Director Appointment & Remuneration Policy

1.0  Purpose

The policy is intended to provide clear guidance and requirements on director selection, appointment and remuneration.This policy sets out an objective and transparent process for identifying the skills required of a director and appointing such directors, and the matter of remuneration.

2.0  Background

The Local Government Act 2002 (the Act) section 57 requires Council to adopt a policy on the appointment and remuneration of directors to council organisations.

Definitions (refer section 6 of the Act)

3.0  Key Definitions

  • Organisation: means any partnership, trust, arrangement for the sharing of profits, union of interest, cooperation, joint venture, or other similar arrangement.
  • Council Organisation (CO):  Any organisation in which one or more local authorities controls any proportion of the voting rights or the right to appoint directors.
  • Council Controlled Organisation (CCO):  Any organisation in which one or more local authorities control 50 per cent or more of the voting rights or have the right to appoint 50 per cent or more of the directors.
  • Council Controlled Trading Organisation (CCTO):  Any council controlled organisation that operates a trading undertaking for the purpose of making a profit.
  • Director:  The directors and the board include trustees, managers, or office holders (however described in that organisation).

4.0  Policy

Council Controlled Organisations and Council Controlled Trading Organisations

Candidates for appointment to a CCO or CCTO are not restricted to Councillors.  Staff or external candidates may be considered for appointment.

  1. The Council will decide whether it is appropriate for the Mayor or a Councillor to fill a vacancy on a CCO or CCTO.  If deemed appropriate, the appointment will be made at the Council meeting, although for a CCTO, a formal application will be required and if there is more than one applicant the Council will obtain external candidate assessment and advice.
  2. If the Council determines to make an outside appointment then the process outlined below will be followed –

Identification of Skills Required

For each director appointment the Council will develop a director profile for the role.  It will detail the skills, knowledge and experience required for that directorship role and will take into account:

  • The nature and scope of the organisation, the organisation’s future directions and its constitutional set up.
  • The strategic objectives of the organisation and the attributes, skills and knowledge, which will be required to deliver the strategic objectives of the organisation.
  • The skills of the current directors or the required skills of all the directors.
  • Any specific skill, knowledge and experience that is currently required or may be required in the future.
  • The role specification will detail:
    • The organisation’s context
    • The functional relationships of the role
    • The responsibilities and liabilities of the role
    • The key results areas for the role
    • The personal attributes for the role
    • The specific skills/qualifications required for the role.
  • Council appointees to CCO’s or CCTO’s that operate as companies are expected to become members of the New Zealand Institute of Directors for the duration of their appointment.

Appointment Process

The Council will decide whether to advertise a particular vacancy or make an appointment without advertisement.  When making this decision the Council will consider the costs of advertising, the availability of qualified candidates, director turnover, and whether the incumbent wishes to be considered for reappointment.

A subcommittee of the Council, with the assistance of external assessment advice if required, will shortlist then interview shortlisted applicants and make a recommendation to the Council.

All Council Director Appointments to Council Organisations must complete and sign the Director Consent Form as appears in Appendix A.

The Council decision will be made with the public excluded, as provided for in the Local Government Official Information and Meetings Act 1987.  Public announcement of the appointment will be made as soon as practicable after the decision is made, and all applicants have been advised.

Conflicts of Interest and Reputational Risk

The Council expects that directors of council organisations will strive to avoid situations where their actions could give rise to conflicts of interest or present a reputational risk to the Council. Directors will be expected to follow the provisions of the NZ Institute of Directors Code of Proper Practice for Directors. Breaches of this code could result in dismissal.

Remuneration

Remuneration of directors of council controlled organisations is a matter of public interest.

Remuneration and changes to it will therefore require Council approval, and will be based on the nature of the organisation, market rates for comparable positions and any specific process for determining remuneration specified in the organisation’s constitution.

Performance Reporting

The Council’s performance reporting obligations for CCTO’s and CCO’s are met via the statement of intent and financial reporting requirements in the Act (sections 64, 66, 67).

Council Organisations (Other Than CCO’S and CCTO’S)

Identification of Skills Required

For each appointment to a council organisation, the Council will give consideration to the nature of the organisation and the skills required for the role.

Candidates are not restricted to Councillors.  Staff or external candidates may be considered for appointment.

Appointment Process

All Council appointments to Council organisations will be made by the Council, except staff appointees who will be appointed by the Chief Executive.

All Council Director Appointments to Council Organisations must complete and sign the Director Consent Form as appears in Appendix A.

