of quota of an equivalent market value; and

(b) each mandated iwi organisation involved in the exchange has complied with the policy of the mandated iwi organisation on exchanges, as notified in its annual plan.

(4) If Te Ohu Kai Moana Trustee Limited is satisfied that the requirements of subsection (3) are met, and allows the proposed exchange, it must ensure that, after the exchange, settlement quota interests—

(a) remain registered against any settlement quota received in the exchange:

(b) are registered against any non-settlement quota received in the exchange.

(5) If the quota received in an exchange was not previously settlement quota, Te Ohu Kai Moana Trustee Limited must ensure that the settlement quota interest is removed from the quota offered for exchange.

(6) Te Ohu Kai Moana Trustee Limited may make or amend rules under section 176 regarding the evidence required to establish the matters referred to in subsection (3).

Breach of restrictions applying to exchanges

175 Remedy for breach of restrictions

(1) If settlement quota is exchanged in breach of section 173 or section 174, the Court may make orders as it thinks fit, including orders—

(a) to cancel the contract or transaction:

(b) to return the assets and any consideration to the prior owner:

(c) consistent with section 161, if a party to the exchange has on-sold or further exchanged the settlement quota, or has granted an interest in it or security over it:

(d) that the costs of the applicant be met by the parties to the sale or transaction.

(2) Orders may be made under subsection (1) on the application of—

(a) any party; or

(b) an adult member of an iwi whose mandated iwi organisation is a party; or

(c) a mandated iwi organisation; or

(d) an entity within Te Ohu Kai Moana Group.

(3) In the case of a breach of section 173 or rules made under section 176, the Illegal Contracts Act 1970 does not apply.

Subpart 4—Additional rules for quota sales and exchanges

176 Additional rules

(1) Te Ohu Kai Moana Trustee Limited may make and amend, in accordance with section 54, rules that must be complied with in every sale or exchange of settlement quota under this Part.

(2) The rules may include, but are not limited to, the following matters:

(a) the notice required to be given to persons eligible to purchase settlement quota, and the form and content of the notice:

(b) any methodology for the tender and sale processes, including notice periods and deadlines for responses to offers:

(c) identification of the parties referred to in sections 163 to 166:

(d) express exceptions to the prohibition against mandated iwi organisations accepting any price other than the highest unconditional bid:

(e) the sale of bundles of inshore settlement quota by a mandated iwi organisation or Te Ohu Kai Moana Trustee Limited in accordance with sections 163 to 166:

(f) the means for determining a purchaser, if more than 1 mandated iwi organisation or Te Ohu Kai Moana Trustee Limited bids the same price for the same settlement quota:

(g) the means for determining fair market value for settlement quota that is exchanged, and the resolution of disputes as to that value:

(h) the recovery of costs by Te Ohu Kai Moana Trustee Limited for the administrative processes required by sections 158 to 169 and 173 and 174, to be paid by, or deducted from, a mandated iwi organisation:

(i) the means for determining the appropriate estimated value for the purpose of section 172(1):

(j) the information that must be supplied to Te Ohu Kai Moana Trustee Limited to establish compliance with the requirements of this Part, the form of that information, and the time within which it must be supplied.

(3) The matters that are provided for in the rules made under subsection (1) may apply to—

(a) a named mandated iwi organisation, all mandated iwi organisations, or mandated iwi organisations of a category specified in the notice; and

(b) specified settlement quota, all settlement quota, or settlement quota of a category specified in the notice.