Group Governance Restructure Proposal

Consultation Paper August 2016

Ngāti Apa ki te Rā Tō Trust

2

IntroductionOne of the five key ‘pou’ in our current strategy is to develop a strong organisation capable of delivering on members’ aspirations and expectations.

Since moving into a ‘post-settlement’ environment, the Trustees have been engaged in a comprehensive process of evaluating how our organisation is structured and how effectively it functions. This culminated in 2013 in an extensive organisational restructure and appointment of a new management team.

Having spent the past 12 – 18 months bedding in this new organisational infrastructure, our attention has now turned to the governance structure itself to consider whether it remains ‘fit for purpose’.

Late last year we engaged independent consultants to help us consider this issue. This paper provides an overview of

> the review process followed;

> the conclusions reached, and identifies aspects of our current governance structure where there is room for improvement;

> an overview of a proposed new governance structure that better meets our requirements, and positions us better for the future.

Over the past six months we have consulted with iwi members through roadshows and other fora on the review process and a way forward. We have taken members’ feedback into account and present this comprehensive restructure proposal to you for your further consideration and feedback.

Contents2 Introduction

3 Current Governance Structure

4 Starting Point for the Review

5 New Model Design Process

6 New Governance Model Proposal

12 Implementation

12 Consultation and Feedback

13 Questions and Answers

Ka ū, Ka ū

Ka ū ki matanukuKa ū ki matarangi

Ka ū ki tēnei whenua hei whenuaMāu e kai e te manawa o tauhou e

Tihei Mauri ora

3

Current Governance StructureOur current governance structure comprises the following:

To a large extent, this structure has evolved out of the various settlement processes we have been part of. In this regard, the composition of the different group entities that comprise our current structure have generally been formed around and in response to the range of Crown and legislative requirements in place at the relevant times.

Through these processes, minimal consideration was given to how each of these different entities fit together and function as a cohesive whole. This is one of the key factors that prompted the review.

PSGE Trustees Appointed to CT

Investments owned by PSGE. Trustees

make “skills based” appointment of

directors

Investments managed on behalf of CT

Management of Fisheries

Assets

PSGE Trustees Elected

AHCNAIL

PSGE CT

PSGE Post-Settlement Governance Entity CT Charitable TrustAHC Asset Holding Company NAIL Ngāti Apa investments Limited

4

Starting Point for the ReviewThe governance review considered how well placed we are under the current governance structure to achieve the following objectives:

> Continuity: building a governance structure that can sustain momentum and withstand changes in trustees and directors without the loss of institutional knowledge, or the risk of counterproductive change.

> Stability: providing good governance and organisational disciplines that are clearly understood and operating to create a culture of inclusion and transparency.

> Tikanga: operating in a way that is consistent with our values and who we are.

> Aspirations: creating an organisation that can represent and work to realise the aspirations of the Ngāti Apa ki te Rā Tō whānau and develop and execute on a real vision.

> Compliance: providing the Trustees with the tools required to understand their fiduciary obligations and how these activities keep themselves and the Ngāti Apa ki te Rā Tō assets safe for future generations.

5

Review ProcessIn undertaking this review we engaged a specialist consulting firm, Ernst & Young Tahi (EYT) to help us. EYT evaluated our current governance structure and identified deficiencies or areas of concerns with the current structure.

The issues identified by EYT can be grouped into three broad areas:

Structure: problems in the make-up of the legal or functional structure of the group.

Process: aspects, processes that govern our activities, and the relationships between group entities that could be improved.

People: problems relating to the composition, appointment processes, criteria, and skills requirements of people in governance roles.

The problems identified can be summarised as follows:

STRUCTURE PROCESS PEOPLE

> Stewardship vs operational governance: the current structure and mode of operating confuses these two important, but distinct functions to the detriment of organisational performance.

> Treaty settlement: The current structure was derived as a result of the settlement process which means there is no assurance it is fit for purpose for today and the future of the Ngāti Apa ki te Rā Tō iwi.

> Authority to act: Lack of consistency in the way in which group entities and committees are formed, what they are responsible for, what authority they have and when and how they should report.

> Clarity of focus: lacking a crystal clear and commonly understood sense of organisational or entity purpose.

> Planning: Limited long term planning processes are in place.

> Risk management: There is no risk management framework in place.

> Financial oversight: Lack of understanding at Trust Board level of the more complex financial issues reported (particularly around investment decisions).

> Reporting: Lack of guidance provided by the Trust Board relating to management reporting. As a result, the reporting is being driven by management.

> Decision making: The time to make decisions can be too long.

> Segregation of roles: Lack of clarity regarding the role and function of the various Boards and management.

