t1 98 2 Ac io n rm at Trinity Lands Limited al In fo Charities Services Investigation ci Hayley Muong R el ea se d un de rt he O ffi 14 November 2018 1. Executive summary ............................................................................................................................. 2 2. Charities Services’ role ........................................................................................................................ 3 t1 98 2 3. Charity background ............................................................................................................................. 5 4. Initiation of investigation .................................................................................................................... 6 Ac 5. Investigations process and evidence obtained ................................................................................... 7 io n 6. Conclusion of financial review ............................................................................................................ 8 R el ea se d un de rt he O ffi ci al In fo rm at 7. Recommendations .............................................................................................................................. 9 1 TRI41046INV001 CC46720 01 July 2017 14 November 2018 Hayley Muong, Senior Investigator 19 82 Investigation Registration Number Date Assigned Date Completed Investigator 1. Executive summary Trinity Lands Limited (“the Company”) was registered as a charitable entity on 29 June 2011, with the following stated purposes: 1: Ac t 1.1. at io n a) provide funding to support and promote the spread of the Christian gospel by any means possible; and b) further such other religious and charitable purposes as the directors may determine The Company was established as an umbrella body, with the express purpose of managing the farms, orchards and forests of three existing shareholding trusts, formed from the same faith community 2, whose purpose and aim is to generate funds to distribute to its approved charities. The three shareholding trusts that the company has replaced are: nf or m 1.2. ffi c ia lI Lichfield Lands Incorporated (CC33759) Longview Trust 3 (CC52442) Hillview Trust (CC27344) In June 2015 Charities Services, the Ministers Office, the Ministry of Primary Industries (“MPI”), Sec 6(c) and selected media outlets received an anonymous complaint. Concerns were raised over the way the Company had been structured and the links between the Companies officers and their associated companies and trusts in which there is a web of investments and loans, including that of associated registered charities Aroha-Nui Trust (CC31230) and The Stockbridge Trust (CC31925). 1.4. In July 2017, Charities Services commenced a financial review 4 and examined the financial statements submitted by the company, in order to make a determination if the concerns expressed by the complainant had any merit. The financial review concluded that: R el ea se 1.5. d un de rt he O 1.3. • The Company was set up to take over the assets of the three existing shareholding trusts (Lichfield Lands Incorporated, Longview Trust Board and Hillview Trust). • The significant asset growth since the establishment of the Company in 2012 relates to revaluations to market rates and the initial asset transfer of $161m and then the Appendix 1 – Trinity Lands Limited Constitution, page 3 Open Brethren. 3 Formally known as Longview Trust Board CC35438. Deregistered on 01/06/2016 at their request. 4 Appendix 2 – Financial Review 1 2 2 further purchase of property, plant and equipment, inventory and G3 Kiwifruit licences. Every year the Company distributes its profits back to the shareholding trusts for them to distribute the funds effectively, as well as making their own charitable donations. • There was nothing to suggest that the salaries paid were excessively high. It is not considered out the ordinary for Directors and Executives to be involved in other organisations that would transact with the Company, as the associated trusts and companies appear to be involved within the same industry. • Investments and loans made by Aroha-Nui Trust and The Stockbridge Trust with related parties were clearly identified in the financial statements and no areas of concern were identified. at io n Ac t1 98 2 • On this basis, no evidence has been found to support the complaint. It is therefore recommended that the investigation is closed and the outcome advised to the complainant and the Company. In fo rm 1.6. al 2. Charities Services’ role ffi ci What we investigate Charities Services, Ngā Ratonga Kaupapa Atawhai, is part of the Department of Internal Affairs, and administers the Charities Act 2005 (“the Act”). Our role is to promote public trust and confidence in the charitable sector and to encourage the effective use of charitable resources. One of our functions is to monitor and promote compliance with the Act and inquire into conduct that may constitute serious wrongdoing under the Act. 2.2. In conducting an investigation, Charities Services relies on its power to investigate charitable entities and people associated with charities under section 50 of the Act. Any charitable entity, or person who may have breached the act or who is engaging or has engaged in conduct constituting serious wrongdoing can be investigated. Charities Services has broad powers to examine and inquire into activities, purposes, management, and property of the charity or person in question. Charities Services can also compel charities and people associated with charities to provide documents under section 51 of the Act. Failure to comply with section 51, or providing false or misleading information under section 51, is an offence. el ea se d un de rt he O 2.1. R 2.3. Serious wrongdoing as defined under section 4 of the Act being: In relation to an entity, includes any serious wrongdoing of any of the following types: a) an unlawful or a corrupt use of the funds or resources of the entity; or b) an act, omission, or course of conduct that constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs of the entity; or 3 c) an act, omission, or course of conduct that constitutes an offence; or d) an act, omission, or course of conduct by a person that is oppressive, improperly discriminatory, or grossly negligent, or that constitutes gross mismanagement. Charities Services considers that wrongdoing is illegal or dishonest behaviour. This can include offences under the Act; offences under other enactments; affording private pecuniary profit to individuals or groups; breaching civil law duties and the rules of the entity. 2.5. To determine whether there has been an act, omission or course of conduct that constitutes serious wrongdoing under the Act, Charities Services must also determine whether the act, omission or course of conduct amounts to serious wrongdoing. 2.6. Whether specific conduct is sufficiently serious will be a matter of fact and degree in each case. The level of seriousness is an integral part of the definition of serious wrongdoing. To simply identify wrongdoing is not sufficient; Charities Services must be satisfied that the wrongdoing is sufficiently serious. This is done on a case by case assessment on the facts, and takes into account the extent to which any conduct, omission or course of conduct would impact on the public’s trust and confidence in the charitable sector and the effective use of charitable resources. In fo rm at io n Ac t1 98 2 2.4. al Compliance action in relation to an investigation Where serious wrongdoing or other breaches of the Act are identified, Charities Services may: ci 2.7. el ea se d un de rt he O ffi a) Issue a “Letter of Expectation “which will outline the breaches that may have occurred, any steps the entity has taken to mitigate non-compliance issues, and any further steps the regulator feels are necessary to ensure on going compliance with the Act. b) Issue a warning notice that outlines the objectionable conduct, and indicates what will happen if that conduct continues; c) Make a recommendation to the Charities Registration Board to publish the wrongdoing on the Charities Register; d) Prosecute offences under the Act (through forwarding evidence of such offences to the Crown Solicitor); e) Present the findings to the Charities Registration Board who can instruct Charities Services to issue a notice to the entity explaining the grounds of removal from the register and, if the charity is removed, disqualify individuals associated with the charity from being officers. R 2.8. In appropriate circumstances, Charities Services may take a collaborative approach to an investigation in order to assist an entity to achieve compliance with the Act. That may include providing information to the Trust about its duties and responsibilities as part of its role to educate on good governance and practice. 4 3. Charity background The Company was incorporated with the companies’ office (3291829) on 20 April 2011. The Company was established as an umbrella body, for the express purpose of managing the farms, orchards and forests of three existing shareholding trusts formed from the same faith community 5, whose purpose and aim is to generate funds to distribute to its approved charities. 3.2. The Company shareholders are Lichfield Lands Incorporated (CC33759), Longview Trust Board (CC35438) and Hillview Trust (CC27344) (the three Trusts). All three shareholders are registered charities. 1.7. The Company was registered as a charitable entity on 29 June 2011, with the following stated purposes: 6: io n Ac t1 98 2 3.1. In fo rm at c) provide funding to support and promote the spread of the Christian gospel by any means possible; and d) further such other religious and charitable purposes s the directors may determine 3.3. It was agreed that the Company would be established and that the three Trusts would transfer their assets into the new company in exchange for a proportionate shareholding. The three trusts would appoint directors to represent them on the new board which would oversee the distributing of the profits back to the three trusts to be further distributed. Trinity Lands is a Tier 1 7 entity, in the year ending (May) 2017 they had $50,539,439 in total revenue and $38,708,198 in total expenses. They hold $339,379,512 in total assets and $222,800,337 in total liabilities. 3.5. Charities Services had not received any other complaints or concerns regarding the Company previously nor had Charities Services undertaken any monitoring or investigations of the Company. he O ffi ci al 3.4. de rt Aroha-Nui Trust and The Stockbridge Trust Both the Aroha-Nui Trust and The Stockbridge Trust are charities with links to the Company. Aroha-Nui Trust and The Stockbridge Trust share some trustees in common, are part of the same faith and share similar charitable purposes as the Company. 3.7. The Aroha-Nui Trust, an incorporated charitable trust, was registered as a charitable entity on 30 June 2008, with the stated purpose “to further the work of God throughout the dominion of New Zealand”. el ea se d un 3.6. R 3.8. At the time of the complaint the relevant trustees of the Aroha-Nui Trust were Ian Elliott, Bruce Elliott, Noel Houghton, and Alexander Baldwin. They are all no longer trustees, the last trustee being removed as of 25 June 2018. Open Brethren. Appendix 1 – Trinity Lands Limited Constitution, page 3 7 Tier 1 entities spend over 30 million dollars a year 5 6 5 3.9. The Stockbridge Trust, an unincorporated trust, was registered on 30 June 2008, with the stated purpose “To provide financial support to people & organisations providing education, social care, youth camps, prison-care and rehab.” t1 98 2 3.10. The trustees of The Stockbridge Trust are Ian Elliott, Bruce Elliot, Margaret Elliott, and Marylyn Elliott. 4. Initiation of investigation 4.1. In June 2015, Charities Services along with the Ministers Office, MPI, and selected media outlets received an anonymous complaint. It was the complainants understanding that, the Company had only been set up to take over the assets of three other charitable trusts and that the trusts were all to own shares in the Company and also receive distributions from the Company. 4.2. The complainant alleged a conflict of interest, in that Sec 9(2)(a) Zespri International Limited (“Zespri”) is also the Sec 9(2)(a) Company and that Zespri is under investigation by the Serious Fraud Office (“SFO”). for the fo rm at io n Ac Sec 6(c) It was further alleged from data gathered from its annual returns that the company had grown its net assets from $50m to $122m in 3 years and paid excessive remuneration to its directors and executives of over $4million being paid between 2011 and 2014. 4.4. The complainant was also concerned about the associated trusts The Stockbridge Trust and the Aroha-Nui Trust which hold a 50% share in the company South East Hort. Limited. 8 The complainant alleged that Aroha-Nui Trust converted existing investments in bonds and shares into an investment in shares and low interest loans in South East Hort Limited. The complainant also alleged that The Stockbridge Trust holds shares in South East Hort Limited and has provided low interest loans to them and to Mana Farm LP and Montrose Partnership. de rt he O ffi ci al In 4.3. Outline of initial concerns In determining whether conduct that constitutes serious wrongdoing or other breaches of the Act may have occurred, Charities Services must also determine whether the allegations made against the company indicated serious wrongdoing or another breach of the act. The allegations about the company are as follows: R el ea se 4.6. d un 4.5. a) The company had seen rapid profit in growth of assets, including owning extensive hectares of lands previously owned by the Trusts. b) The Company is only distributing less than a third of its funds for charitable purposes. c) The Companies officers are receiving significant amounts of remuneration and are associated with numerous non charitable companies with financial links to associated trusts. 8 The Company’s officers Bruce Elliot and Ian Elliot are both Director/Shareholders on South-East Hort Limited. 6 d) Related charities the Aroha-Nui Trust and The Stockbridge Trust may be providing unsecured loans at below market rates to companies linked to its trustees and investments in shares to companies that the trustees are linked to and appear not to be returning dividends. The complainant’s concerns appear to center on that fact that a business is also benefiting from their charitable status. It is Charities Services position that a charity can have a noncharitable purpose—for example, running social events or running a business—as long as it is ancillary to pursuing its main charitable purpose. 4.8. In making a decision whether a non-charitable purpose is ancillary, we examine whether the non-charitable purposes and activities are necessary to carry out the charitable purpose, and how much of the non-charitable activity you are involved in. For example; a business may be registered as a charity if all its profits are directed to its charitable purposes and all the other registration requirements are met. 4.9. To date, Zespri have never raised a concern with Charities Services around any potential conflict of interest around the fact Sec 9(2)(a) As part of Zespri’s policy around its vision and values is “… to recruit and retain qualified people who understand local conditions and the markets in which they operate.” 9 al 9(2)(a) ci 4.10. A media release from Sec In fo rm at io n Ac t1 98 2 4.7. O ffi company’s next Annual Meeting in July 2019.” at the 10 he 5. Investigations process and evidence obtained In order for Charities Services to make a determination around whether a charity has engaged in serious wrongdoing, we need to assess the concerns outlined in the complaint to determine if there is any merit in those claims. 5.2. In order to make this determination a financial review was undertaken by a Senior Investigator with the support of Charites Services’, Senior Accountant, in order to make an assessment on the issues raised by the complainant. In doing so the Investigator and Accountant used the information already provided to Charites Services by the Company through their annual returns, including that of their financial statements for the period of 2010 to present date. el ea se d un de rt 5.1. R 5.3. 9 Enquires were also made into the allegations of an investigation with the SFO. An SFO media release, dated 07 November 2017 advised that the investigation into the affairs of Zespri Group Limited concerning allegation of criminality arising from the practice of dual invoicing http://www.zespri.com/companyinformation 10 Sec 9(2)(a) 7 had concluded. The investigation was closed having determined that the conduct did not meet the high evidential standard of laying criminal charges. 5.4. Both the and MPI also received the initial anonymous complaint and confirmed with Charities Services that they had not opened any investigations based on the allegations from the complainant. t1 98 2 Sec 6(c) Ac 6. Conclusion of financial review The financial review established that the Company was set up to take over the assets of the three Trusts. 6.2. The financial review also identified that the significant asset growth since the establishment of the Company in 2012 related to revaluations of market rates and the initial asset transfer of $161m and then the further purchase of property, plant and equipment, inventory and G3 Kiwifruit licences. 6.3. Charities Services has no issue around the amount of charitable funds the Company distributes, as the Act does not stipulate how a charity is to distribute their funds or the percentage that a charity needs to distribute for charitable purposes. 