If the appointments are made with the public excluded a public announcement will be made as soon as practicable after the decision is made.

Remuneration

The Council will not normally pay any remuneration to its appointee(s) except as may be specified in the Council’s policy on Councillors’ remuneration.  Remuneration may be paid by the organisation, but Council appointed staff are not permitted to accept any remuneration.

Conflicts of Interest and Reputational Risk

The council expects that directors of council organisations will strive to avoid situations where their actions could give rise to conflicts of interest or present a reputational risk to the Council. Directors will be expected to follow the provisions of the New Zealand Institute of Directors Code of Proper Practice For Directors.  Breaches of this code could result in dismissal.

Performance Reporting

The Council’s performance reporting obligations for CO’s are met via the requirement that all Council appointees report to the Council at least annually following the organisation’s annual general meeting.

Appendix A – Director Consent Form

Application Form Timaru District Council CCO Board Appointments

1. Consent and Certificate of Director - (Section 152 of the Companies Act 1993)

Company Name: ......................................................................................................

Company Number:....................................................................................................

Director’s first name(s):.............................................................................................

Director’s surname(s):...............................................................................................

(Please ensure your full legal name is provided - Initials are not allowed)

I consent to be a director of the above company and certify that I am not disqualified from being appointed or holding office as a director of a company

Signature:...................................................................................................................

(Please read the disqualification details below)

Date of appointment:.................................................................................................

Director’s residential address:....................................................................................

...................................................................................................................................

2. Disqualification Details

Please ensure that you are not disqualified from being a director for this company before signing this consent form.

A person cannot be a director of a company if he or she is any of the following:

  1. Under 18 years of age; or
  2. An undischarged bankrupt. Search the bankruptcy database online for free at www.insolvency.govt.nz; or
  3. Prohibited from being a director or promoter of, or being concerned or taking part in the management of a company under any statutory provisions. This includes (but is not limited to) people who have been convicted of a crime involving dishonesty in the last 5 years or have been prohibited from managing a company by the Registrar of Companies. It also includes people who have been prohibited from being a director or promoter of, or being concerned or taking part in the management of, an overseas company under an order made, or notice given, under the law of a prescribed overseas jurisdiction in accordance with section 151(2)(eb) of the Companies Act 1993; or e.g. Auckland Council Property Limited 3025668; or
  4. subject to a property order under sections 30 or 31 of the Protection of Personal Property Rights Act 1988; or
  5. Not eligible because of requirements contained in the company’s constitution (if any); or
  6. A person who is disqualified under another Act.

A person who is not a natural person cannot be a director of a company.

For more information refer to sections 151 and 382 to 385 of the Companies Act 1993. A copy of the Act can be viewed online for free at www.companies.govt.nz.

3. Disclosure of Interests

You are required to disclose the nature and extent (including monetary value, if quantifiable) of all interests that you have or are likely to have, in matters relating to the CCO.

4. Other Questions

4.1 Has there been (or is there now pending) any claim against you in your capacity as director, officer, secretary, board or committee member, or employee of either the company/trust or any other company, association, trust or entity?

Yes   No

4.2 Are you aware of any circumstances that might give rise to a claim against you or an investigation, examination or inquiry involving you?

Yes   No

4.3 Have you ever been involved in a company that has been in receivership or non voluntary liquidation?

Yes   No

4.4 Have you ever been involved in any criminal conduct, had a statutory demand placed on you, been the subject of any disciplinary action, been fined or penalised or been the subject of any inquiry in the last 5 years?

Yes   No

4.5 Have you ever been refused Directors and Officers Liability insurance or had an insurer refuse to renew a policy as apply special terms or conditions in relation to your cover?

Yes   No

If yes to any of these questions, please give details:

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

5. Nomination Confirmation

I, .…………………………………………………………………………………………

(full legal name)

Confirm that the information I have given in this disclosure form is complete, true and correct.

In the event of any actual or potential conflict of interest or probity issue arising, I agree to promptly declare that conflict or probity issue to the Chair of the Board, who will consider how the conflict or probity issue can best be managed. I also agree to abide by any decisions about the management of that conflict or probity issue. I acknowledge that, in the event that a conflict or probity issue cannot be managed, the Chair will inform Timaru District Council. I acknowledge that, in the event I am appointed to the Board, the Timaru District Council will be informed of any interests I have declared.

I authorise the Timaru District Council and/or its nominated agency to verify the accuracy of the information I have provided in my application for appointment.

Signature:  ..........................................................................................................................

Date: ..................................................................................................................................


Adopted Policy & Development Committee 22 November 2016