> Strategy: Failure of all Trustees to deeply engage in strategic development.

> Appointment of the Trustees: Election process may not provide the right mix of skills and competencies needed.

> Number of appointments to the Governing roles: Not clear how many governing positions there are (including committees).

> Duplication of roles: Lack of clarity around the purpose of the range of entities (different Trust’s etc) meaning business becomes complex, blurred and confusing for Board members.

> Skills and competencies: Lack of understanding of the current skills and competencies of the Trustees and Directors.

> Succession planning: No succession plan for Trustees, Directors, the Chair and the CEO / leadership.

6

New Model Design ProcessIn light of the evaluation conclusions, we embarked on a process of re-designing the model to create a robust governance platform for the future.

The criteria for a new governance model included the following:

1. Structural design – needs to be simplified and provide clarity of function and roles.

2. Core governance processes – needs improvement to understand what is required, what should be reported and monitored and should include self-evaluation.

3. Appointment process – implement a process to ensure those with the appropriate skills and competencies are in place to provide direction and enable decision making.

4. Values – as an overriding principle the governance structure needs to reflect and support:

> Tika: doing things the right way – recognising that we only exist to advance the collective interests of iwi

members, and should operate in a way that respects and enhances our Ngāti Apa ki te Rā Tōtanga.

> Pono: doing what we do with integrity – ensuring the structure is transparent and that those in governance roles are accountable for meeting iwi members expectations.

> Aroha: a clear focus on delivering positive benefits to all members.

The board worked with EYT to develop a number of options for change. Through this conversation the key features and requirements of a new model became clearer, and eventually these options converged into a single preferred model.

7

New Governance Model Proposal In this section we outline our proposal for a new governance model.

Outlined below, first, is a high level visualisation of how the key component parts of the model and how they fit together.

We then break down and provide an overview of the role, composition, and key activities of each key entity within the model.

For clarity we note that this is a ‘conceptual’ model only, and that further work will be required if the model is adopted to consider how it can be best implemented from a legal and tax perspective (and to what extent we can work within the existing structure). We provide a brief overview of the implementation process in the next section.

OverviewThe high level composition of the new group structure, and allocation of roles and accountabilities proposed can be visualised as follows:

Ngāti Apa ki te Rā Tō Trust

Ngāti Apa ki te Rā Tō iwiKia tu pakari ai te whare o Ngāti Apa ki Rā Tō;

Our vision for Ngāti Apa ki te Rā Tō is for a strong, vibrant and proud iwi which exercises and realised its rangatiratanga.

(Elected by and accountable to iwi members)

CEO Office

Operational Board Entity

Commercial Entity

Investment strategy

Distribution strategy

Investment management

Distribution management

Appointed by the Operational Board Entity

Appointed by the NAKTRT Trust

▶ Long term investment strategy & planning

▶ Delivery of investment strategy

▶ Dividend strategy

▶ Commercial risk management

▶ Regulatory and legislative compliance

▶ Budgeting and forecasting

▶ Reporting

▶ Long term distribution strategy & planning for cultural revitalisation, social responsibility & education

▶ Delivery of distribution strategy

▶ Cultural programme strategy

▶ Cultural revitalisation management

▶ Socially responsible programme development and delivery

▶ CSE risk management and compliance

▶ Reporting

Appointed by the Operational Board EntityCultural, Social, Educational Entity

Foresight

Action

Oversight

8

Organisational Overview: Roles, Composition, and Activities of each Entity

ROLE COMPOSITION AND ACTIVITIES

NGĀTI APA KI TE RĀ TŌ TRUST

The NAKTRT Trust will hold the assets/rights for the NAKTRT Group and be legal entity for the settlement assets.

Roles include:

› The ultimate governing body, owner and steward of all Ngāti Apa ki te Rā Tō resources and taonga on behalf of the iwi

› The ultimate voice for the Ngāti Apa ki te Rā entities back to the iwi

› Sets the strategic vision for the NAKTRT Group

› Instructs the Operational, Commercial, and CSE Boards, through Letters of Expectations

› Develop an accountability framework for plans and policies, including who will prepare/plan, approve, implement, monitor and review the related activities

› Establish and approve agreed group wide policies

› Establish and approve policies required to management the NAKTRT Trust

› Recommend a long term vision and strategy for approval by the Iwi

› Approve the medium term plans (three to five years) as recommended by the Operational Board

› Approve the short term plans as recommended by the Operational Board

› Appoint the members to the Appointments Panel, Whakapapa, Validation, and Audit, Finance and Risk Committees and approve the appointment process

› Appoint the Operational Board members

› Delegate authorities to the Operational Board whilst retaining reserved powers

› Review the performance of the Operational Board members and provide feedback to the NAKTRT Trust members

› Ratify the appointment of members (directors or trustees) to the Commercial and CSE Board

› Define the investment risk appetite of the Group (and communicate this to the Commercial Board)

› Ensure compliance with regulations and policy

Composition

› Six Trustees elected by members on a representative basis (three from each hapū) with a change in the election cycle

› No alternate Trustees

› No independent Trustees

› Three year term with a maximum of three terms

› Appointment of each trustee to be staggered to allow for phased appointments (two must roll off at the end of each term) and are eligible for reappointment as above.