6.4. The financial statements showed that the Company has been distributing the profits back to the Three trusts so they can distribute the funds effectively, as well as making their own charitable donations. 6.5. Charities are able to pay their staff salaries as they see fit and for a company of this size this does not appear to be excessively high. In addition, there is nothing to indicate that the executives are being paid above market rate. 6.6. It is also not considered unusual that the directors and executives were involved in other organisations that transacted with the Company, as the associated trusts and the Company appear to be involved within the same industry. 6.7. While both the Aroha-Nui Trust and The Stockbridge Trust have significant investments in related entities which have grown in value over time, it does not appear that they are investing further resources in these entities. Rather, the increase in the investments reflects an increase in the market value of the investments. el ea se d un de rt he O ffi ci al In fo rm at io n 6.1. R 6.8. The investments have generated low returns between 2011 and 2017, however this would be considered reasonable in the context of the PSA Kiwifruit vine disease which affected the kiwifruit industry in NZ beginning in 2010. It is not likely these investments would be considered inappropriate given that it does not appear further investment has been made despite the low returns. 8 6.9. Both the Aroha-Nui Trust and The Stockbridge Trust carry significant investments in Montrose Partnership and the nature of this investment and the relationship of this entity to the trusts is unclear, though the investment appears to be generating significant returns. 7. Recommendation Following the recommendation of the financial review, Charities Services found no evidence to support the complaint. 7.2. In light of the above findings of this report, we recommend the investigation be closed and the complainant and the Company to be made aware of the outcome. R el ea se d un de rt he O ffi ci al In fo rm at io n Ac t1 98 2 7.1. 9 Appendix 1 The Companies Act 1993 Constitution of Document Number Trinity Lands Limited (for office use only) Name Reservation Number (for proposed company) Company Number 3291829 Piease note that the information in this form must be either typewritten or printed. it must not be handwritten. (for existing company) if there is insufficient space on the form to suppiy the information required, Piease attach separate sheets containing the information. PART 1. THE SCHEDULE ti The schedule in this part 1 which is referred to tater in this constitution is as foliows: Appointment and removal of directors (1) a) There shall be not iess than eight (8) and not more than twelve (12) directors at all times. b) Directors may from time to time be appointed and removed from office under clause 2.10. Quorum of shareholders (2) The number of shareholders which constitutes a quorum of sharehoiders in accordance with clause 10.4(2) [Quorum of shareholders] (holding the shares specified in that sub ctause) is a two-thirds majority of sharehoiders. Quorum of directors The number of directors which constitutes a quorum of directors in accordance with clause t9.4(t) [Quorum] is a 75% majority of directors with all three shareholders present. issue of shares on registration and amalgamation (3) in accordance with clause 9.2(2) [issue of shares on registration or amaigamation] the detaits of payment of initial shares on registration are: Class of share set out betow: 9.2(2) Consideration set out below: 9.2(2) Date payment due set out below: Ordinary 8.333.00 per share on incorporation 92(2) (0) Piece of Payment: The registered office of the company uniess otherwise directed. Presented by GAZE BURT Solicitors PO Box 91?345 Victoria Street West, Auckland 1142 Postal Address Account Teiephone Fax 100003295 303-3764 399-3114 TABLE OF CONTENTS PART 1. THE SCHEDULE 1 PART 2. SPECIAL PROVISIONS 2 Background 2 Charitable Purposes 2 Restriction on Transfer of Shares 2 Capital and Income 3 Directors 3 Restrictions to Override 4 PART 3. GENERAL 4 Interpretation 4 Capacity 5 Change of name 5 PART 4. SHARES 5 4. Share Capital and Variation of Rights 5 5. Transfer of Shares 9 6. Issue of New Shares 10 PART 5. SHAREHOLDERS 12 7. Shareholder Powers 12 8. Distributions 14 9. Meeting and Resolutions 15 10. Proceedings at Meetings of Shareholders 17 PART 6. MANAGEMENT 24 11. Appointment and Removal of Directors 24 12. Powers of Directors 24 13. Self?Interest Transactions 25 14. Duties of Directors 26 15. Directors Ceasing to Hold Office 28 16. Additional Directors . 28 17. Proceedings of Board of Directors 29 18. Managing Director 31 19 Indemnity, Insurance, and Remuneration 31 PART 7. ADMINISTRATION 33 20. Authority to Bind Company 33 21. Accounts 34 22. Inspection of Company Records 36 23. Audit 38 24. Notices 38 25. Address for Service 39 26. Secrets of Company 4O 27. Secretary 41 28. Liquidation 41 29. Removal from New Zealand Register 42 Certification of Constitution 42 Constitution of Trinity Lands Limited PART 2. SPECIAL PROVISIONS 2st The clauses in this part2 {Special provisions] are clauses paramount. Whenever these clauses paramount are inconsistent with ciauses in the remainder of this constitution, these clauses paramount prevaii, except to the extent to which the other ciauses mereiy reflect statutory provisions which are mandatory. 2.2 BACKGROUND 2.2.1 Lichfieid Lands incorporated, Longview Trust and Hillview Trust (?the sharehoiders?) are all farming trusts or societies originating in the Waikato. 2.2.2 The shareholders have agreed to combine their resources in order to provide funding to support and promote spreading the gospei by any means possibte. 2.3 PURPOSES 2.3.1 The Company has been incorporated exclusively for charitable purposes within New Zealand to: provide funding to support and promote the spread of the Christian gospei by any means possibie; and further such other religious and charitabte purposes as the directors may determine. 2.4 RESTRICTEON ON TRANSFER OF SHARES 2.4.1 Nothing in this Constitution shall authorise any share in the Company to be held by any person unless that person is an entity with ruies which provide: that it has exclusiveiy charitable purposes at law; and that it shatl not operate for the private pecuniary profit of any individual; and that upon dissolution or winding up its assets may only be distributed for charitabte purposes at law; that if it holds the shares in the Company as a part of its business activities, it is bound to comply with the restrictions contained in the income Tax Act 2007 to ensure that such business income is exempt from income tax; and that it may not amend its rules such that it ceases to be a charitabie entity or ceases to be exempt from income tax at law. 2.4.2 Compulsory transfer of Shares if any holder of Shares ceases to compiy with the requirements of this clause 2.4 then such holder will no longer be entitled to any dividends or other distributions from the Company. Constitution of Trinity Lands Limited CAPITAL AND 2.5 2.6 2.7 2.8 2.9 2.10 NONE of the capital or income of the Company shatl be paid or transferred directiy or indirectty by way of dividend bonus or otherwise howsoever by way of private pecuniary profit to any member of the Company PROVIDED THAT nothing in this clause or elsewhere in this Constitution shalt prevent: 2.5.1 The payment in good faith of reasonable remuneration to any directors, employees or the secretary of the Company or to any member of the Company or to any other person for services rendered to the Company; or 2.5.2 The payment of a donation or donations of capital and/or income to any member of the Company so long as that member is a charitabte organisation for the purposes of the Income Tax Act 2007. 2.5.3 The Company paying to any shareholder or trust tending money to the Company interest at a rate not exceeding the commerciai rate for the time being. anything contained or implied in this constitution, any person who is: 2.6.1 A shareholder or director of the Company; or 2.6.2 A settlor or trustee of any trust which is a shareholder of the Company; or 2.6.3 An associated person (as defined by the income Tax Act 2007) of any such trustee, shareholder or director; shall not by virtue of that capacity in any way (whether directiy or tndirectty) determine, or materially inftuence in any way the determination of the nature or the amount of any benefit or advantage or income or the circumstances in which it is or is to be received, gained, achieved, afforded or derived by that person. A person who in the course of and as part of the carrying on of his or her business of a professional pubiic practice shaii not, by reason only of his or her rendering professional services to the Company, be in breach of the terms of this clause. AFTER paying atl the Company's debts on the winding-up or dissolution of the Company any surplus property or assets shail be transferred in specie to the shareholders in accordance with the Shareholders Agreement If the directors fail to agree upon how any surplus assets or property will be deait with then such dispute will be dealt with finalty under clause THE Company may alter this constitution pursuant to the Companies Act 1993 PROVIDED HOWEVER that no such amendment enables the Company to apply any part of its assets property or undertaking to any purpose which is not charitable according to the laws of New Zealand. 2.10.1 At ail times each shareholder shatl be entitted to appoint one director for every one thousand (1000) shares that it hoids in the Company. 2.10.2 The initial directors appointed by Lichfieid Lands under this ctause are: Jack Jones, Gordon Fountain, Murray McBride, Mark Gardiner, lan Elliott 2.10.3 The initial directors appointed by Longview Trust under this clause are: Alexander Batdwin, John Atexander, Bruce Etiiott, Gray Batdwin and Fred Barrett. 2.10.4 The initial directors appointed by Hiliview Trust under this ciause are: Stuart Bay, Gordon Wood Constitution of Trinity Lands Limited 2.10.5 One third of the directors wiil retire at the end of each twelve month period At the first directors? meeting the directors shalt decide whether directors wilt retire according to age or alphabetical order. Each director shail be eiigible for reappointment for subsequent terms. 2.10.6 Any shareholder with the right to appoint a director may do so by written notice to the Company, except for the initiai directors who are deemed to have been appointed by the relevant shareholder. 2.10.7 Any shareholder that has appointed a director may remove that director at any time by written notice to the Company. 2.11 RESTRICTIONS TO OVERRIDE The restrictions and conditions provided for in this clause2 apply notwithstanding any other provision in this Constitution to the contrary. PART 3. GENERAL 3.1 Interpretation (1) In this constitution, unless the context otherwise requires "The Act" - means the Companies Act 1993. Definitions in Act - Words or expressions contained in this constitution bear the same meanings as in the Act (or any statutory modification of it) in force at the date on which this constitution becomes binding on the company. Masculine, feminine, and neuter ?Words which import any gender include the other genders. "Month" - means calendar month. "Person"- includes partnerships, associations, and corporations as well as individuals. "Protection attorney" - means an attorney who is appointed and acting under the Protection of Personal and Property Rights Act 1988. "Schedule" means (where not otherwise defined) a schedule of the Companies Act 1993. "Secretary" means any person appointed to perform the duties of the secretary of the company. "Section"- means (where not otherwise defined) a section of the Companies Act 1993. ?Shareholders Agreement? means any shareholders agreement signed by all the shareholders for the time being. Singular and plural - Words which import the singular and plural number include the plural and singular number respectively. "Sub clause? means (where not otherwise defined) a sub clause within the same clause as the reference occurs. Writing References to writing (including written) include printing, typing, and other modes of representing words in visible form. Present tense applies to future time - (2) This constitution is always speaking. Whenever any matter or thing is expressed in the present tense, then the matter or thing is applied to the circumstances as they arise, so that effect may be given to this constitution and every part of it according to its spirit, true intent, and meaning. Constitution of Trinity Lands Limited 3.2 Capacity Subject to the Act, any other enactment, and the general law, the company has, both inside and outside New Zealand, - Full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction; and For the purposes of paragraph full rights, powers, and privileges. (See section 16 [Capacity and powers]) 3.3 Change of name An application to change the name of the company is an amendment of the constitution for the purposes of the Act. (See section 23(2) [Change of name]) PART 4. SHARES 4. SHARE CAPITAL AND VARIATION OF RIGHTS 4.1 Rights and powers attaching to shares (1) Subject to sub clause (2), a share confers on the holder - The right to one vote on a poll at a meeting of the company on any resolution, including any resolution to Appoint or remove an auditor: (ii) Adopt a constitution: Alter this constitution: (iv) Approve a major transaction: Approve an amalgamation under section 221 [Approval of amalgamation proposal]: (vi) Put the company into liquidation. 4.2 Alteration of Shareholder Rights Special resolution of interest group (1) The company must not take action that affects the rights attached to shares unless that action has been approved by a special resolution of each interest group. (See section 117(1) [Alteration of shareholder rights]) Rights attached to shares (2) For the purposes of sub clause (1 the rights attached to shares include The rights, privileges, limitations, and conditions attached to the share by the Act or by this constitution, including voting rights: The right to have the procedure in this clause, and any further procedure required elsewhere by this constitution for the amendment or alteration of rights, observed by the company: (0) The right that a procedure required elsewhere by this constitution for the amendment or alteration of rights not be amended or altered. (See section 117(2)) Issue of further shares (3) For the purposes of sub clause (1 the issue of further shares ranking equally with, or in priority to, existing shares, whether as to voting rights or distributions, is deemed to be action affecting the rights attached to the existing shares, unless this 5 Constitution of Trinity Lands Limited constitution elsewhere expressly permits the issue of further shares ranking equally with, or in priority to, those shares. (See section 117(3)) (Refer to section 118 [Meaning of "classes" and "interest groups"] to section 119 [Actions not invalid]) 4.3 No notice of trusts No notice of a trust, whether express, implied, or constructive, may be entered on the share register. (See section 92 [Trusts not to be entered on register]) 4.4 Statement of rights to be given to shareholders (1) The company must issue to a shareholder, on request, a statement that sets out - The class of shares held by the shareholder, the total number of shares of that class issued by the company and the number of shares of that class held by the shareholder; and The rights, privileges, conditions, and limitations, including restrictions on transfer, attaching to the shares held by the shareholder; and The relationship of the shares held by the shareholder to other classes of shares. (See section 83(1) [Statement of rights to be given to shareholders]) When no statement required (2) The company is not obliged to provide a shareholder with a statement if A statement has been provided within the previous 6 months; and The shareholder has not acquired or disposed of shares since the previous statement was provided; and The rights attached to shares of the company have not been altered since the previous statement was provided; and There are special circumstances that make it reasonable for the company to refuse the request. (See section 83(2)) Not evidence of title (3) The statement is not evidence of title to the shares or of any of the matters set out in it. (See section 83(3)) (4) The statement must state in a prominent place that it is not evidence of title to the shares or of the matters set out in it. (See section 83(4)) 4.5 Issue of share certificates (1) A shareholder may apply to the company for a certificate relating to some or all of his or her shares in the company. (See section 95(3)) (2) Sub clause (1) does not apply if the company?s shares can be transferred under the Securities Transfer Act 1991 without a share certificate. (See section 95(2)) Constitution of Trinity Lands Limited Duties of company (3) On receipt of an application for a share certificate, the company must within 20 working days after receiving the application - If the application relates to some but not all of the shares, separate the shares shown in the register as owned by the applicant into separate parcels; one parcel being the shares to which the share certificate relates, and the other parcel being any remaining shares; and In all cases, send to the shareholder a certificate stating the name of the company; and (ii) the class of shares held by the shareholder; and The number of shares held by the shareholder to which the certificate relates. (See section 95(4)) Joint holding (4) ln respect of shares held jointly by several persons the company need not issue more than one certificate. Delivery of a certificate for a share to one of several joint holders is sufficient delivery to all holders. 