November, 2023 - Parry Field Lawyers

There is a big need for more community housing in our country – but how do Community Housing Providers get set up? What is the process to actually become a registered Community Housing Provider? These are the common questions we get about Community Housing Providers, and we will provide answers to the first question in this article, and then set out how to register in a second article.

What is a Community Housing Provider?

A Community Housing Provider (CHP) is defined as an entity who provides housing for the purpose of either community rental housing or affordable rental housing, or both.[1] Tenants of these homes will be those who have registered themselves as in need of a home on the Ministry of Social Development’s Public Housing Register, provided the CHP is registered by the Community Housing Regulatory Authority (CHRA).

There is some good news in that there is flexibility when it comes to the legal form these can take. A CHP can be set up using various structures, such as a company, a charitable company, a trust, or a limited partnership, provided their purpose satisfies this definition.

We can provide you with advice as to what structure best suits your situation. You may also wish to look at our Community Housing – A Legal Guide for more information.

Why would an entity want to become a Community Housing Provider?

One clear benefit of being a CHP is knowing that you are helping those in need by building and providing housing. Rather than investing in a term deposit or other ventures which may be purely focused on return on investments, providing rental housing for those facing difficult situations helps to better the community.

There are other benefits if you are registered as a CHP by the CHRA. Financially this can be beneficial because:

By being a registered CHP, the Ministry of Housing and Urban Development (HUD) provide an Income-Related Rent Subsidy to registered CHPs through reimbursement agreements and tailored agreements.[2] This covers the difference between the amount of rent the tenant is to pay (as determined by the Ministry of Social Development) and the market rent of the property. This ensures that you will not be disadvantaged by providing affordable rental housing to those in need.
A registered CHP may also get an income tax exemption. To do so, they must meet the eligibility criteria (which is discussed below), are a trust or company, and are not carrying out activities that are for profits or personal gain. The registered CHP must also not have more than 15% of its beneficiaries or tenants with an income or total assets that exceed particular amounts. These amounts are specified within Schedule 34 of the Income Tax Act 2007 (ITA). It must be noted that only the income limit will apply to the tenant if they have not owned land before, meaning their asset value can exceed the limits stated in the ITA.

We help many community housing providers and could help you as well – check out our information at our information hub here.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, judithbullin@parryfield.com or paulowens@parryfield.com at Parry Field Lawyers.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

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[1] Public and Community Housing Management Act 1992, s 2.

[2] Public and Community Housing Management (Community Housing Provider) Regulations 2014, s 4(1).

There is a big need for more community housing in our country – in our first article here we talked about what Community Housing Providers (CHPs) are. In this article we will talk about how you can register to become a CHP.

How do I become a Community Housing Provider?

Anyone can be a CHP, but the Public and Community Housing Management (Community Housing Provider) Regulations 2014 (the Regulations) sets out the criteria that must be met to become a registered CHP. An entity must first meet the eligibility criteria, which requires an entity to meet the CHP definition mentioned above, its governing body supports the application for the entity becoming registered.

After having reviewed the performance standards, if the Community Housing Regulatory Authority (CHRA) is satisfied on reasonable grounds that the entity has the capacity to meet the performance standards it may be registered.[1] However, an entity cannot be eligible for registration if they are a council-controlled organisation, a local authority, or are subsidiary of these organisations unless they operate at an arm’s length away from them.[2]

The performance standards set out in the Regulations and by the CHRA are relevant for the eligibility criteria.[3] These standards for registration are put in place to ensure that the CHP does have the capacity to become a registered CHP, as well as to ensure the CHP can continue to comply with these standards once registered. The performance standards focus on five key principles, which are:

Governance
Management
Financial viability
Tenancy management
Property and asset management.

One we often provide assistance with is the governance aspect of the performance standards. This is to ensure your entity is governed in the appropriate manner with the correct systems and processes in place.

For more information on the performance standards, please have a look at the CHRA document on the performance standards: https://chra.hud.govt.nz/assets/Uploads/performance-standards-guidelines.pdf

If an entity meets the eligibility criteria, it can then meet with the CHRA and discuss particular matters such as the entity’s circumstances, and it provides a chance for the CHRA to discuss the expectations of a CHP, the entity’s suitability for registration, and any other information they may require. Following the meeting, an entity must complete an application form. This includes providing mandatory supporting information and evidence which demonstrates the entity’s capability to meet the processes and policies required of a CHP as set out in the performance standards.

