Last updated: Rāapa, 06 Hōngongoi, 2022 | Wednesday, 6 July 2022
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Specific duties of directors/trustees are often set out in the constitution, trust deed, rules from statutory bodies etc. There are also general obligations that apply across different types of organisations. Some of the main points are:
Directors/trustees on a board:
- Are bound to act in the interests of the organisation as a whole over his/her own or whanau interests.
- Must make sure they request or otherwise get the information they need to base their decisions on.
- Must ensure that all reporting, financial and otherwise, from the organisation to owners and other stakeholders is accurate and not misleading.
- Must be aware of the legislation which is relevant to their organisation and ensure that legislation is complied with. Directors can risk being charged with fraud or negligence if an organisation fails to comply with laws that apply to it.
- Must attend board meetings (and send formal apologies if they cannot).
- Should contribute to debate in an informed and constructive manner.
- Must respect confidential information.
- Must accept collective responsibility for all decisions.
What directors/trustees should NOT do include:
- Quoting other members' comments outside the board room. The board needs to be seen to speak with unity.
- Going directly to organisation staff for information or other requests.
- Committing to expenses without the authority of the board, for example, commissioning external advice without getting prior approval.
More information for Partnerships
In addition to these general obligations, specific duties of partners are often set out in a Partnership Deed or Joint Venture Agreement.
More information for Charitable Trusts
In addition to these general obligations, specific duties of board members of Charitable Trusts are often set out in the organisation's constitution, trust deed or rules. Board members should also be familiar with the obligations set out in the Charitable Trusts Act 1957 and the Trustee Act 1957.
More information for Māori Trust Boards
Board members are elected representatives. Notwithstanding this they are required to act efficiently and to perform the functions of the office that is to administer the assets in accordance with the provisions of the Māori Trust Boards Act for the general benefit of the beneficiaries.
A board member may be removed from office by the Governor General for:
- Inability to perform the functions of the office
- Neglect of duty
A board member can also be removed from office if convicted of an offence punishable by imprisonment.
A prudent board member should:
- Act in the interests of the beneficiaries as a whole
- Ensure they request or otherwise obtain information they need to make decisions
- Ensure that all reporting, financial and otherwise, from the organisation to the beneficiaries and other stakeholders is accurate and not misleading
- Be aware of legislation that is relevant to their organisation and ensure that the legislation is complied with
- Attend board meetings (and send formal apologies if they cannot)
- Contribute to debate in an informed and constructive manner
- Respect confidential information
- Accept collective responsibility for decisions
Board members should not:
- Go directly to organisation staff for information or other requests
- Commit to expenses without the authority of the board, for example commission external devise without getting prior approval
More information for Trusts
The duties are set out in the Trustee Act 1956. The general requirements are that a trustee exercising any power of investment shall exercise the care, diligence, and skill that a prudent person of business would exercise in managing the affairs of others.
Where a trustee's profession, employment, or business is or includes acting as a trustee or investing money on behalf of others, the trustee, in exercising any power of investment, shall exercise the care, diligence, and skill that a prudent person engaged in that profession, employment, or business would exercise in managing the affairs of others.
More information for Structures under the Te Ture Whenua Māori Act
The legal duties of trustees are set out below:
- Being familiar with the precise terms of the trust and its assets
- Complying with the terms of the trust and applicable legislation
- Treating all beneficiaries equally
- Exercising care, diligence and skill in investing trust funds
- The duty to pay the trust funds to the right persons
- The duty to keep proper accounts and provide information
If a trustee fails to carry out his or her duty satisfactorily the Māori Land Court may make an order for the removal of the trustee. The Māori Land Court may also require a trustee to file in the Court a written report and appear in Court for questioning on the report on any matter relating to the administration of the Trust or the performance of his or her duties as a trustee.
Any beneficial owners commencing proceedings for breach of trust can call any trustee to account at any time. Alternatively an owner can make application to the Māori Land Court for:
- Termination of the trust
- The addition, reduction or replacement of trustees
- The removal of trustees
More information for Māori Incorporations
In addition to these general obligations, specific duties of committee members are set out in the Te Ture Whenua Māori Act 1993 and the Incorporation's constitution.
More information for Māori Reservations
The trustees are under a duty at all times to act in good faith in the exercise of their powers. The trustees should administer the reservation:
- In such a manner as will promote the purposes for which the reservation is set apart
- For the benefit of the beneficiaries
- In accordance with Te Ture Whenua Māori Land Act 1993 and the Māori Reservation Regulations 1994 and any relevant order of the Māori Land Court
Where a reservation is a marae, the trustees of that reservation are required to draw up, (in agreement with the beneficiaries of the marae), a charter for the reservation, which may include provision for the following matters:
- The name of the marae
- A general description of the marae reservation
- A list of iwi, hapu, or whanau who are beneficiaries of the marae reservation
- The process for nominating and selecting marae trustees
- Principles to which the trustees would have regard in relation to the marae
- The manner in which the trustees are to be accountable to the beneficiaries
- The process by which conflicts between beneficiaries and trustees are to be resolved
- The recognition of existing marae committees
- The appointment by the trustees of one or more committees for the purposes of carrying out the day-to-day administration of the marae
- The procedure for altering the charter
- Provision for the keeping and inspection of the charter
- Such other matters as the beneficiaries of the marae may require