Owners of Māori freehold land are restricted to using the land administration structures contained within Te Ture Whenua Māori Act 1993. The structures available to whanau, hapu and iwi under Te Ture Whenua Māori Act 1993 are Māori Land Court trusts, Māori incorporations and Māori reservations.
The main advantages of structures under Te Ture Whenua Māori Act 1993 are:
- Māori Land Court intervention ensures accountability and protection
- High level of beneficiary participation
- The restrictions on alienation
The main disadvantages of structures under Te Ture Whenua Māori Act 1993 are:
- Lack commerciality
- Can be cumbersome due to high level of beneficiary participation
- Māori Land Court intervention can be time consuming and costly
- The restrictions on alienation can impede development
- Difficulties in obtaining finance
Suitability of structures under Te Ture Whenua Māori Act 1993
Many commercial operations involving Māori land are carried out under Ahu Whenua trusts or Māori incorporations. Examples include Palmerston North Māori Reserve Trust, Wairarapa Moana Incorporation and the Wakatu Incorporation.
The commercial operations are often land based and include farming, horticulture, viticulture, commercial forestry and extractive industries such as gravel extraction and mining. Other commercial operations include property investments and the seafood industry.
Land utilised for non-commercial purposes such as Marae and Urupa are commonly set aside as Māori reservations.
At present the Māori Land Court has no role in relation to settlement assets although it has been suggested that the Māori Land Court could provide a forum for disputes over settlement assets and the accountability of settlement structures.
Māori Land Court Trusts
The Māori Land Court has exclusive jurisdiction to constitute trusts over Māori land and general land owned by Māori.
Māori land means Māori customary land and Māori freehold land.
General land owned by Māori means general land that is owned for a beneficial estate in fee simple by a Māori or a group of persons of whom a majority are Māori.
What Māori Land Court Trusts do
The main function of Māori Land Court trusts is to administer the trust's assets for the general benefit of the beneficiaries.
The trustees appointed by the Māori Land Court are responsible for:
- Carrying out the terms of the trust
- The proper administration and management of the business of the trust
- The preservation of the assets of the trust
- The collection and distribution of the income of the trust
Many trusts undertake farming activities on their own account. Activities include farming (beef and sheep), dairying, cropping (i.e. maize), horticulture and forestry.
Other trusts prefer to lease out all or part of the land. In such circumstances the trustees will be responsible for monitoring the lease, collecting rent and, where appropriate, approving distributions to the beneficiaries.
Before entering into a lease, trustees should first consider the trust order for any restrictions on leasing. In some situations the trustees may need to seek an amendment to the trust order from the beneficial owners and the Māori Land Court.
If the trust order permits, a trust may undertake activities with others through joint ventures (i.e. Forestry rights) and share farming arrangements (i.e. share cropping).
Some trusts are large enough to employ a manager or farm supervisor.
If a manager is employed then the trustees are also responsible for setting the overall direction of the operations and the manager carries out the day-to-day running of the operation. The manager then reports to the trustees with all the information the trustees need to be sure that the operations are running well and in line with the terms of the trust.
The trustees should give clear direction to the manager, and help create and support a climate where people within the operation and outside can see and support the direction.
The five types of trusts created under Te Ture Whenua Māori Act 1993 are:
- Ahu Whenua Trusts
- Whenua Topu Trusts
- Kai tiaki Trusts
- Whānau Trusts
- Putea Trusts
Ahu Whenua Trusts
Ahu Whenua Trusts replace the old section 438 trusts.
This type of trust is a land administration trust designed to manage whole blocks of Māori freehold land.
Before setting up an Ahu Whenua Trust the Māori Land Court is required to be satisfied that the constitution of the trust will promote and facilitate the use and administration of the land for the beneficial owners.
Ahu Whenua Trusts are often used for commercial operations and is the choice of trust for many farming operations over Māori freehold land.
Trustees of Ahu Whenua Trusts are able to make decisions concerning the administration of the land on behalf of the beneficial owners.
Subject to certain restrictions on alienation it is possible for the trust order to give the trustees flexible powers.
The trustees can only alienate the land by way of sale in limited and prescribed circumstances. It is also possible for the trust order to contain provisions prohibiting the sale of land altogether and/or prohibiting the mortgaging of the land for security purposes.
Ahu Whenua Trusts are also permitted over Māori reserved land previously administered by the Māori Trustee. Trusts set up over Māori reserved land include the Wellington Tenths Trust, the Palmerston North Reserves Trust and the Pukeroa Oruawhata Trust.
Whenua Topu Trusts
A Whenua Topu trust is designed to manage land belonging to an iwi or hapu.
Before setting up a Whenua Topu trust the Māori Land Court needs to be satisfied that the constitution of the trust will promote and facilitate the use and administration of the land by the iwi or hapu.
Whenua Topu trusts share many of the features of the Ahu Whenua trusts and are subject to the same restrictions. An example of a Whenua topu Trust is the Te Awapuni Moana Trust.
Kai Tiaki Trusts
Kaitiaki trusts are designed to protect minors or persons under disability who are unable to manage their affairs. The trust can be constituted over the persons land interests and personal property.
Whānau trusts are designed to hold and manage beneficial interests or shares in Māori land or general land owned by Māori.
A key feature of Whānau trusts is that they enable whanau members to bring together all of their interests or shares in land for the benefit or advancement of the whānau and the descendents of the tipuna (either living or deceased) named in the trust order.
While a Whānau trust exists, no person is entitled to succeed to any interest or shares held by the trust. This prevents the further fragmentation of shares and is seen as a major benefit.
One of the difficulties of Whānau trusts are that once established they are not easily terminated. This difficulty increases with the passing of time.
A Putea trust is designed to deal with uneconomical smaller share interests within a block or within various blocks. The owners, trustees or the secretary of a Māori incorporation, may make the application for the creation of a Putea trust.
The Te Ture Whenua Māori Act 1993 requires that the shares and any income they produce be held for Māori community purposes.