An application for registration will be reviewed by the CHRA, who aim to make a decision within 60 working days of having received it (provided the application was fully complete). The CHRA will focus on whether the tenants will be housed appropriately, as well as reviewing whether the five performance standards are met by the entity. Throughout the review, the CHRA consider the principles of proportionality, transparency, fairness, and consistency.

If an entity is successful in their application, the CHRA will still provide feedback as to what can be improved to further meet the performance standards. The entity will then be added to the Public Register on the CHRA website and published in the New Zealand Gazette. The Ministry of Housing and Urban Development (HUD) will also be notified that your entity is now registered, meaning the entity and HUD can then proceed to provide community housing to those in need.

We help many community housing providers and could help you as well – check out our information at our information hub here.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, judithbullin@parryfield.com or paulowens@parryfield.com at Parry Field Lawyers.

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[1] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(a), (c), (d).

[2] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(b).

[3] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(d).

The new Charities Amendment Act 2023 (the Act) amends the Charities Act 2005. Some of its changes are already in force, having been introduced in July and October this year, while other changes come into force from 5 July 2024. In this two part update we outline the latest changes that apply as of 5 October 2023.

Changes to The Definition, Age and Role of Officers

A key amendment is the expansion of the definition of “officer” under section 4 of the Act to include any persons who has significant influence over the entities substantial decisions, including management or administration. So, an officer can be a trustee, members of board or governing body (if it has one) or persons that occupy other positions (such as a chief executive or treasure) if that position allows them to exercise substantial influence. Officers, according to the new Act, will also include so called “deemed directors”, being persons with whose direction or instruction the entity is accustomed or required to act. As the definition of officer has been expanded, existing and new charities should take care to have clear distinctions between those in governance and management, as well being cautious about the influence of those in management positions.

Furthermore, s 13(1)(e) introduces a new requirement that charities must at any time have at least one officer 18 years of age of older. Also, section 36A outlines the role of an officer of a charity is to “delivery its charitable purpose” and “comply with its obligations” under the Charities Act or other Acts. This is clearly in addition to other fiduciary duties that are already required of officers.

Disqualifying Officers

Section 36C gives the Charities Registration Board the ability to disqualify a person, for not more than five years, from being an officer of a charity by notice. The notice can be by email and the Board must publish notice on their website as soon as practicable. Prior to this new Act, the Charities Registration Board, did not have the ability to directly remove an officer and instead would need to deregister the entity. An officer can be disqualified if they have:

Engaged in serious wrongdoing in connection with the entity; or
Failed significantly or persistently to meet their obligations under the Charities Act or other enactments.

This gives the Charities Board considerable power to ban officers of charities and the circumstances in which these powers will be used is uncertain. Further, the new provision does not yet require the Board to provide the Registrar of Incorporated Societies a copy of a banning order which was previously required.

Consult on Significant Guidelines

Section 12A of the Act has been introduced a new process which requires the chief executive of the Department of Internal Affairs to consult with persons or representatives they consider “reasonable to consult before issuing significant guidelines or recommendations on the best practice to be observed by charities, officers, and persons concerned with the management or administration of charities.” [1] This appears to provide accountability for decision making but it may mean that non-significant guidelines or recommendations need no consultation. Further, it is only a requirement to consult.

Charities Obligations

The new section 13A provides all charities must remain qualified for registration. To remain qualified, charities must maintain income for charitable purposes, have qualified officers and have and maintain rules. This restates some of the key requirements already set out in s 13 but includes the requirement to have and maintain rules.

Extended Timeframes for Providing Information

Section 18 of the Act was amended to increase the time frame in which charities can make submissions when the chief executive is considering whether they qualify for registration. This was increased from 20 working days to 2 months and also includes the time frame that an application will be treated as withdrawn if there is no response to the notice. If the Charities Board declines an application for registration or deregisters of a charity, they must now publish their decision and their reasons for it as soon as practicable on their website.

Requirement to Review Governance Procedures

Charities are now required to review their governance procedures every three years under the s 42G of the Act. In this review charities must consider whether their procedures, within or beyond its rules, are fit for purpose and help the charity achieve its charitable purpose and comply with the Charities Acts’ requirements. How this new duty works in practice is unclear as these terms are neither defined nor explained. However, frequently reviewing and updating rules and procedures is good practice for charities to adopt to ensure safe, smooth and efficient management and operation.