4.6 Duplicate share certificates If a share certificate is defaced, lost, or destroyed, then it may be renewed on whatever terms (if any) as to evidence and indemnity and the payment of out-of-pocket expenses of the company of investigating evidence the board thinks fit. 4.7 Share register (1) The company must maintain a share register that records the shares issued by the company and states - Whether, under this constitution or the terms of issue of the shares, there are any restrictions or limitations on their transfer; and Where any document that contains the restrictions or limitations may be inspected. (See section 87(1) [Company to maintain share register]) Details required (2) The share register must state, with respect to each class of shares, The names, alphabetically arranged, and the latest known address of each person who is, or has within the last 10 years been, a shareholder; and The number of shares of that class held by each shareholder within the last 10 years; and The date of any Issue of shares to; or (ii) Repurchase or redemption of shares from; or Transfer of shares by or to each shareholder within the last 10 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred. (See section 87(2)) (3) An agent may maintain the share register. (See section 87(3)) Constitution of Trinity Lands Limited 4.8 Evidence of legal title (1) Subject to section 91 [Power of Court to rectify share register], the entry of the name of a person in the share register as holder of a share is prima facie evidence that legal title to the share vests in that person. (See section 89(1) [Share register as evidence of legal title]) Entitlement to rights (2) The company may treat the registered holder of a share as the only person entitled to - Exercise the right to vote attaching to the share; and Receive notices; and (0) Exercise the other rights and powers attaching to the share. (See section 89(2)) 4.9 Directors? duty It is the duty of each director to take reasonable steps to ensure that the share register is properly kept and that share transfers are entered on it in accordance with clause 5 [Transfer of shares]. (See section 90 [Directors' duty to supervise share register]) 4.10 Liability of shareholders (1) A shareholder is not liable for an obligation of the company by reason only of being a shareholder. (See section 97(1) [Liability of shareholders]) Liability limited (2) The liability of a shareholder is limited to: Any amount unpaid on a share held by the shareholder; Any liability expressly provided for elsewhere in this constitution; Any liability under section 131 to section 137 that arises through section 126(2). (See section 97(2)) 4.11 Liability of former shareholders (1) A former shareholder who ceased to be a shareholder during the specified period is liable to the company in respect of any amount unpaid on the shares held by that former shareholder or any liability provided for in this constitution for which that former shareholder was liable to the company if the Court is satisfied that the shareholders of the company are unable to discharge any liability - For any amount unpaid on shares held by them; or Expressly provided for elsewhere in this constitution. (See section 98(1) [Liability of former shareholders]) Debts contracted later (2) A former shareholder is not liable under sub clause (1 for any debt or liability of the company which was contracted after ceasing to be a shareholder. (See section 98(2)) Reregistered companies (3) Sub clauses(1) and (2) apply, with whatever modifications are necessary, in relation to an existing company that has become reregistered in accordance with the Companies Reregistration Act1993 and as if the reference to a former 8 Constitution of Trinity Lands Limited shareholder included a reference to a person who was a member of the company before the reregistration. (See section 98(3)) Meaning of "specified period" (4) For the purposes of sub clause (1), ?specified period" has the meaning defined in section 98(6) (Where limited liability becomes unlimited liability, refer to sections 98(4) and 5. TRANSFER OF SHARES 5.1 Execution and registration (1) Shares may be transferred by entry of the name of the transferee on the share register. (See section 84 (1) [Transfer of shares]) (2) For the purpose of transferring shares, a form of transfer signed by the present holder of the shares or by his or her personal representative must be delivered to- The company; or An agent of the company who maintains the share register under clause 4.7. (See section 84 (3) The form of transfer must be signed by the transferee if registration as holder of the shares imposes a liability to the company on the transferee. (See section 84 5.2 Form of transfer Subject to such of the restrictions of this constitution as may be applicable, any shareholder may transfer all or any of his or her shares by instrument in writing in any usual or common form; or in any other form of which the board may approve; or in the form set out in the First Schedule to the Securities Transfer Act 1991. 5.3 Rights to refuse transfer The board may refuse in its absolute discretion to register any transfer of a share: 5.4 Where share certificate issued (1) Notwithstanding clause 5.1 [Execution and registration] and section 84 [Transfer of shares], where a share certificate has been issued, a transfer of the shares to which it relates must not be registered by the company unless the form of transfer is accompanied by the share certificate relating to the share, or by evidence as to its loss or destruction and, if required, an indemnity in a form required by the board. (See section 95(5) [Share certificates]) (2) Where shares to which a share certificate relates are to be transferred, and the share certificate is sent to the company to enable the registration of the transfer, the share certificate must be cancelled and no further share certificate issued except at the request of the transferee. (See section 95(6)) Constitution of Trinity Lands Limited 5.5 Notice of refusal to register (1) On receipt of a form of transfer in accordance with sub clause (2) of clause 5.1 and, if applicable, sub clause (3) of clause 5.1, the company must forthwith enter or cause to be entered the name of the transferee on the share register as a holder of the shares, unless - The board resolves within 30 working days of receipt of the transfer to refuse or delay the registration of the transfer in its discretion; and Notice of the resolution, including those reasons, is sent to the transferor and to the transferee within 5 working days of the resolution being passed by the board; and The Act or this constitution expressly permits the board to refuse or delay registration for the reasons stated. (See section 84(4)) 6. ISSUE OF NEW SHARES 6.1 Time of issue of shares A share is issued when the name of the holder is entered on the share register. (See section 51 [Time of issue of shares]) 6.2 issue of shares on registration or amalgamation (1) The company must forthwith after registration of the company, issue to the persons named in the application for registration as shareholders, the number of shares specified in the application as being the number of shares to be issued to those persons. (See section 41 [Issue of shares on registration and amalgamation]) Details of payment (2) The details of payment are as follows: The consideration for each class of share is that specified in the schedule. The date of payment of that consideration is that specified in the schedule. If no date of payment is so specified, then the consideration must be paid on the date for payment which is resolved by the board. The payment does not fail due until the board has given the shareholder not less than seven days notice (commencing on the day the shareholder is served) of the resolution. The place of payment is that specified in the schedule. If no place of payment is so specified, then the place of payment is the registered office of the company. Amalgamated company (3) The company must, in the case of an amalgamated company, forthwith after the amalgamation is effective, issue to any person entitled to a share or shares under the amalgamation proposal, the share or shares to which that person is entitled. (See section 41(b)) 6.3 Issue of other shares Subject to the Act and approval by special resolution, the board may issue shares at any time and in any number if - The shares belong to a class provided for in this constitution; and The number of shares does not exceed the maximum number of shares that may, under this constitution, be issued in that class of shares; and 10 Constitution of Trinity Lands Limited The provisions of this constitution relating to the issue of shares are complied with. (Refer to section 42 [Issue of other shares]) 6.4 Shareholder approval for issue of new shares (1) Notwithstanding clause 6.3 [Issue of other shares], if shares cannot be issued by reason of any limitation or restriction elsewhere in this constitution, then the board may issue shares if the board obtains the approval for the issue in the same manner as approval is required for an alteration to this constitution that would permit such an issue. (See section 44(1) [Shareholder approval for issue of new shares]) (2) Subject to the terms of the approval, the shares may be issued at any time, to any person, and in any number the board thinks fit. (See section 44(2)) (3) Within 10 working days of approval being given under sub clause (1), the board must ensure that notice of that approval in the prescribed form is delivered to the Registrar for registration. (See section 44(3)) (4) Nothing in this clause affects the need to obtain the approval of an interest group in accordance with clause 4.2 [Alteration of shareholders' rights] if the issue affects the rights of that interest group. (See section 44(4)) 6.5 Same conditions apply to new shares The new shares are subject to the same provisions with reference to the payment of calls, liens, transfer, transmission, forfeiture, and otherwise as the shares in the original share cap?ai 6.6 Consideration (1) Before the board issues shares under clause 6.3 [Issue of other shares] or clause 6.4 [Shareholder approval for issue of new shares], the board must - Decide the consideration for which the shares will be issued and the terms on which they will be issued; and if the shares are to be issued other than for cash, determine the reasonable present cash value of the consideration for the issue; and Resolve that, in its opinion, the consideration for and terms of issue are fair and reasonable to the company and to all existing shareholders; and if the shares are to be issued otherthan for cash, resolve that, in its opinion, the present cash value of the consideration to be provided for the issue of the shares is not less than the amount to be credited for the issue of the shares. (See section 47(1) [Consideration to be decided by board]) Directors' certificate (2) The directors who vote in favour of a resolution under sub clause (1) must sign a certificate Stating the consideration for, and the terms of, the issue; and Describing the consideration in sufficient detail to identify it; and 11 Constitution of Trinity Lands Limited Where a present cash value has been determined in accordance with sub clause (1 stating that value and the basis for assessing it; and Stating that, in their opinion, the consideration for and terms of issue are fair and reasonable to the company and to all existing shareholders; and If the shares are to be issued other than for cash stating that, in their Opinion the present cash value of the consideration to be provided for the issue of the shares is not less than the amount to be credited for the issue of the shares. (See section 47(2)) Present cash value resolution (3) Before shares that have already been issued are credited as fully or partly paid up other than for cash, the board must Determine the reasonable present cash value of the consideration; and Resolve that, in its opinion, the present cash value of the consideration is Fair and reasonable to the company and to all existing shareholders; and (ii) Not less than the amount to be credited in respect of the shares. (See section 47(3)) Directors certificate (4) The directors who vote in favour of a resolution under sub clause (3) must sign a certificate - Describing the consideration in sufficient detail to identify it; and Stating - The present cash value of the consideration and the basis for assessing it; and (ii) That the present cash value of the consideration is fair and reasonable to the company and to all existing shareholders; and That the present cash value of the consideration is not less than the amount to be credited in respect of the shares. (See section 47(4)) Certificate to Registrar (5) The board must deliver a copy of a certificate that complies with sub clause (2) or sub clause (4) to the Registrar for registration within 10 working days after it is given. (See section 47(5)) (For payments not in cash refer to section 47(6)) PART 5. SHAREHOLDERS 7. SHAREHOLDER POWERS 7.1 Powers reserved to shareholders Powers reserved to the shareholders by the Act may be exercised only At a meeting of shareholders pursuant to clause 9.1 [Annual meetings of shareholders] or clause 9.2 [Special meetings of shareholders]; or By a resolution in lieu of a meeting pursuant to clause 9.3 [Resolution in lieu of meeting]. (See section 104 [Exercise of powers reserved to shareholders]) 12 Constitution of Trinity Lands Limited 7.2 Ordinary resolutions (1) Unless otherwise specified in the Act or this constitution, a power reserved to shareholders may be exercised by an ordinary resolution. (2) An ordinary resolution is a resolution that is approved by a two-thirds majority of the votes of those shareholders entitled to vote and voting on the question. (See section 105 [Exercise of powers by ordinary resolution]) 7.3 Special resolutions (1) When shareholders exercise a power to - Adopt a constitution, or alter or revoke the constitution: Approve a major transaction: (0) Approve an amalgamation of the company under section 221 [Approval of amalgamation proposal]: Put the company into liquidation, - the power must be exercised by special resolution. (2) A special resolution pursuant to paragraphs or or can be rescinded only by a special resolution. (3) A special resolution pursuant to paragraph cannot be rescinded. (See section 106 [Powers exercised by special resolution]) (4) A special resolution is a resolution approved by a majority of 90 per cent of the votes of those shareholders entitled to vote and voting on the question. (See section 2 [Interpretation]) 7.4 Unanimous shareholder agreements (1) Subject to clause 10.5 [Solvency test], if all entitled persons have agreed or concur. Issue of shares (2) If all entitled persons have agreed or concur, shares may be issued othenivise than in accordance with clause 6.3 [Issue of other shares], or clause 6.4 [Shareholder approval for issue of new shares]. (See section 107(2)) In writing (3) For the purposes of this clause, no agreement or concurrence of the entitled persons is valid or enforceable unless the agreement or concurrence is in writing. (See section 107(4)) Particular or general (4) An agreement or concurrence may be - A separate agreement to, or concurrence in, the particular exercise of the power referred to; or An agreement to, or concurrence in, the exercise of the power generally or from time to time. (See section 107(5)) ?23 Constitution of Trinity Lands Limited Withdrawal (5) An entitled person may, at any time, by notice in writing to the company, withdraw from any agreement or concurrence referred to in sub clause and any such notice takes effect accordingly. (See section 107(6)) Notice (6) Where a power is exercised pursuant to an agreement or concurrence referred to in sub clause the board must, within 10 working days of the exercise, send to every entitled person a notice in writing containing details of the exercise. (See section 107(7)) 7.5 Solvency test (1) A power referred to in clause 10.4(1) must not be exercised unless the board is satisfied on reasonable grounds that the company will, immediately after the exercise, satisfy the solvency test. (See section 108(1) [Company to satisfy solvency test]) Certificate (2) The directors who vote in favour of the exercise must sign a certificate stating that, in their opinion, the company will, after the exercise, satisfy the solvency test. (See section 108(2)) Change in circumstances (3) if, after a resolution is passed under sub clause(1) and before the power is exercised, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the power is exercised, satisfy the solvency test, any exercise of the power is deemed not to have been authorised. (See section 108(3)) (In applying the solvency test for the purposes of clause 10.4(1) refer to section 108(5) for definitions of "assets" and "liabilities") 7.6 Management review by shareholders (1) The chairperson of a meeting of shareholders must ailew a reasonable opportunity for shareholders at the meeting to question, discuss, or comment on the management. Resolution (2) A meeting of shareholders may pass a resolution under this clause relating to the management. Not binding (3) Unless this constitution elsewhere provides, a resolution passed pursuant to sub clause (2) is not binding on the board. (See section 100 [Management review by shareholders]) 8. DISTRIBUTIONS 8.1 Solvency Test 14 Constitution of Trinity Lands Limited (1) Subject to clause 9.2, the Board may, if it is satisfied on reasonable grounds that the Company will, immediately after the distribution, satisfy the solvency test, authorise a distribution by the company to the charitable purposes under clause 2.3 as it thinks fit. (2) The directors who vote in favour of a distribution must sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test and stating the grounds for that opinion. (3) For the purpose of this clause in applying the solvency test, ?debts? and ?liabilities? each has the meaning given to it in section 52(4) of the Act. 8.2 Dividends payable pari passu (1) The Board may not authorise a dividend; in respect of some but not all of the shares; or that is of a greater value per share in respect of some shares. (2) A shareholder may, by notice in writing signed by or on behalf of the shareholder, and given to the company, waive his or her entitlement to receive a dividend. (3) if all the shareholders concur in writing in respect of each proposed dividend, the company may pay a dividend which is a distribution other than in accordance with clause 92(1). 