› Chair and Deputy Chair are appointed by the Trust

Role of the Chair

› Clearly define the attributes of a chair through a position description, including anticipated time commitment

› Clearly define the review process to determine how the Chairs performance will be reviewed, who will undertake the review, the frequency of the review and if any information will be formally disclosed to the members.

Role of the Deputy Chair

› Clearly define the attributes of a deputy chair through a position description, including anticipated time committee

› Clearly define the review process to determine how the Chairs performance will be reviewed, who will undertake the review, the frequency of the review and if any information will be formally disclosed to the members.

Role of a Trustee

› Clearly define the attributes of a trustee through a position description, including anticipated time committee

› Clearly define the review process to determine how the Trustees performance will be reviewed, who will undertake the review, the frequency of the review and if any information will be formally disclosed to the members.

9

› Appoint the External Auditor for the group

› Appoints a secretariat to support the Trust

› Appoint the CEO and appraise their performance.

› Approve the remuneration of the CEO

› Provide the CEO with delegations to run the CEO’s office including remuneration levels in line with approved budgets

Actions

› Governance training to upskill elected members including the development of a Governance Manual

› Provide clarity regarding the powers delegated to the Operational Board

Frequency of meetings

› Quarterly plus the AGM and any SGM’s

APPOINTMENTS PANEL

The Appointments Panel role will include:

› Establish a clear appointment process including the development of a role descriptions for members (directors or trustees) of the Operational, Commercial, and CSE Boards, including commercial and cultural requirements

› Seek application for the various Operational Board Roles

› Recommend the Operational Board members to the NAKTRT Trust for appointment

› Provide input to the NAKTRT Trust regarding the powers that can be delegated to the Operational Board

› Provide input into the role descriptions for the NAKTRT Trust taking into account the requirements set out in the Trust Deed but also as required for good governance

Composition

› Three NAKTRT Trust members with an external facilitator, plus the Chair of the NAKTRT Trust

› Ability to co-opt additional members from time to time who have the necessary skills for the appointments required

› Chair of the NAKTRT Trust will be the Chair of the Appointments panel

Frequency of meetings

› At least annually and as required in order to appoint members

OPERATIONAL BOARD

The Operational Board will oversee and coordinate the Commercial and CSE activities of NAKTRT Group. Its role includes:

› Prepare a statement of corporate intent to be approved by the NAKTRT Trust

› Help to shape the the Medium and Long Term planning of the NAKTRT Trust

› Primary responsibility for implementation of medium and long term plans, principally by overseeing annual planning processes across the Group

› Prepare a short term/annual plan and budgets for the Trust and all operations

› Approve the short term/annual plans (including budgets) for the CSE and Commercial Boards

› Translate the Trusts high level position on risk appetite and investment style into a workable policy (to be included in the Statement of Investment Policies and Objectives), and ensure compliance with this by the Commercial Board

› Establish policies in order to operate the Operational Board

› Accountable to the NAKTRT Trust for achieving the agreed plans, and to demonstrate this through appropriate reporting

Composition

› Three members appointed by the NAKTRT Trust (via the appointments panel) based on skills and ability.

› The Chair will be appointed by the NAKTRT Trust based on skills required to Chair the Board.

› The Chair of the NAKTRT Trust can attend Board meetings by virtue of Office (ex officio) but cannot vote on matters.

Frequency of meetings

› Bi Monthly

10

ROLE COMPOSITION AND ACTIVITIES

› Ensuring a balanced, well-coordinated, and mutually reinforcing approach between the Commercial and CSE activities

› Monitoring the risks for the Commercial and CSE Entities

› Ensuring effective Stakeholder engagement for all Commercial or CSE related matters

› Ensuring compliance with regulations and policy by the Commercial and CSE Boards (particularly the SIPO).

› Advise the Trust on appointment of the CEO, and appraisal of their performance and remuneration

› Utilise the services provided by CEO Office for all Operational Board related matters

› Appoint the Internal Auditor for the group if considered necessary to provide assurance over risks identified and compliance activities.