To read part II to this article, click here

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

We help with charity set ups and answering questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, michaelbelay@parryfield.com, sophietremewan@parryfield.com, or yangsu@parryfield.com at Parry Field Lawyers

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[1] Charities Amendment Act 2023, s 12A.

We continue our two part update covering the changed brough on by the Charities Amendment Act 2023 (the Act). In part one we covered the changes that came into effect in October 2023. In this part two, we cover the changes that are coming into force from 5 July 2024.

Objections

New sections 55A to 55E outline a new process for objecting to decisions made by Charities Services or the Charities Registration Board (the Board). The Act refers to the “chief executive” of the Department of Internal Affairs, but in practice these decisions are made by Charities Services.[1]

What Can Be Objected To?

Charities are now able object to a wider range of decisions. Previously, only proposals to deregister a charity or decline an application could be objected against. Section 55A outlines a list of several decisions made by Charities Services objections can be raised against. These include decisions to remove from the register any document or information related to the entity, a decision to give a warning notice and any decision made by the Board under the Act. Objections can also be raised against any decision made by the registrar.

Deadline For Objections

Before a decision is made, the decision makers must give the charity or person concerned notice regarding the intended decision, the grounds for the decision and the date by which an objection to the intended decision must be received (section 55B). This date will be no later than two months after the date of the notice. This is an increase from 20 working days. Unlike appeals (examined below), objections are therefore made before the decision is made.

Opportunity To Be Heard

Section 55D allows the objector the opportunity to be heard. This can be either in person or by electronic means. Previously, despite the rules of natural justice normally requiring an oral hearing, there was no right to a hearing.

Appeals

Decisions can also be appealed after they are made. There is a new process for this. While not explicitly stated in the Act, it appears that appeals can be made even if an objection was not made against a decision.

What can be appealed?

Section 58A outlines a list of decisions that can be appealed against. These grounds mirror those decisions that can be objected to under 55A. Previously, charities had wider rights of appeal as the grounds were not limited.

Who appeals are made to?

Appeals are now made in the first instance to the Taxation and Charities Review Authority (“TCRA”). Previously, appeals were made to the High Court. The intention behind this is to simplify the process for charities, with the TCRA offering a less formal process.[2] Subsequent appeals to the High Court and Court of Appeal can still be made. An unintended effect could be that charities lose their right of appeal to the Supreme Court, as generally only two appeals are allowed in New Zealand courts.

Deadline for appeals

As with objections, there is a two month time frame for filing an appeal. This was previously 20 working days. However, if it can be demonstrated that there were exceptional grounds that prevented an appeal from being lodged in time, additional time may be allowed.

Costs

Internal Affairs estimated in an impact statement that the cost for an appeal to the TCRA will be $410. This is significantly cheaper than the cost of appealing to the High Court.[3]

Additional change coming: Accumulated Funds

There is an additional change coming regarding charities’ accumulated funds. This is not found in the legislation but in an upcoming change the to the annual return form. Charities with annual expenditure over $140,000 will need to provide reasons in their annual returns for holding the accumulated funds. Charities Services is consulting on the annual return forms and other changes may be coming, likely to happen in 2024. In the meantime, charities are advised to consider the reasons for holding accumulated funds, ensuring it is being done in the best interests of their charitable purposes.

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

We help with charity set ups and answering questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, michaelbelay@parryfield.com, sophietremewan@parryfield.com, or yangsu@parryfield.com at Parry Field Lawyers

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[1] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[2] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[3] Department of Internal Affairs “Regulatory Impact Statement: Modernising the Charities Act” (Report, 19 October 2021) at 106 and 107, https://www.treasury.govt.nz/publications/risa/regulatory-impact-statement-modernising-charities-act

We have reviewed many hundreds of NDAs (aka Non-Disclosure Agreements or sometimes called Confidentiality Agreements). What are the points that we are reviewing to check for?

These are often used when one party wants to share secrets it has with another – this could be as they are seeking investment, or perhaps they want to explore entering into a long term contract together.

We have a lot of information for companies at our information hub over here, but in this article we want to set out some of the provisions that you should know about, to stay safe. If you’d like us to look over one you have been sent before you sign it, then just let us know as we can often spot things that are unusual quickly.

In order to upskill you on some key points to watch out for, consider these:

Mutual or one way?
If it is a mutual one then typically it will be more “fair” – as you both need to comply with the provisions. Even if it is mutual look out for any special carve outs that only apply to one party and not the other eg rights of termination or liability provisions that are more favourable (usually for the person who prepared the draft).