9. MEETING AND RESOLUTIONS 9.1 Annual meeting of shareholders When held (1) The board must call an annual meeting of shareholders to be held not later than 6 months after the balance date of the company; and not later than 15 months after the previous annual meeting. (See section 120(1) [Annual meeting of shareholders]) (2) The company, if it is not a company that is reregistered under the Act, does not have to hold its first annual meeting in the calendar year of its registration, but must hold that meeting within 18 months of its registration. (See section 120(2)) (3) The company must hold the meeting on the date on which it is called to be held. (See section 120(4)) Time and place (4) The annual meeting must be held at such time and place as the directors appoint. (See section 120(5)) 9.2 Special meetings of shareholders A special meeting of shareholders entitled to vote on an issue - May be called at any time by The board; or 15 Constitution of Trinity Lands Limited (ii) A person who is authorised by this constitution to call the meeting: Must be called by the board on the written request of shareholders holding shares carrying together not less than 5 per cent of the voting rights entitled to be exercised on the issue. (See section 121 [Special meetings of shareholders]) 9.3 Resolution in lieu of meeting (1) Subject to sub clauses (2) and (3), a resolution in writing signed by not less than 75%; or Such other percentage as this constitution may require for passing a special resolution, - whichever is the greater, of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% or, if a higher percentage is required by this constitution, that higher percentage, of the votes entitled to be cast on that resolution, is as valid as if it had been passed at a meeting of those shareholders. (See section 122(1) [Resolution in lieu of meeting]) Required decision: shareholders entitled (2) A resolution in writing that - Relates to a matter that is required by the Act or by this constitution to be decided at a meeting of the shareholders of the company; and is signed by all the shareholders specified in sub clause (3) is made in accordance with the Act and this constitution. (See section 122(2)) Which shareholders entitled (3) For the purposes of sub clause the shareholders are, In the case of a resolution under clause 25.1(1) [When no auditors required], all the shareholders who are entitled to vote on the resolution: In any other case, the shareholders referred to in sub clause (1). (See section 122(3)) (3A) For the purposes of sub clause (2), any such resolution may consist of one or more documents in similar form (including letters, telegrams, cables, facsimiles, telex messages, electronic mail, or other similar means of communication) each signed or assented to by or on behalf of one or more of the shareholders specified in sub clause (3). Resolution in lieu of annual meeting (4) The company need not hold an annual meeting of shareholders under clause 9.1 [Annual meeting of shareholders] if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with sub clauses (2) and (3). (See section 122(4)) Copy to non-signatory (5) Within 5 working days of a resolution being passed under this clause, the company must send a copy of the resolution to every shareholder who did not sign the resolution or on whose behalf the resolution was not signed. (See section 122(5)) 16 Constitution of Trinity Lands Limited Notice not required (6) A resolution may be signed under sub clauses (1) or (2) without any prior notice being given to shareholders. (See section 122(6)) 9.4 Ascertaining shareholders (1) The shareholders who are entitled to exercise any right or receive any benefit under the Act or this constitution are If the board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date: If the board does not fix a date for the purpose, those shareholders whose names are registered in the share register on the day on which the board passes the resolution concerned. (See section 125(1) [Shareholders entitled to receive distributions, attend meetings, and exercise rights]) Date under sub clause 1) (2) A date must not be fixed under sub clause (1) that precedes by more than 20 working days the date on which the proposed action will be taken. (See section 125(2)) Notice required (3) The shareholders who are entitled to receive notice of a meeting of shareholders are, If the board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date; if the board does not fix a date for the purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given. (See section 125(3)) Date under sub clause (3) (4) A date must not be fixed under sub clause (3) that precedes by more than 30 working days or less than 10 working days the date on which the meeting is to be held. (See section 125(4)) 10. PROCEEDINGS AT MEETINGS OF SHAREHOLDERS (See first schedule) 10.1 Chairperson (1) If the directors have elected a chairperson of the board, and the chairperson of the board is present at a meeting of shareholders, then he or she must chair the meeting. If chairperson not present (2) If no chairperson of the board has been elected or if, at any meeting of shareholders, the chairperson of the board is not present within 15 minutes of the time appointed for the commencement of the meeting, then: The directors who are present must elect one of their number to be chairperson of the meeting; 17 Constitution of Trinity Lands Limited If no director is present within 15 minutes of the time appointed for the commencement of the meeting, then the shareholders present may choose one of their number to be chairperson of the meeting. 10.2 Notice of meetings (1) Written notice of the time and place of a meeting of shareholders must be sent to every shareholder entitled to receive notice of the meeting and to every director and an auditor of the company not less than 10 working days before the meeting. Contents (2) The notice must state - The nature of the business to be transacted at the meeting in sufficient detail to enable a shareholder to form a reasoned judgment in relation to it; and The text of any special resolution to be submitted to the meeting. Waiver (3) An irregularity in a notice of a meeting is waived if all the shareholders entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity, or if all such shareholders agree to the waiver. Adjournment (4) The chairperson may (and if so directed by the meeting must) adjourn the meeting from time to time and from place to place. No business may be transacted at any adjourned meeting except the business which was left unfinished at the meeting which was adjourned. If a meeting is adjourned for 30 days or more, then notice of the adjourned meeting must be given in the same way as for an original meeting. Except as above, it is not necessary to give notice of an adjournment or of the business which is to be transacted at an adjourned meeting. Omission of notice (5) The proceedings of a meeting are not invalidated by the accidental omission to give notice of the meeting to a person who is entitled to receive notice of it, or by non?receipt of the notice by such a person. 10.3 Methods of holding meetings A meeting of shareholders may be held either By a number of shareholders, who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or By means of audio, or audio and visual, communication by which all shareholders participating and constituting a quorum, can simultaneously hear each other throughout the meeting. 10.4 Quorum of shareholders (1) Subject to sub clause (3), no business may be transacted at a meeting of shareholders if a quorum is not present. (2) A quorum for a meeting of shareholders is present if shareholders or their proxies are present or have cast postal votes who between them: Total the number specified in the schedule in clause 1; or If no number is specified, then are able to exercise a majority of the votes to be cast on the business to be transacted by the meeting. 18 Constitution of Trinity Lands Limited If no quorum (3) If a quorum is not present within 30 minutes after the time appointed for the meeting, In the case of a meeting called under clause 11.2(b) (section 121(b) [Special meetings of shareholders]), the meeting is dissolved; In the case of any other meeting, the meeting is adjourned to the same day in the following week at the same time and place, or to such other date, time, and place as the directors may appoint, and if, at the adjourned meeting, a quorum is not present within 30 minutes after the time appointed for the meeting, the shareholders present or their proxies are a quorum. 10.5 Voting (1) In the case of a meeting of shareholders held under clause 12.3(a) [Methods of holding meetings] unless a poll is demanded, voting at the meeting shall be by whichever of the following methods is determined by the chairperson of the meeting: Voting by voice; or Voting by show of hands. (2) In the case of a meeting of shareholders held under clause unless a poll is demanded, voting at the meeting shall be by the shareholders signifying individually their assent or dissent by voice. Chairperson 's declaration unless poll (3) A declaration by the chairperson of the meeting that a resolution is carried by the requisite majority is conclusive evidence of that fact unless a poll is demanded in accordance with sub clause (4). Right to poll (4) At a meeting of shareholders a poll may be demanded by - Not less than 5 shareholders having the right to vote at the meeting; or A shareholder or shareholders representing not less than 10 per cent of the total voting rights of all shareholders having the right to vote at the meeting; or By a shareholder or shareholders holding shares in the company that confer a right to vote at the meeting and on which the aggregate amount paid up is not less than 10 per cent of the total amount paid up on all shares that confer that right; or The chairman of the meeting. (5) A poll may be demanded either before or after the vote is taken on a resolution. (6) If a poll is taken, votes must be counted according to the votes attached to the shares of each shareholder present in person or by proxy and voting. No casting vote (7) The chairperson of a shareholders' meeting is not entitled to a casting vote. Right of proxy (8) For the purposes of this clause, the instrument appointing a proxy to vote at a meeting of the company confers authority to demand or join in demanding a poll 19 Constitution of Trinity Lands Limited and a demand by a person as proxy for a shareholder has the same effect as a demand by the shareholder. One vote (9) Poll (10) 10.6 (1) (2) (3) (4) Subject to any rights or restrictions attached to any class of shares, every shareholder who is present in person or by proxy, and who votes by voice or show of hands has one vote. The chairperson may demand a poll on a resolution, either before or after a vote on it, whether by voice or by show of hands. The demand for a poll may be withdrawn. Save as in sub clause (13), should a poll be demanded, it must be taken in the manner in which the chairperson directs, and the result of the poll is deemed to be the resolution of the meeting at which the poll was demanded. A poll which is demanded upon the election of a chairperson or upon a question of adjournment must be taken forthwith. A poll which is demanded upon any other question must be taken at whatever time and place the chairperson directs. Any business except that on which a poll has been demanded may proceed pending the poll being taken. Proxies A shareholder may exercise the right to vote either by being present in person or by proxy. A proxy for a shareholder is entitled to attend and be heard at a meeting of shareholders as if the proxy were the shareholder. A proxy must be appointed by notice in writing signed by the shareholder and the notice must state whether the appointment is for a particular meeting or a specified term. No proxy is effective in relation to a meeting unless a copy of the notice of appointment is produced before the start of the meeting. Proxy with notice of meeting (5) With the notice of meeting the board must include the form of proxy in sub clause Form of proxy (6) The instrument which appoints a proxy may be In any usual or common form; or In any form which the directors approve; or In the following form - - Limited of being a shareholder/shareholders of the above-named company, hereby appoint - 20 Constitution of Trinity Lands Limited of - or failing him or her, - of - as my/our proxy to vote for me/us on my/our behalf: at the [annual or special, as the case may be] meeting of the shareholders to be held on the - day of [year] and at any adjournment of the meeting; or For a term of - (not exceeding 12 months) commencing on the - day of [year]. Signed this - day of [year] *This form is to be used in **favour of/against the resolution. [Specify each resolution *Unless otherwise instructed, the proxy will vote as he or she thinks fit. ?Strike out whichever is not desired. 10.7 Postal votes (1) A shareholder may exercise the right to vote at a meeting by casting a postal vote in accordance with this clause. (2) Notice to state right The notice of a meeting at which shareholders are entitled to cast a postal vote must state: That a shareholder may exercise the right to vote at a meeting by casting a postal vote; and The name of the person authorised by the board to receive and count postal votes at that meeting. (3) If no person has been authorised to receive and count postal votes at a meeting, or if no person is named as being so authorised in the notice of the meeting, then every director is deemed to be so authorised. (4) A shareholder may cast a postal vote on all or any of the matters to be voted on at the meeting by sending a notice of the manner in which his or her shares are to be voted to a person authorised to receive and count postal votes at that meeting. The notice must reach that person not less than 48 hours before the start of the meeting. (5) Duty of counting It is the duty of a person authorised to receive and count postal votes at a meeting To collect together all postal votes received by him or her, or by the company; and In relation to each resolution to be voted on at the meeting, to count - The number of shareholders voting in favour of the resolution and the number of votes cast by each shareholder in favour of the resolution; and (ii) The number of shareholders voting against the resolution, and the number of votes cast by each shareholder against the resolution; and To sign a certificate that he or she has carried out the duties set out in paragraphs and of this sub clause and which sets out the results of the counts required by paragraph of this sub clause; and To ensure that the certificate required by paragraph of this sub clause is presented to the chairperson of the meeting. 21 Constitution of Trinity Lands Limited (6) Chairperson 's duty If a vote is taken at a meeting on a resolution on which postal votes have been cast, the chairperson of the meeting must - On a vote by show of hands, count each shareholder who has submitted a postal vote for or against the resolution: On a poll, count the votes cast by each shareholder who has submitted a postal vote for or against the resolution. (7) The chairperson of a meeting must call for a poll on a resolution on which he or she holds sufficient postal votes that he or she believes that if a poll is taken the result may differ from that obtained on a show of hands. (8) The chairperson of a meeting must ensure that a certificate of postal votes held by him or her is annexed to the minutes of the meeting. 10.8 Minutes (1) The board must ensure that minutes are kept of all proceedings at meetings of shareholders. (2) Minutes which have been signed correct by the chairperson of the meeting are prima facie evidence of the proceedings. 