› Review the performance of the Commercial and CSE Board members (trustees/directors) and provide feedback to the Trust

› Consideration to be given to having a sunset clause on the Operational Board where all roles will be handed back to the NAKTRT Trust

COMMERCIAL BOARD

The Commercial Board will hold commercial assets for the assets of NAKTRT Group. Roles includes:

› Prepare a statement of corporate intent to be presented to the Operational Board

› Prepare the short term plans (annual including budgets) for approval by the Operational Board

› Maintaining and growing the Commercial assets and investments, and generate income for the NAKTRT Group

› Incorporates and manages the assets and all commercial activities (including activities currently performed by the AHC and NAIL)

› Monitor risk for the Commercial Board

› Responsible for the respective stakeholder engagement

› Establish policies in order to operate the Commercial Board

› Ensure compliance with regulations and policy

› Utilise shared services provided by CEO Office

› Prepare an Annual Report and set of Accounts for the NAKTRT Trust

Composition

› Three members appointed by the Operational Board based on skill

› Chair will be appointed by the Operational Board based on skills required to effectively chair the Board.

› Deputy chair appointed by the Operational Board. The Chair of the NAKTRT Trust can attend Board meetings by virtue of Office (ex officio) but cannot vote on matters.

Frequency of meetings

› Bi Monthly or more frequently as required

11

CSE BOARD

The CSE Board will be provided funding to be used for the CSE activities.

Roles includes:

› Prepare a statement of corporate intent to be presented to the Operational Board

› Prepare the short term plans (annual including budgets) for approval by the Operational Board

› Development of strategies and programmes for the betterment of the NAKTRT iwi members

› Incorporates and oversees the activities previously undertaken by the C, S & E committees

› Monitoring risk for CSE Board

› Stakeholder engagement for the CSE Board

› Establish policies in order to operate the CSE Board

› Ensuring compliance with regulations and policy for the CSE Board

› Utilise shared services provided by CEO Office

› Prepare an Annual Report and set of Accounts for the NAKTRT Trust

Composition

› Three CSE Board members appointed by the Operational Board based on skill and ability

› The Chair will be appointed by the Operational Board based on skill.

› A Deputy chair will be appointed by the CSE Board as required

› The Chair of the NAKTRT Trust can attend Trust meetings by virtue of Office (ex officio) but cannot vote on matters.

Frequency of meetings

› Bi Monthly or more frequently as required

ALL COMMITTEES

Roles includes:

› Committees will be established to deal with matters that require more specific, specialised, or focussed input or deliberation.

› The committees will have terms of reference in place approved by their establishing board/entity

› Utilise the CEO office for service delivery

Composition

› Standing committees will include:

› The whakapapa and validation committee (appointed by the NAKTRT Trust)

› The cultural committee (appointed by the NAKTRT Trust)

› The audit and risk committee (appointed by the Operational Board)

› Three to five committee members per committee

Frequency of meetings

› As required – no more than monthly and less than annually

CEO OFFICE

Roles includes:

› Implementing and managing the plans approved by the NAKTRT Trust to achieve the outcomes within policy, plan and budget

› Providing all management services to all governing bodies

› Employment, deployment and performance management of all staff within the CEO office

› Using the delegated authorities from the NAKTRT Trust to act on behalf of the NAKTRT Trust and its members

Composition

› The CEO is appointed by NAKTRT Trust in consultation with the Operational Board

Frequency of meetings

› Not applicable

12

ImplementationWhile we have described the proposed new structure in a fully completed ‘form above, a number of further workstreams would be required to turn this concept into reality. These include:

1. Legal Structuring: while the model described above speaks to a certain structural form (e.g. that each different function will be a separate entity with its own board), further work is required to consider what changes (if any) need to be made to adapt our current legal structure to accommodate the new model.

2. Tax Structuring: Any changes to the overall legal structure will also need to be reviewed from a tax perspective to ensure that we do not jeopardise our current tax-exempt status.

3. Practical Implementation: the model provides for a range of new governance positions to be created, and systems and processes to be put in place. This will not be able to all happen from day one. Implementation of each element of the proposed structure will need to happen in a coordinated way over time.

If we proceed with the changes to the governance structure proposed, we will prepare a more detailed implementation plan to guide the implementation process.

If changes to entity deeds or constitutions are required to enable implementation to occur, this will also require a special resolution of members and a special general meeting.

Consultation and FeedbackThe purpose of this document is to provide you with a comprehensive overview of the proposal for changes to our governance structure, and the reasons for those changes.