Who holds the power
Like most commercial agreements these are all about negotiating power. Some companies will only deal with you to explore whether they will talk more if you sign their NDA. If you are happy with the security you have then it is probably the “key” to enter into those discussions and you just have to weigh up the commercial risks as not having the ability to talk to them will certainly not lead to a contract.

Clear definitions
Spend some time checking how confidential information is defined – most agreements will include things which are labelled as confidential, but does it go as far as to say anything you should know was confidential or anything that was said by phone? It becomes harder to prove later on if the definitions go that far. For certainty it can be a strategy to ask that confidential information is written and labelled that way. Unless it suits you to have a wider definition as you are providing most of the information.

The Purpose
It is common for a purpose of the disclosure to be identified and then reference made to that purpose – that is, the confidential information disclosed needs to be used for the purpose (eg evaluating if the parties will enter into a contract of some kind). Any time there is a purpose or definition of permitted use check if it is going too far and covering things that are too wide. Typically there is also a statement about how entering into the NDA is not obligating a party to sign additional agreements related to the purpose – one or both sides might decide to walk away.

Standard of protection
Most agreements will say something about how each party will keep the information safe. A common standard is that the level of protection is the same level you would use with your own confidential information.

Carve outs for permitted disclosures
An NDA should have some specific carve outs in relation to disclosure that is permitted – typically this will cover sharing with advisors, if required to disclose by a Court or Government body (usually need to notify the other party if this happens), was already in the public domain, later was released by the disclosing party publicly, was already known by the receiving party or was independently developed by the receiver (though that might be hard to prove). Another common carve out covers affiliates of the signing party, provided that the signing party ensures that the affiliate abides by the same obligations under the NDA.

Return or destruction of information
There will usually be a clause saying that at the end of the agreement confidential information will be returned, or destroyed. While understandable, this is probably hard to comply with given most information is transmitted via email so back ups likely exist on a server, somewhere. A reference to taking the steps that they can but not requiring a search of all back up files is a practical solution (with a commitment that they will maintain the confidentiality and not use it).

IP Ownership
We would want to see that the original owner of the IP retains ownership of it even if shared with the other party. There may be a provision about what happens to new IP created based on disclosed information – those usually indicate how a party will want additional agreements to work so can be a good test of the new relationship eg will they own new IP developed based on what you disclose? NDAs also often make it clear that there is no license granted by the NDA for the information to be used.

Warranties, Indemnities, Remedies
It is common to have provisions that say there is no warranty regarding the information provided (ie that it is accurate, full, fitness for purpose etc). There is often an indemnity for the discloser if the recipient were to breach the agreement and they suffered loss, and it will often set out what the remedies are if there is a breach (applying to a court to enforce it).

Term
Typically there will be a period of the agreement, so how long is appropriate – 6 months, 1 year, 3 years? It is common for the obligations to continue on indefinitely, and it is also common for an NDA to be superseded by a later agreement that will set out more about how the parties treat each other.

Who is the counterparty?
It is worth asking this before you sign any contract – is it with the “main entity” or is it with a subsidiary. If so, does that entity have any assets? Also consider whether the likely harm of breach of the NDA would be financial and/or reputational as this may influence which entity you prefer to be the counterparty.

Governing law
This is actually important just because if you are based in New Zealand but the governing law is California, or Germany, or Japan, then you cannot really know what the law is going to decide over there unless you engage a local lawyer. Your ability to quickly enforce the NDA may also be compromised if a foreign law and/or court is chosen.

What is the real value?
We seldom see NDAs actually enforced because the cost of doing so in a Court is often prohibitive – but what they are good for is signalling intent and a “moral obligation”, showing how the parties will respect intellectual property. They also start a pattern of relationship and indicate that each party sees it as being important to deal with each other fairly. Relationships are the real key in business, and they get built through interactions and you get a “sense” of their approach. For these reasons they are an important part of growing a relationship with the other side.

We hope this has been a helpful overview to upskill you on key things to look for in an NDA. If you get one that has some “unusual” looking provisions, then feel free to drop us a line to have a look over.

We also have many resources for companies over at our “Start-ups and Capital Raising Information Hub” including downloads like the “Start-ups Legal Toolkit” and the “Capital Raising Guide”. We hope these are helpful to build up the ecosystem.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

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