10.9 Shareholder proposals (1) A shareholder may give written notice to the board of a matter the shareholder proposes to raise for discussion or resolution at the next meeting of shareholders at which the shareholder is entitied to vote. Notice not less than 20 working days (2) If the notice is received by the board not less than 20 working days before the last day on which notice of the relevant meeting of shareholders is required to be given by the board, then the board must, at the expense of the company, give notice of the shareholder proposal and the text of any proposed resolution to all shareholders entitled to receive notice of the meeting. Notice between 5 and 20 working days (3) If the notice is received by the board not less than 5 working days and not more than 20 working days before the last day on which notice of the relevant meeting of shareholders is required to be given by the board, then the board must, at the expense of the shareholder, give notice of the shareholder proposal and the text of any proposed resolution to all shareholders entitled to receive notice of the meeting. Notice less than 5 working days (4) If the notice is received by the board less than 5 working days before the last day on which notice of the relevant meeting of shareholders is required to be given by the board, then the board may, if practicable, and at the expense of the shareholder, give notice of the shareholder proposal and the text of any proposed resolution to all shareholders entitled to receive notice of the meeting. Shareholder's statement (5) If the directors intend that shareholders may vote on the proposal by proxy or by postal vote, then they must give the proposing shareholder the right to include in or 22 Constitution of Trinity Lands Limited with the notice given by the board a statement of not more than 1,000 words prepared by the proposing shareholder in support of the proposal, together with the name and address of the proposing shareholder. (6) The board is not required to include in or with the notice given by the board a statement prepared by a shareholder who the directors consider to be defamatory, frivolous, or vexatious. If costs payable (7) Where the costs of giving notice of the shareholder proposal and the text of the proposed resolution are required to be met by the proposing shareholder, then the proposing shareholder must, on giving notice to the board, deposit with the company or tender to the company a sum sufficient to meet those costs. 10.10 Corporations may act by representatives A body corporate which is a shareholder may appoint a representative to attend a meeting of shareholders on its behalf in the same manner as that in which it could appoint a proxy. 10.11 Votes ofjoint holders Where 2 or more persons are registered as the holder of a share, the vote of the person named first in the share register and voting on a matter must be accepted to the exclusion of the votes of the other joint holders. 10.12 Loss of voting rights if calls unpaid Subject as provided elsewhere in this constitution, if a sum due to the company in respect of a share has not been paid, that share may not be voted at a shareholders? meeting other than a meeting of an interest group. 10.13 Other proceedings Except as provided in this clause 12 and as elsewhere provided in this constitution, a meeting of shareholders may regulate its own procedure. 10.14 Vote before notice of revocation A vote given in accordance with the terms of an instrument of proxy is valid notwithstanding - The previous death or insanity of the principal; or A revocation of the proxy or of the authority under which the proxy was executed; or The transfer of the share in respect of which the proxy is given - if no notice in writing of the death, insanity, revocation, or transfer has been received by the company at the registered office before the commencement of the meeting or adjourned meeting at which the proxy is used, or is presented at the meeting or adjourned meeting before the vote is given. 23 Constitution of Trinity Lands Limited PART 6. MANAGEMENT 11. APPOINTMENT AND REMOVAL OF DIRECTORS 11.1 Appointment and removal of directors (1) Directors may be appointed and removed in the manner specified in the schedule in part 1 or as otherwise provided by this constitution. Appointment need not be voted on individually (2) The resolution to appoint directors need not be for the appointment of one director. (Refer to section 155) 11.2 Qualification (1) There is no share holding qualification for directors. (2) A natural person who is not disqualified by subsection (2) of section 151 [Qualifications of directors] may be appointed as a director of the company. (See section 151(1)) (3) The following are disqualified from being appointed or holding office as a director: A body corporate: A person who is under 18 years of age: (0) A person who is an undischarged bankrupt: A person who is subject to a property order under section 30 or section 31 of the Protection of Personal and Property Rights Act 1988. (Refer to section 151(2) and 11.3 Director's consent required A person must not be appointed a director unless he or she has consented in writing to be a director and certified that he or she is not disqualified from being appointed or holding office. (See section 152 [Director's consent required]) 12. POWERS OF DIRECTORS 12.1 Management of company (1) The business and affairs of the company must be managed by, or under the direction or supervision of, the board. (2) The board has all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company. (3) Sub clauses (1) and (2) are subject to any modifications, exceptions, or limitations contained in the Act or elsewhere in this constitution. (See section 128 [Management of company]) 24 Constitution of Trinity Lands Limited 13. SELF-INTEREST TRANSACTIONS 13.1 Restrictions on self-interest transactions The directors must comply with section 139 [Meaning of "interested"] to section 149 [Restrictions on share dealing by directors]. 13.2 Meaning of ?interested? (1) Subject to sub clause (2), a director is interested in a transaction to which the company is a party if, and only if, the director - Is a party to, or will or may derive a material financial benefit from, the transaction; or Has a material financial interest in another party to the transaction; or Director, officer, or trustee (C) Is a director, officer, or trustee of another party to, or person who will or may derive a material, financial benefit from, the transaction, not being a party or person that is - The company's holding company being a holding company of which the company is a wholly?owned subsidiary; or (ii) A wholly-owned subsidiary of the company; or A wholly-owned subsidiary of a holding company of which the company is also a wholly-owned subsidiary; or Parent, child, or spouse ls the parent, child, or spouse of another party to, or person who will or may derive a material financial benefit from, the transaction; or Material interest is otherwise directly or indirectly materially interested in the transaction. (See section 139(1) [Meaning of "interested"]) Security with no connection to director (2) A director is not interested in a transaction to which the company is a party if the transaction comprises only the giving by the company of security to a third party which has no connection with the director, at the request of the third party, in respect of a debt or obligation of the company for which the director or another person has personally assumed responsibility in whole or in part under a guarantee, indemnity, or by the deposit of a security. (See section 139(2)) 13.3 Disclosure of interest (1) A director must, forthwith after becoming aware of the fact that he or she is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register, and, if the company has more than one director, disclose to the board - If the monetary value of the director's interest is able to be quantified, the nature and monetary value of that interest; or If the monetary value of the director's interest cannot be quantified, the nature and extent of that interest. (See section 140(1) [Disclosure of interest]) Shareholder, director, officer, or trustee (2) For the purposes of sub clause (1 a general notice entered in the interests register or disclosed to the board to the effect that a director is a shareholder, director, officer, or trustee of another named company or other person and is to be regarded 25 Constitution of Trinity Lands Limited as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction. (See section 140(2)) Fa?ure to comply (3) A failure by a director to comply with sub clause (1) does not affect the validity of a transaction entered into by the company or the director. (See section 140(3)) 13.4 Avoidance of transactions (1) A transaction entered into by the company in which a director is interested may be avoided by the company within 3 months of the transaction being disclosed to all the shareholders (whether by means of the company's annual report or otherwise). (See section 141(1) [Avoidance of transactions]) (2) A transaction cannot be avoided if the company receives fair value under it. (See section 141(2)) (Refer to section 143 which excludes clauses 15.3 and 15.4 where clause 15.7 [indemnity and insurance] applies) 13.5 Any Director who is or may be in any other capacity whatever interested or concerned directly or indirectly in any property or undertaking in which the company is or may be in any way concerned or involved shall disclose the nature and extent of that director?s interest to the other directors, and shall not take any part whatever in any deliberations of the directors concerning the matter in which that director is or may be interested other than as a director of the company. 14. DUTIES OF DIRECTORS 14.1 Duty to act in good faith and in best interests of company A director, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company. (See section 131(1) [Duty to act in good faith and in best interests of company]) 14.2 Exercise of powers in relation to employees Nothing in clauses 16.1, 16.2, or 16.3 limits the power of a director to make provision for the benefit of employees of the company in connection with the company ceasing to carry on the whole or part of its business. (See section 132 [Exercise of powers in relation to employees]) 14.3 Powers to be exercised for proper purpose A director must exercise a power for a proper purpose. (See section 133 [Powers to be exercised for proper purpose]) 14.4 Directors to comply with Act and constitution A director must not act, or agree to the company acting, in a manner that contravenes the Act or this constitution. (See section 134 [Directors to comply with Act and constitution]) 26 Constitution of Trinity Lands Limited 14.5 Reckless trading A director must not - Agree to the business of the company being carried on in a manner likely to create a substantial risk of serious loss to the company's creditors; or Cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company's creditors. (See section 135 [Reckless trading]) 14.6 Duty in relation to obligations A director must not agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so. (See section 136 [Duty in relation to obligations]) 14.7 Director?s duty of care A director, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account, but without limitation, The nature of the company; and The nature of the decision; and The position of the director and the nature of the responsibilities undertaken by him or her. (See section 137 [Director's duty of care]) 14.8 Keep minutes and records (1) The board must cause minutes of all resolutions and proceedings of all meetings of the company and of the board to be duly entered in books to be from time to time provided for the purpose and in particular must cause to be recorded in such minutes The names of the directors present at each meeting of the board; and All resolutions of the board and of any meeting of the company; and All appointments of officers of the company; and All bills, notes, debentures, mortgages, and charges authorised to be drawn, accepted, made, given, or executed and all instruments which, it entered into by a natural person, would, by law, be required to be by deed. (2) Similar minutes must be made and entered of all resolutions and proceedings of any committee. (3) The minutes of any meeting of the company or of the board or of any committee (if purporting to be signed by the chairman of such meeting or of the next succeeding meeting) are receivable in all Courts and by any person authorised to take evidence as prima facie evidence of the matters stated in such minutes. 14.9 Keep register of mortgages and other charges The board must cause a proper register to be kept in accordance with the Companies (Registration of Charges) Act 1993 of all mortgages and charges Specifically affecting the property of the company and must duly comply with the requirements of Part lV [Registration of charges] of the Companies Act 1955 in regard to the registration of mortgages and charges. 27 Constitution of Trinity Lands Limited 14.10 Keep accounts The board must keep books of account in the manner and to the extent required by section 194 [Accounting records to be kept] and section 195 [Place accounting records to be kept] of the Act. 14.11 Annual return (1) The board must ensure that the Registrar receives each year, during the month allocated to the company for the purpose, an annual return in the prescribed form. (2) The annual return must be dated as at a day within the month during which the return is required to be received by the Registrar. The information in it must be compiled as at that date. (Refer to section 214 [Annual return]) 15. DIRECTORS CEASING TO HOLD OFFICE 15.1 Director ceasing to hold office (1) The office of director of the company is vacated if the person holding that office - Resigns in accordance with sub clause or is removed from office in accordance with the Act or this constitution; or Becomes disqualified from being a director in accordance with section 151 [Qualifications of directors]; or Dies; or Otherwise vacates office in accordance with this constitution. (See section 157(1) [Director ceasing to hold office]) Resignation (2) A director may resign office by signing a written notice of resignation and delivering it to the address for service of the company. The notice is effective when it is received at that address or at a later time specified in the notice. (See section 157(2)) Remains liable (3) Notwithstanding the vacation of office, a person who held office as a director remains liable under the provisions of the Act which impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director. (See section 157(3)) 15.2 Notice of change of directors The board must ensure that, within 20 working days of a change in the directors, or in their residential address, or of the company first becoming aware of the change, notice of the change in the prescribed form is received by the Registrar. (Refer to section 159 [Notice of change of directors]) 16. ADDITIONAL DIRECTORS 16.1 Vary number of directors The company may by special resolution increase or reduce the number of directors. 28 Constitution of Trinity Lands Limited May be cancelled (1) Any appointment so made may be cancelled at any time by the appointor and any appointment or cancellation under this clause must be effected by notice in writing to be delivered to the company. Proxy (2) Any director or alternate director may attend and vote by proxy at any meeting of the directors, provided that the proxy is a director or alternate director and has been appointed in writing under the hand of the appointer. Particular meetings only except with consent (3) Every such appointment must be for a particular meeting or meetings but with the consent of the board may be general. 17. PROCEEDINGS OF BOARD OF DIRECTORS (See third schedule) 17.1 Chairperson (1) The directors may elect one of their number as chairperson of the board. The chairperson shall be elected annually at the end of the annual general meeting or at any other time that the board may appoint such person. (2) The director elected as chairperson holds that office until he or she dies or resigns or the directors elect a chairperson in his or her place (3) if no chairperson is elected or if, at any meeting of the board, the chairperson is not present within 5 minutes after the time appointed for the commencement of the meeting, the directors present may choose one of their number to be chairperson of the meeting. 17.2 Notice of meeting (1) A director or, if requested by a director to do so, an employee of the company, may convene a meeting of the board by giving notice in accordance with this clause. (2) Not less than Sworking days? notice of a meeting of the board must be sent to every director who is in New Zealand, and the notice must include the date, time, and place of the meeting and the matters to be discussed. (3) An irregularity in the notice of a meeting is waived if all directors entitled to receive notice of the meeting attend the meeting without protest as to the irregularity or if all directors entitled to receive notice of the meeting agree to the waiver. 17.3 Methods of holding meetings A meeting of the board may be held either By a number of the directors, who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or at any director's option By means of audio, or audio and visual, communication by which all directors participating and constituting a quorum, can simultaneously hear each other throughout the meeting. 29 Constitution of Trinity Lands Limited 17.4 Quorum (1) A quorum for a meeting of the board is the number specified in the schedule in pan1. (2) No business may be transacted at a meeting of directors if a quorum is not present. 17.5 Voting (1) Every director has one vote. No casting vote (2) The chairperson does not have a casting vote. Majority vote (3) A resolution of the board is passed if it is agreed to by all directors present without dissent or if a majority of the votes cast on it are in favour of it. May abstain (4) Clause 5(4) of the third schedule does not apply. (to) A director present at a meeting of the board may abstain from voting. An abstaining director is not presumed to have agreed to, and to have voted in favour of, a resolution of the board. 17.6 Minutes The board must ensure that minutes are kept of all proceedings of the board. 17.? Unanimous resolution (1) A resolution in writing, signed or assented to by all directors then entitled to receive notice of a board meeting, is as valid and effective as if it had been passed at a meeting of the board duly convened and held. (2) Any such resolution may consist of several documents (including facsimile or other similar means of communication) in like form each signed or assented to by one or more directors. (3) A copy of any such resolution must be entered in the minute book of board proceedings. 