We invite your comments, feedback, and suggestions on the approach proposed.

We welcome your feedback and encourage you to submit your comments in writing to us via email to office@ngatiapakiterato.iwi.nz, or post to: Governance Review, Ngāti Apa ki te Rā Tō, PO Box 708, Blenheim. Please get your feedback to us by 5pm Wednesday 31 August, 2016. You can also submit your comments from the ‘Contact Us’ section of our website: www.ngatiapakiterato.iwi.nz.

13

Questions and AnswersQ: What are the main changes proposed to the current governance structure?A: The main changes are separating “strategic” governance from oversight of operations, planning, and implementation.

Vision setting, strategic governance, and ultimate accountability for organisational performance will continue to sit with the elected Trust Board.

Responsibility for implementing the long term vision and strategy (through shorter term planning) will be delegated to new, specialised entities, with governance roles being “skills-based”.

More specifically: in addition to Trust Board and Investment Board already in place, the new structure will incorporate a new entity responsible for delivery of social, cultural and educational outcomes (CSE); and an operational board responsible for implementing the high level strategy and vision, and coordinating the CSE and Investment Boards to do the same (see diagram on page 7).

Q: Why are we making this change?A: The independent Ernst and Young Tahi review found that our current governance structure was not fit for purpose in terms of its structure, processes, and certain aspects of who, and how people are appointed to governance roles.

In light of these conclusions it was not tenable for us to continue to operate under a model that we know is unlikely to best support our aspirations, objectives, and effectiveness into the future.

Q: Why do we need so much governance?A: Each of the new proposed entities under this structure will perform a well-defined and specialised function. The need for this structure reflects our organisation’s continuing growth and maturity, and it will enable us to improve our focus and effectiveness in delivering for iwi members. It is also an acknowledgement that we may not currently have the skill sets we need within our current governance structure to be really effective.

Another important part of this model is putting in place a comprehensive governance training programme for elected Trustees, and developing a pipeline of potential trustees. This will help us to better manage continuity and ensure that people have the opportunity to develop skills prior to getting onto the Trust board.

Q: How are people going to be appointed to governance roles?A: Trustee roles at the ‘top table’ will continue to be appointed through a democratic election process.

Other governance roles will generally be appointed on the basis of skill and capability. We do note that insight and application of Ngāti Apa ki te Rā Tōtanga is regarded as a core capability of anyone in a governance role whether an iwi member, or independent. Iwi members that bring the right skills and insight to the table will be preferred for these roles, but we will look to bring in independents to fill skills gaps.

Appointments decisions in relation to the operational board will be made by the Trustees upon advice from an Appointments Panel. Appointments to operating subsidiaries will be made by the operational board, with input from the Trustees.

14

Q: How does the new structure align with our values?A: Our values, and what’s tika, have been central to the design of the proposed new governance structure. For instance, despite incorporating a greater level of skills-based appointments to governance roles, accountability and control cascades upwards; to Trustees, and ultimately to iwi members who give governance its mandate and have the final say in how things are run.

Ultimately, values manifest in actions and behaviours as much as anything else. It is up to the governance of the organisation to ensure that our values are upheld in what we do and how we do it, and also for members to hold governance to account for doing so.

Q: What is the cost of operating the new structure?A: We have not costed the structure in full. This is an exercise that we will undertake once the model has been finalised. Operating costs may be slightly higher, but not materially so.

We consider that cost should be considered in terms of “value for money”, and iwi members will continue to have the opportunity to hold governance accountable for this through annual confirmation of board fees.

Q: Why are we consulting with you now?A: The proposal outlined in this document represents what we think is the best structure to take us forward.

It is based on comprehensive analysis of our current structure and clear problems identified, and an extensive design exercise undertaken in conjunction with independent experts.

We have undertaken a number of roadshows in March and June this year, and have also taken feedback received during these sessions into consideration.

Our purpose for consulting now is to provide a comprehensive overview of the proposal and provide you with a reasonable period of time to consider and provide feedback, prior to proposing any formal changes (to our deeds or constitution) required in order to implement the proposal later in the year.

Send us your feedback!Use this form to send us your whakaaro on the restructuring proposal. Your feedback is important to us. It will be used to finalise a proposal to put before iwi members for consideration.  If you need more space simply fold additional paper into this form.

Please note that any changes requiring amendments to our trust deeds must be voted on, and passed by 75 per cent of the votes cast.

Please get your feedback to us by 5pm Wednesday 31 August.

Ngāti Apa ki te Rā Tō TrustPO Box 708Blenheim 7240

FreePost Authority: Ngati Apa Ki Te Ra To