17.8 Mediation or arbitration - Resolve (1) If any shareholder or director considers that it has been dealt with unfairly or inappropriately it may refer the matter to resolve (the Christian Service for Dispute Resolution Inc) for conciliation (by mediation and/or arbitration). Similarly, if the Company considers the relationship between it and any shareholder or director needs external intervention for resolution, it can refer such matters to resolve. (2) If the matter needs to proceed to arbitration with resolve, all parties agree that the decision of the arbitrator shall be binding on all parties and shall not be the subject to appeal to the High Court. Unless agreed otherwise with the conciliator at the time of the dispute, or in the event of a determination as to costs in the Award, each party will equally share the costs of that process. 17.9 Other proceedings Except as provided in this clause 19 [Proceedings of board of directors], the board may regulate its own procedure. 30 Constitution of Trinity Lands Limited 18. MANAGING DIRECTOR 18.1 Appointment (1) The board may from time to time appoint one or more of their body to the office of managing director for such period and on such terms as the board thinks fit, and subject to the terms of any agreement entered into in any particular case, may revoke any such appointment. (2) Termination The appointment of a director so appointed is automatically determined if he or she ceases from any cause to be a director. 18.2 Powers Subject to section 130 [Delegation of powers], the board may entrust to and confer upon a managing director any of the powers exercisable by the board upon such terms and conditions and with such restrictions as the board may think fit, and either collaterally with or to the exclusion of the board's powers and may from time to time revoke, withdraw, alter, or vary all or any of those powers. 18.3 Remedy damages only (1) The board may agree on behalf of the company with anyone who is or is about to become a managing director as to the length and terms of the managing director's employment, on the basis that the remedy of that person for any breach of the agreement wilt be in damages only. (2) The managing director does not have a right or claim to continue in office as managing director contrary to the will of the board. 19. INDEMNITY, INSURANCE, AND REMUNERATION 19.1 Indemnity and insurance (1) Except as provided in this clause, the company must not indemnify, or directly or indirectly effect insurance for, a director or employee of the company or a related company in respect of - Liability for any act or omission in his or her capacity as a director or employee; or Costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability. (See section 162(1) [indemnity and insurance]) (2) An indemnity given in breach of this clause is void. (See section 162(2)) Indemnify a director or employee for costs where acquittal or discontinuance (3) The company may indemnify a director or employee of the company or a related company for any costs incurred by him or her in any proceeding - That relates to liability for any act or omission in his or her capacity as a director or employee; and 31 Constitution of Trinity Lands Limited In which judgment is given in his or her favour, or in which he or she is acquitted, or which is discontinued. (See section 162(3)) Indemnity a director or employee for liability other than to company or related company (4) The company may indemnify a director or employee of the company or a related company in respect of Liability to any person other than the company or a related company for any act or omission in his or her capacity as a director or employee; or Costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability,? not being criminal liability or liability in respect of a breach, in the case of a director, of the duty specified in clauses 14.1 [Duty to act in good faith and in best interests of company] to 14.3 or, in the case of an employee, of any fiduciary duty owed to the company or related company. (See section 162(4)) Insurance for a director or employee (5) The company may, with the prior approval of the board, effect insurance for a director or employee of the company or a related company in respect of Liability, not being criminal liability, for any act or omission in his or her capacity as a director or employee; or Costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability; or Costs incurred by that director or employee in defending any criminal proceedings - That have been brought against the director or employee in relation to any act or omission in his or her capacity as a director or employee; and (ii) In which he or she is acquitted. (See section 162(5)) Directors' certificate (6) The directors who vote in favour of authorisation of insurance under sub clause (5) must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the company. (See section 162(6)) Interests register (7) The board must ensure that particulars of any indemnity given to, or insurance effected for, any director or employee of the company or related company, are forthwith entered in the interests register. (See section 162(7)) Definitions (8) The definitions of "director", "effect insurance", "employee", and "indemnify" are in section 162(9). (See section 162(9)) 32 Constitution of Trinity Lands Limited 19.2 Remuneration and other benefits of directors (1) The board, subject to the provisions of clause 2 of this Constitution and to the approval by ordinary resolution, may authorise the payment of remuneration or the provision of other benefits by the company to a director for services as a director or in any other capacity, and if the board is satisfied that to do so is fair to the company. (See section 161 (1) [Remuneration and other benefits]) (2) No director shall be present or have any voting rights when his or her remuneration under clause 2.5.1 is determined. Interests register (3) The board must ensure that forthwith after authorising the making of the payment, or the provision of the benefit, or the making of the loan, or the giving of the guarantee, or the entering into of the contract, as the case may be, particulars of the payment, or benefit, or loan, or guarantee, or contract are entered in the interests register. (See section 161(2)) Directors' certificate (4) Directors who vote in favour of authorising a payment or benefit under sub clause (1) must sign a certificate stating that, in their opinion, the making of the payment, or the provision of the benefit is fair to the company, and the grounds for that opinion. (See section 161(4)) PART 7. ADMINISTRATION 20. AUTHORITY TO BIND COMPANY 20.1 Method of contracting (1) A contract or other enforceable obligation may be entered into by the company as follows Deeds An obligation which, if entered into by a natural person, would, by law, be required to be by deed, may be entered into on behalf of the company in writing signed under the name of the company by Two or more directors of the company; or (ii) If there is only one director, by that director whose signature must be witnessed; or If this constitution elsewhere so provides, a director or other person or class of persons whose signature or signatures must be witnessed; or (iv) One or more attorneys appointed by the company in accordance with section 181 [Attorneys]. (See section 180(1) [Method of contracting]) If writing required An obligation which, if entered into by a natural person, is by law, required to be in writing, may be entered into on behalf of the company in writing by a person acting under the company?s express or implied authority. (See section 180(1) 33 Constitution of Trinity Lands Limited If writing not required An obligation which, if entered into by a natural person, is not, by law, required to be in writing, may be entered into on behalf of the company in writing or orally by a person acting under the company?s express or implied authority. (See section 180(1) Common seal (2) The company may, in addition to complying with sub clause (1), affix its common seal, if it has one, to the contract or document containing the enforceable obligation. (See section Also applies outside New Zealand (3) Sub clause (1) applies to a contractor other obligation Whether or not the obligation was entered into in New Zealand; and Whether or not the law governing the contract or obligation is the law of New Zealand. (See section 180(2) 21 . ACCOUNTS 21.1 Accounting records to be kept (1) The board must cause accounting records to be kept that Correctly record and explain the transactions of the company; and Will at any time enable the financial position of the company to be determined with reasonable accuracy; and Will enable the directors to ensure that the financial statements of the company comply with section 10 [Obligation to prepare financial statements] of the Financial Reporting Act 1993 and any group financial statements comply with section 13 [Obligation to prepare group financial statements] of that Act; and Will enable the financial statements of the company to be readily and properly audited. (See section 194(1) [Accounting records to be kept]) Contents of records (2) Without limiting sub clause (1 the accounting records must contain Entries of money received and spent each day and the matters to which it relates: A record of the assets and liabilities of the company: If the company's business involves dealing in goods - A record of goods bought and sold, except goods sold for cash in the ordinary course of carrying on a retail business, that identifies both the goods and buyers and sellers and relevant invoices. (ii) A record of stock held at the end of the financial year together with records of any stocktaking?s during the year. if the company?s business involves providing services, a record of the services provided and the relevant invoices. (See section 194(2)) 34 Constitution of Trinity Lands Limited In English or convertible into English (3) The accounting services must be kept In written form and in English: or In a form and manner in which they are easily accessible and convertible into written form in English. (See section 194(3)) 21.2 Annual report (1) Subject to sub clause (2), the board must, within 6 months after the balance date of the company, prepare an annual report on the affairs of the company during the accounting period ending on that date. (2) If clause applies, the board must, within 9 months after the balance date of the company, prepare an annual report on the affairs of the company during the accounting period ending on that date. (See section 208 [Obligation to prepare annual report]) 21.3 Annual report to shareholders (1) The board must cause a copy of the annual report to be sent to every shareholder not less than 10 working days before the date fixed for holding the annual meeting of shareholders. (See section 209(1) [Sending of annual report to shareholders]) Where not required (2) The board is not required to send an annual report to a shareholder if - The shareholder has given notice in writing to the company waiving the right to be sent a copy of that annual report or copies of annual reports generally; and The shareholder has not revoked that notice; and A copy of the report is available for inspection by the shareholders in the manner prescribed by clause 22.3 [Manner of inspection]. (See section 209(2)) 21.4 Financial statements to shareholders who elect not to receive annual report If a shareholder elects not to receive a copy of the annual report, then the board must comply with section 210 [Sending of financial statements to shareholders who elect not to receive annual report]. (Refer to section 210) 21.5 Shareholders may elect not to receive documents Subject to section 210 [Sending of financial statements to shareholders who elect not to receive annual report], a shareholder may elect, by written notice to the company, to waive the right to receive all or any documents from the company. The shareholder may revoke the waiver in the same manner. While the waiver is in effect, the company need not send to the shareholder the documents to which the waiver relates. (See section 212 [Shareholders may elect not to receive documents]) 35 Constitution of Trinity Lands Limited 22. INSPECTION OF COMPANY RECORDS 22.1 Public inspection of company records The company must keep the following records available for inspection in the manner prescribed in clause 22.3 [Manner of inspection] by a person who serves written notice of intention to inspect on the company: The certificate of incorporation or registration: This constitution: The share register: The fuli names and residential addresses of the directors: The registered office and address for service of the company. (See section 215 [Public inspection of company records]) 22.2 Inspection of company records by shareholders The company must keep the following records available for inspection in the manner prescribed by clause 22.3 [Manner of inspection] by a shareholder of the company, or by a person authorised in writing by a shareholder for the purpose, who serves written notice of intention to inspect on the company: Minutes of all meetings and resolutions of shareholders: Copies of all written communications to all shareholders or to all holders of a class of shares during the preceding 10 years, including annual reports, financial statements, and group financial statements: Certificates given by directors under the Act: The interests register. (See section 216 [Inspection of company records by shareholders]) 22.3 Manner of inspection (1) Documents which may be inspected under clauses 21.1 or 22.2 must be available for inspection at the place at which the company's records are kept between 9.00 am and 5.00 pm on each working day during the inspection period. (See section 217(1) [Manner of inspection]) Inspection period (2) "Inspection period" means the period commencing on the third working day after the day on which notice of intention to inspect is served on the company by the person or shareholder concerned and ending with the eighth working day after the day of service. (See section 217(2)) 22.4 Copies of documents A person may require a copy of, or extract from, a document which is available for inspection by him or her under clause 22.1 [Public inspection of company records] or clause 22.2 [inspection of company records by shareholders] to be sent to him or her - Within 10 working days after he or she has made a request in writing for the copy or extract; and If he or she has paid a reasonable copying and administration fee prescribed by the company. (See section 218 [Copies of documents]) 36 Constitution of Trinity Lands Limited 22.5 Information for shareholders Subject to the restrictions contained in section 178, a shareholder may at any time make a written request for information held by the company. (Refer to section 178 [Information for shareholders]) 22.6 (1) (2) Inspection of records by directors Subject to sub clause (2), every director is entitled, on giving reasonable notice, to inspect the records of the company - In written form; and Without charge; and (0) At a reasonable time specified by the director. The Court may, on the application by the company, if it is satisfied that - It would not be in the company's interests for a director to inspect the records; or The proposed inspection is for a purpose that is not properly connected with the director's duties,- Direct that the records need not be made available for inspection or limit the inspection of them in any manner it thinks fit. (See section 191 [Inspection of records by directors]) 22.7 (1) Company records Subject to sub clause (3), the company must keep the following documents at its registered office: This constitution: Minutes of all meetings and resolutions of shareholders within the last 7 years: An interest?s register: Minutes of all meetings and resolutions of directors and directors? committees within the last 7 years: Certificates given by directors under the Act within the last 7 years: The full names and addresses of the current directors: (9) Copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports made under clause 21.2 [Annual report]. Copies of all financial statements and group financial statements required to be completed by the Act or the Financial Reporting Act 1993 for the fast 7 completed accounting periods of the company: The accounting records required by clause 21.1[Accounting records to be kept] for the current accounting period and for the last 7 completed accounting periods of the company: The share register. (See section 189(1) [Company records]) (2) The references in paragraphs and of sub clause (1) to 7 years and the references in paragraphs and of that sub clause to 7 completed accounting periods include such lesser periods as the Registrar may approve by notice in writing to the company. (See section 189(2)) 37 Constitution of Trinity Lands Limited Notice to Registrar (3) The records referred to in paragraphs to of sub clause (1) may be kept at a place in New Zealand, notice of which is given to the Registrar in accordance with sub clause (4). (See section 189(3)) (4) If any records are not kept at the registered office of the company, or the place at which they are kept is changed, the company must ensure that within 10 working days of their first being kept elsewhere or moved, as the case may be, notice is given to the Registrar for registration of the places where the records are kept. (See section 189(4)) 23. AUDIT 23.1 When auditors required The company must, at each annual meeting, appoint an auditor to - Hold office from the conclusion of the meeting until the conclusion of the next annual meeting; and Audit the financial statements of the company and, if the company is required to complete group annual statements, those group annual statements, for the accounting period next after the meeting. (See section 196(1) [Appointment of auditors]) 24. NOTICES 24.1 Service Documents may be served in accordance with the following sections of the Act - 387 [Service of documents on companies in legal proceedings] 388 [Service of other documents on companies] (0) 391 [Service of documents on shareholders and creditors] 24.2 Joint holders A notice may be given by the company to the joint holders of a share by giving the notice to the joint holder first named in the register of shareholders in respect of the share. 24.3 Mentally disordered or protected person, deceased or bankrupt estate A notice may be given by the company to the persons who are entitled to a share in consequence of the mental disorder, protection order, death, or bankruptcy of a shareholder by sending it through the post in a prepaid letter addressed to them by name, or by the title of the manager, protection attorney, representatives of the deceased, or assignee of the bankrupt, or by any like description At the address, if any, supplied for the purpose by the persons claiming to be en??ed;or Until such an address has been supplied, by giving the notice in any manner in which the notice might have been given if the mentai disorder, death, or bankruptcy had not occurred. 38 Constitution of Trinity Lands Limited 24.4 Notice of meeting Notice of every meeting must be given to (1) (2) (C) Every shareholder except those shareholders who (having no registered address within New Zealand) have not supplied to the company an address within New Zealand for the giving of notices to them; and Every person upon whom the ownership of a share devolves by reason of his or her being a legal personal representative or an assignee in bankruptcy of a shareholder where the shareholder but for his or her death or bankruptcy would be entitled to receive notice of the meeting; and The auditor (if any) for the time being of the company. No other person is entitled to receive notices of meetings. 24.5 Service on director or shareholder The company may serve a notice upon any director or shareholder either: personally; or by posting it by fast post in a prepaid envelope or package addressed to that director or shareholder at that person?s last known address; or by delivery to a document exchange; or by facsimile to the facsimile telephone number of that director or shareholder. 24.6 Time of service by facsimile or by electronic means A notice served by facsimile or by electronic means is deemed to be served on the day after completion of transmission. 24.7 Time of service by post A notice which is sent by post or delivered to a document exchange is deemed to be served: 24.8 (1) 25. 25.1 (1) on a person whose last known address is in New Zealand, at the expiry of 48 hours after the envelope or package which contained it was posted or delivered in New Zealand; and on a person whose last known address is outside New Zealand, at the expiry of 7 days after the envelope or package which contained it was posted by fast post in New Zealand. Proof of service To prove service by post or delivery to a document exchange it is sufficient to prove that the envelope or package which contained the notice was properly addressed and posted or delivered with all attached postal or delivery charges paid. To prove service by facsimile, it is sufficient to prove that the document was properly addressed and sent by facsimile. ADDRESS FOR SERVICE Address for service The company must have an address for service in New Zealand. The address for service may be the company?s registered office or another place. but it must not be at a postal centre or document exchange. 39 Constitution of Trinity Lands Limited (3) (4) A company?s address for service at any particular time is the address that is described as its address for service in the New Zealand register at that time. The description of the address for service must state that it is at the registered office of the company, or if it is at another place, must - State the address of that place; and if the address for service is at the offices of any firm of chartered accountants, barristers and solicitors, or any other person, state That the address for service of the company is at the offices of that firm or person; and (ii) Particulars of the location in any building of those offices; or If the address for service is not at the offices of any such firm or person but is located in a building occupied by persons other than the company, state particulars of its location in the building. (See section 192 [Address for service]) 25.2 (2) (3) Change of address for service Subject as provided elsewhere in this constitution, the board may change the address for service at any time. Notice in the prescribed form of the change must be given to the Registrar for registration. A change of address for service takes effect on a date stated in the notice, not being a date that is earlier than 5 working days after the notice is registered. (See section 193 [Change of address for service]) 25.3 No address supplied if a shareholder has no registered address, and if the shareholder has not supplied to the company an address for the giving of notices to him or her 26. 26.1 (2) The shareholder is not entitled to have any notices sent to him or her from the company; and The company's registered office is deemed to be the registered address for the shareholder for all purposes; and All proceedings which are taken without notice to that shareholder are as valid as if he or she had due notice. SECRETS OF COMPANY Shareholders not entitled No shareholder is entitled to require or receive any information concerning the company?s business, trading, or customers, or any trade secret or secret process of or used by the company, beyond such information as to the accounts and businesses of the company as is by this constitution or by statute directed to be disclosed to shareholders. No shareholder is entitled to inspection of any of the books, papers, correspondence, or documents of the company, except so far as such inspection is expressly authorised by statute. 4O Constitution of Trinity Lands Limited 26.2 Use of company information (1) A director who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or use or act on the information, except Forthe purposes of the company; or As required by law; or In accordance with sub clause (2) or sub clause or In complying with clause 15.3 [Disclosure of interest]. (See section 145(1) [Use of company information]) (2) Disclosure permitted A director may, unless prohibited by the board, disclose information to A person whose interests the director represents; or A person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director?s powers and duties and, if the director discloses the information, the name of the person to whom it is disclosed must be entered in the interests register. (See section 145(2)) (3) Requirements for disclosure A director may disclose, make use of or act on the information if Particulars of the disclosure, use, or the act in question are entered in the interests register; and The director is first authorised to do so by the board; and The disclosure, use, or act in question will not, or will not be likely to, prejudice the company. (See section 145(3)) 27. SECRETARY 27.1 Appointment and removal (1) A secretary may be appointed by the board for the term, at the remuneration, and upon the conditions which it thinks fit. (2) Any secretary so appointed may be removed by the board. 28. LIQUIDATION 28.1 Surplus assets When the company is liquidated the surplus assets must be distributed in accordance with clause 2.8. 41 Constitution of Trinity Lands Limited 29. REMOVAL FROM NEW ZEALAND REGISTER 29.1 Request for removal Those shareholders entitled to vote and voting on the question by special resolution may, in the prescribed form, apply to the Registrar to remove the company from the New Zealand Register on the grounds - That the company has ceased to carry on business, has discharged in full its liabilities to all its known creditors, and has distributed its surplus assets in accordance with this constitution and the Act; or That the company has no surplus assets after paying its debts in full or in part, and no creditor has applied to the Court under section 241 [Commencement of liquidation] for an order putting the company into liquidation. (Refer to sections 318(1)(d)(i) and 318(2) CERTIFICATION OF CONSTITUTION The undersigned applicants for registration hereby certify that the above document is the constitution of: Trinity Lands Limited Signatu of applicant. Full name of applicant. Date: V?s-?naps b/Loi?i j/f/U Mm?tg iw CF-203 v.1 28 Copyright71301994, 1997 1998 1999 Avon Publishing Ltd. Auckland 42 Appendix 2 Financial Review Entity Accounting Tier Charity Number Investigator Date of Report io n Ac t1 98 2 Trinity Lands Limited 2 CC46720 Hayley Muong, Senior Investigator 19 October 2018 at 1. Purpose of Review In 2015 Charities Services received a complaint with concerns about financial wrongdoing identified through the information submitted by Trinity Lands Limited (Trinity Lands) in their financial statements between the financial years 2012 and 2015. 1.2. The complainant expressed concerns over: fo rm 1.1. The purpose of this financial review is to undertake a full financial analysis on the financial statements of Trinity Lands submitted to Charities Services as part of the Trinity Lands’ annual returns. The review was conducted on the annual returns and financial statements supplied to Charities Services by Trinity Lands for the period discussed in the complaint being 2012 to 2015. The financial statements provided were prepared under the previous reporting standards, which did not give the most comprehensive breakdown of financial information. se d 2.1. un de 2. Review Process rt he 1.3. O ffi ci al In 1. Rapid growth in Trinity Lands’ assets 2. Trinity Lands is distributing less than a third of its profits to charity. 3. Trinity Lands related party transaction notes show significant transaction with Directors and Executives. 4. Related Charities Aroha- Nui Charitable Trust (Aroha-Nui) and The Stockbridge Trust (Stockbridge) are providing unsecured loans at below market rates and investments in related companies. Our review scope included the 2016 and 2017 financial statements; these statements have been prepared in accordance with current Public Benefit Entity International Public Sector Accounting Standards (PBE IPSAS) issued by the External Reporting Board (XRB). Correspondingly, they provide a more detailed breakdown of financial information which also provide further context to the previous financial statements. R el ea 2.2. 2.3. In order to get a clear picture of the purpose of the Trinity Lands the registration application including supporting documentation and any open source information i.e. Companies register was reviewed when required. 2.4. The annual returns submitted by both associated charities Aroha-Nui and Stockbridge were also reviewed. 2.5. The review entailed: 0 Analysis of financial statements to determine if there is any merit in the concerns expressed by the complainant. This analysis was conducted in conjunction with Charities Services? Senior Accountant, Jamie Cattell. A full check of the financial statements to identify any other anomalies or areas of concern over and above the concerns already outlined, including identifying whether the ?nancial statements appear reasonable considering the size and activities of the charity. 0 Assessment of Trinity Lands? financial statements for obvious indicators of non- compliance with PBE IPSAS. 3. Review Findings Issue 1- Asset Growth 3.1. The company has seen rapid profit in growth of assets, including owning extensive hectares of lands previously owned by the trusts. Findings on asset growth 3.2. Trinity Lands Limited was registered as a company on 20 April 2011. The shareholders are Lichfield Lands Incorporated (CC33759), Longview Trust Board (CC35438) and Hillview Trust (CC27344) (the three Trusts). Company Summary Addresses Dirm [ms (1 Slmroholdinqs (3) Our urnonls PPSR Slum [(lldl of Shares Shareholding N0 Shareholders Ill alum Allm alum 5674 shares (47.28%) Lichfield Lands lncorporated 419 Paraonur Road. Rd l, Tokoroa, 349] New Zealand Allocation 2 4485 shares (37.38%) Longview Trust '22 Pukelaha Road, Rd I, Hamilton, 328] New Zealand Allmalmn 3. 184] shares (15.34%) Trust 790 Manawaru Road, Rd l, Te Aloha, 339] New Zealand 3.3. On registration in June 2011 Trinity Lands advised that the purpose of establishing Trinity Lands was for managing the farms, orchards and forests of the three Trusts. (see above) 3.4. It was agreed that upon establishment of the Company that the three Trusts would transfer their assets into the new company in exchange for a proportionate shareholding. The three trusts would appoint directors to represent them on the new board which would be in charge of distributing the profits back to the three trusts to be distributed. 3.5. This table below shows the assets as reflected in Trinity Lands? financial statementsPage 2 of 12 Total Assets $161,034,535 $183,844,235 $253,583,727 $261,375,047 $277,819,979 $339,379,513 Growth in $22,809,700 $69,739,492 $51,900,181 $16,444,932 $61,559,534 Assets Total $60,904,236 $63,512,195 $87,253,204 $86,957,441 $104,102,847 $116,579,175 Liabilities Growth in $2,607,959 $23,741,009 ?$295,763 $17,145,406 $12,476,328 Liabilities Revaluation $18,457,721 $38,423,130 $10,321,699 $4,217,804 $39,501,963 3.6. 3.7. 3.8. 3.9. 3.10. Trinity lands? ?rst annual return was for the year ended 31/05/2012; no asset information is available prior to this date. The financial statements show a clear pattern of growth in Trinity Lands? total assets. In the year that Trinity Lands was established they acquired $161m of assets from the pre-existing trusts and continued to signi?cantly increase their assets on a yearly basis thereafter. It is however clear from the ?nancial statements that the main source of the increase in assets is that the assets are carried at market value and have been subject to significant upward revaluations in each year. As the company holds significant ?nancial assets and large amounts of land such revaluations would be expected. It can also be seen that the remaining portion of the increase in value has been driven by the company taking on further debt from BNZ to fund asset purchases. The purchases made are consistent with capital commitments described below. Further, as the primary source of debt in this case was a reputable financial institution drawn at market rates, we do not consider this to present any further concerns. As outlined in the ?commitments? in Trinity Lands financial statement notes below they continue to increase their assets through the purchase of property, equipment, inventory and G3 Kiwifruit licences. FY Commitments 2012 The company has committed itself to the purchase of a farm of $8.1 million on 01 June 2012, and carbon credits for $255,000 on 21 April 2013 2013 The company has committed itself to the purchase of 3 farms for $19.5 million on 19 July 2013. 2014 The company has committed itself to the purchase of $59.37Ha of G3 Kiwifruit licences over the next 4 years. 2015 The company has committed itself to the purchase of 59.37ha of G3 Kiwifruit licences over the next 3 years, to purchase a herd of cows for $1,297,614, to purchase a 9ha orchard for $3,690,000, to purchase an atom sprayer machine and for $172,500 and to pay uncalled Capital Pioneer investments of $254,197. 2016 The company has the commitments to purchase 2.73 canopy ha kiwifruit orchard at 124 Walker Road, East, to purchase Goldwood orchard at Athenree Industry shares, to pay uncalled capital to Pioneer Investments and to pay off 59.37ha of G3 kiwifruit licences over the next 3 years. 2017 The company has the commitments to purchase property at 250 Omokoroa Road, Omokoroa and to pay uncalled capital to Pioneer Investments. The follow through of these commitments is clearly reflected through the increase in Intangible Assets (Zespri G3 Licences) which has increased from $509k in 2016 to $5.3k in 2017 and property, plant and equipment cost value increases from $214m in 2015 to $269m in 2017. Conclusions Page 3 of 12 3.11. 3.12. 3.13. 3.14. Trinity Lands was set up to take over the assets of the three existing shareholding trusts (Lich?eld Lands Incorporated, Longview Trust Board and Hillview Trust). It was outlined at the time of registration that Trinity Lands were to receive assets from the three trusts in exchange for shares in Trinity Lands. It is clear from the financial statements that while there has been significant asset growth since establishment in 2012, the bulk of this relates to revaluations to market rates and the initial asset transfer of $161m. The remaining increase in assets appears to be due to purchase of property, plant and equipment, inventory and G3 Kiwifruit licences funded by market debt. These purchases appear to have been made for the purpose of providing pro?ts back to the three original Trusts through dividends. Recommendations Based on the analysis of the financial statements above we do not consider there to be any risk in relation to asset growth requiring further work at this stage. Issue 2- Charitable Donations 3.15. 3.16. 3.17. The Trust is distributing less than a third of its funds for its charitable purpose. Findings on charitable donations During registration it was outlined that the purpose of establishing Trinity Lands was that the three trusts would transfer their assets into the new company in exchange for a proportionate shareholding and that the shareholding Trusts appoint Directors to represent them on the new Board. The Board would be in charge of distributing the pro?ts back to the shareholding Trusts for them to focus their attention on distributing the funds effectively. The tables below show the amount of dividends paid by Trinity Lands to the Trusts and the donations made directly by Trinity Lands. Dividends paid 2013 $2,000,000 2014 $2,250,000 2015 $3,000,000 2016 $2,250,000 2017 $3,000,000 Donations $102,122 $126,379 $398,507 *summarised statements provided for the 2013 and 2014 annual returns do not provide a detailed breakdown which included donations. Donations to the community 2015 I 2016 2017 Transform Aotearoa $93,200 $96,600 $127,200 Local Schools - $24,000 $12,870 Westpac Rescue Helicopter $2,174 $1,739 $2,174 BOP Rescue Helicopter - - $2,500 FVHS Stars programme $2,609 - - Surf Junior Rugby $2,804 - $1,739 Life Education Trust - $2,000 $1,000 Maketu Fire Brigade - $1,000 - Putaruru Fire Brigade $3,000 St Johns Ambulance $186,000 Good Neighbour Trust- Truck $41,524 Good Neighbour Trust- Donation $10,000 Edgecumber Food Relief (via Eastpack) $10,000 Tokora A Assoc $500 $500 $500 Other $835 $540 - Page 4 of 12 3.18 3.19. 3.20. 3.21 3.22. 3.23. 3.24. $102,122 $126,379 $398,507 The dividends were received by three Trusts and distributed in accordance with their charitable purposes. As recorded in their 2016 and 2017 ?nancial statements, Lichfield lands? donations are made to support Christian camps and Christian organisations, to support people with their biblical studies, and to supplement income or fill time for retired Christian workers. Longview Trust Board?s donations are used for the development and support of Christian Leaders, Christian education, and promoting Christian values. Hillview Trust?s donations are made to promote the scriptures and gospel of Jesus, supporting the establishment of a local community centre. The figures from their financial statements are as follows: 2011 $1,414,440 $554,850 $177,109 2 145 399 2012 $937,710 $710,023 $135,327 1 783 050 2013 $1 034 000 $739 600 $221 286 $1 994 886 2014 $1 253 813 $722 455 $265 023 $2 241 291 2015 511 730 2016 679 859 2017 $1,488,400 $317,073 $1,805,473 *There was no financial information for Longview Trust Board as they deregistered in 2017. Conclusions It is clear from the financial statements that each year the charity is distributing the profits back to the shareholding Trusts for them to distribute the funds effectively. Trinity Lands are also making charitable donations and the recipients all appear to be Charities with independent charitable purposes. The Charites Act 2005 (the Act) does not stipulate how a charity is to distribute their funds for charitable purposes nor does Trinity Lands? trust deeds stipulate an amount or percentage that the charity must distribute for charitable purposes. Recommendations There is no legislative requirement in relation to the amount of charitable funds that need to be distributed in any financial year. To the extent the charity is acting to advance its charitable purpose and are genuinely donating funds of any amount to other Charities we have no grounds to take any action. I_ssue 3- Officer related associations and remuneration 3.25. 3.26. Trinity Lands officers are allegedly receiving significant amounts of remuneration and are associated with numerous non charitable companies with financial links to associated trusts. Findings officer related associations and remuneration Related party transactions are detailed in the notes to the financial statements. I Related Party Transactions 2012 The Directors and Executives are involved in organisation which transacted with the company on normal commercial term amounting to $2.4 million worth of business. Page 5 of 12 3.27 3.28 3.29 3.30. 3.31 2013 The Directors and Executives are involved in organisation which transacted with the company on normal commercial term amounting to $645,000 worth of business. 2014 The Directors and Executives are involved in organisation which transacted with the company on normal commercial terms amounting to $980,718 worth of business. 2015 The Directors and Executives are involved in organisation which transacted with the company on normal commercial terms amounting to $172,486 worth of business and $5,445,000 for the sale of a farm. . The above information shows the related party transactions being conducted with organisations associated to the Directors. . The 2012-2015 Financial statements do not provide any further breakdowns on remuneration for its officers or directors. . A review of the 2016 financial statements show that Trinity Lands classifies its key management personnel into one of 2 classes - Members of the Board of Directors - Chief operating of?cer (CEO or MD), responsible for reporting to the Board of Directors and senior executive of?cers, responsible for operation on the company?s operating segments and reporting to the chief operating of?cer During the 2015-2017 years the directors appointed by the shareholders were paid no annual directors fees, nor any honoraria. The Independent Director was able to direct $20,000 of funds in gifts to two charities, but received no personal benefit. The chief operating officer and senior executive officers are contractors. . The aggregate level remuneration paid and number of persons (measured in ?people?) for the board of Directors, for senior executive of?ces and chief operating officer in each class of key management personnel is presented below: I No. of people 2017 2016 2015 Directors: Remuneration Shareholder 11 representatives Independent 1 $20,000 Executive: Remuneration 4 $648,839 $564,302 $530,118 Conclusions 3.32. The review of 2012-2015 financial statements identified that there was no direct breakdown of salaries received by the Directors or Executives. 3.33. The review of the 2015 to 2017 Financial Statements did however provide a comprehensive breakdown of Director and Executive remuneration, the highest of which being an average of $162,000 in 2017. Entities are able to pay their staff salaries that they see fit to the extent they are materially consistent with a market rate. For a company of this size these amounts do not appear excessive. Page 6 of 12 3.34. Trinity Lands have endeavoured to be transparent in reporting its related party transactions which were recorded in the notes in the 2012 to 2015 with more comprehensive breakdowns being provided in the statements for 2016 and 2017. All related party transactions were stated to have been on ordinary commercial terms. Based on the information provided we have no reason to conclude that this may not be the case. 98 2 Recommendations 3.35. No concerns over amounts paid to the executive at this stage. No further action should be taken. Ac t1 3.36. No concerns over related party transactions at this stage. No further action should be taken. Issue 4- Related party investments and loans at io n 3.37. Aroha-Nui Trust (an incorporated charitable trust) and The Stockbridge Trust (an unincorporated trust) allegedly operated primarily to provide funding via loans and equity investments at below market rates to companies linked to their trustees. fo rm 3.38. At the time of the complaint the relevant trustees of Aroha-Nui trust were Ian Elliott, Bruce Elliott, Noel Houghton, and Alexander Baldwin. None of these are currently trustees of the trust with the last member being removed as of 25 June 2018. In 3.39. The trustees of the Stockbridge trust are Ian Elliott, Bruce Elliot, Margaret Elliott, and Marylynn Elliott. O ffi ci al Findings on related party investments and loans 3.40. Review of the 2010 to 2017 financial statements submitted for the Aroha-Nui and Stockbridge Trusts shows that both have long standing investments in South East Hort Ltd and Manna Farms LP. South-East Hort Limited he 3.41. South- East Hort Limited is a registered company with Bruce Elliott, Ian Elliott, Noel Houghton, Peter McBride and Nathan Smith as the directors. un de rt 3.42. The majority shareholders in the company are Bruce Elliott, Ian Elliott, Margaret Elliot, and Mary-lynn Elliot who collectively hold 33.87% of the outstanding shares in the company. It is not clear to what extent these shares represent an interest held on behalf of the Stockbridge trust. se d 3.43. An additional 24.87% of the shares are owned by Elliott Hort Limited, a company which also appears to be controlled by the aforementioned persons through significant shareholding by them and a third company, Southernby Farm Limited. 3.44. Aroha-Nui independently holds 10.41% of the outstanding shares in South-East Hort Limited. ea Manna Farms LLP R el 3.45. Manna Farms LLP is a limited partnership in which the listed general partner is Manna Farm Management Limited. The directors of Manna Farms Management Limited are Ian Elliott, Phillip Price and Robert Stantiall. 3.46. The majority shareholder in the company is Craigielea Farms Limited, a company in which Ian Elliott is also a significant shareholder. Along with three other shareholders Ian owns 99.99% of the shares. It is not clear to what proportion Ian holds independently. 3.47. A further 18.31% of the shares in Manna Farm Management Limited are owned by Bruce Elliott, Ian Elliott, Margaret Elliott, and Mary-Lynn Elliott. It is not clear to what extent these shares are held on behalf of the Stockbridge Trust. Page 7 of 12 3.48. Aroha-Nui independently holds a 4.26% shareholding in Manna Farm Management Limited. Extent of Investments in related parties and Returns 3.49. The investment balances and returns from the investments in South-East Hort and Manna Farms LLP from 2010 to 2017 per the ?nancial statements of the trusts have been summarised belowl. 30-Jun-17 30-Jun-16 30-Jun-15 Aroha-nui 30-Jun- 14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Investment - South East Hort Interest - South East Hort Return on Investment Investment - Manna Farm LLP Return - Manna Farm LLP Return on Investment Average 10, 290, 845 124,828 1% 1.413.245 18, 584 1% 13,909,851 0% 1.773.965 75,150 4% 14,832,594 0% 1.574.082 32,111 10,611,966 53,273 1% 1.457.727 13,714 1% 11,289,242 237,907 2% 1,543,470 79,739 5% 10,175,306 0% 1.362.313 15,364 1% 9,061,370 0% 1.181.157 4 2 1,770 7,947,434 148,434 4,499,000 559,006 2% 12% 1,000,000 - 0% 0% Stockbridge Average 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Investment - South East Hort . 2,719,208 3,854,014 3,852,600 2,402,244 2,462,799 2,308,533 2,154,266 2,000,000 - Interest - South East Hort 9,140 - - 12,064 51,918 - - - Return on Investment Investment - Manna Farm LLP 753,602 960,895 852,626 789,601 836,045 724,030 612,015 500,000 - Return - Manna - - Farm LLP 10,066 40,706 17,393 7,429 43,192 8,322 11,792 - Return on Investment 3.50. It can be seen from the above that the return over time in the trusts from their investments has moved consistently. In the ?nancial year ended 30 June 2010 Aroha-Nui received a return on its investment in South-East Hort of roughly 12%. 3.51. From 2011 onward both trusts received much lower returns of between 0% and 2% per annum. 3.52. Similarly both trusts have received low returns or generated losses on their shares in the Manna Farm LLP from 2011 to 2017. The average return across the time period for both trusts is 3.53. It can also be seen from the above that the value of the investments in each of the trusts has increased signi?cantly between 2010 and 2017. Further review of the ?nancial statements indicates that the primary cause of this is revaluation of the investments to market value. This is reflected in the movement in the investment revaluation reserves of each of the trusts. 1 For the 2012 and 2013 ?nancial years no Statement of Financial Position was provided. The investment balances in these years was extrapolated from the 2011 and 2014 investment balances in each of the trusts. Page 8 of 12 3.54. Between 2010 and 2017 the Aroha-Nui and Stockbridge trusts record total movement in these reserves of $10.64m and $1.6m respectively. This accounts for all of the increase in investment values in Aroha-Nui of $10.1m and most of the increase in Stockbridge of $2.3m. Given that these investments represent the majority of the assets of the trusts it is reasonable to assume that the movement in the reserve mainly relates to these investments. Other relevant information 3.55. The investment revaluation reserve indicates that investments are being carried at market value. Under the Tier 3 standard this is only permitted where an entity has elected to apply the relevant Tier 2 standards on financial instruments. As there is no indication that the trusts have done so, the financial statements submitted do not comply with relevant financial reporting standards. 3.56. An additional signi?cant investment was identified in the financial statements for each of the trusts in Montrose Partnership. Details of the value of this investment and returns are included belowz. Aroha-nui Average 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Investment - 6v Montrose - Partnership 537,769 1,773,826 880,161 322,263 472,243 3 286,440 193,538 5,658 Interest - Montrose - Partnership 236,844 1,230,383 240,657 58,335 17,787 130,058 119,775 199,196 15,227 Return on Investment 44% 69% 27% -18% 4% 34% 42% 103% -269% Stockbridge Average 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Investment? Montrose Partnership 167,605 491,475 196,288 69,094 103,057 83,479 62,236 - Interest - Montrose - Partnership 73,432 340,903 54,497 13,210 3,882 28,383 26,139 - - Return on Investment 44% 69% 28% 49% 4% 34% 42% 3.57. Montrose Partnership does not appear to be an entity registered in New Zealand as no records of the entity can be found on the companies or limited partnerships register. Therefore, while the investment appears to be very profitable, it is not clear as to the nature of this investment. 3.58. It is possible that this investment relates to Montrose Partners LLP, a private corporate finance entity based in London, UK. 3.59. In order to assess the extent to which the trusts operate for charitable purposes a summary of surpluses and distributions has been included below. Aroha-nui Average 30-Jun-17 30-Jun-16 30-] un-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Surplus 498,891 1,355,161 237,850 53,470 388,931 240,098 126,215 642,963 946,437 Distributions 318,809 1,355,159 226,376 53,470 277,000 130,882 38,771 228,237 240,579 2 For the 2012 and 2013 ?nancial years no Statement of Financial Position was provided. The investment balances in these years was extrapolated from the 2011 and 2014 investment balances in each of the trusts. Page 9 of 12 Return on Investment 64% 100% 95% 100% 71% 55% 31% 35% 25% Stockbridge Average 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 30-Jun-10 Surplus 135,230 405,574 61,843 39,985 134,828 62,837 48,154 152,791 175,827 Distributions 37,150 67,949 52,066 39,985 25,979 6,400 800 44, 170 59,850 Return on Investment 27% 17% 84% 100% 19% 10% 2% 29% 34% 3.60. It can be seen from the summary above that both of the trusts are distributing a substantial proportion of their surpluses in each year with both distributing all their surpluses in 2015. It is not clear from the financial statement which entities are receiving distributions. 3.61. Per the 2017 financial statements, the distributions are being made to 43 different donee organisations across the trusts. It is stated that the organisations receiving distributions provide financial support to Christian people and organisations who care for youth, prisoners and their families, those without regular income, and those who need housing finance. They also distribute to organisations that support Christian education. 3.62. Review of the expenses reported in the ?nancial statements of each trust does reveals that there have not been any significant transactions with related parties beyond the investments. Conclusions 3.63. While both trusts have signi?cant investments in related entities which have grown in value over time, it does not appear that they are investing further resources in these entities. Rather, the increase in the investments reflects an increase in the market value of the investments. 3.64. The investments have generated low returns between 2011 and 2017, however this would be considered reasonable in the context of the PSA Kiwifruit vine disease which affected the kiwifruit industry in NZ beginning in 2010. It is not likely these investments would be considered inappropriate given that it does not appear further investment was made during the period of low returns. 3.65. The financial statements do not comply with relevant financial reporting standards as the revaluation of investments has not been performed and disclosed in accordance with the applicable Tier 2 standard. 3.66. The trusts carry signi?cant investments in Montrose Partnership and the nature of this investment and the relationship of this entity to the trusts is unclear. The investment appears to be generating significant returns to the trusts. 3.67. The trusts are making substantial distributions to a wide range of organisations on a regular basis with these distributions often representing a significant percentage of surpluses generated in each financial year. It does not appear from the ?nancial statements that a primary purpose of the trusts is to invest in related entities without making distributions. Recommendations 3.68. The investments in related entities do not appear to be of signi?cant concern at this stage. No further work needs to be performed in relation to these investments. 3.69. The entity should be notified of non-compliance with financial reporting standards and directed to correct for this in future ?nancial statements. 3.70. We should inquire with the trusts to determine the nature of the investments in Montrose Partnership and its relationship, if any, to the trusts. Page 10 of 12 4. Compliance Accountants Financial Review of Trinity Lands’ financial statements A full financial review was conducted by the Compliance Accountant with the purpose of determining if there were any further issues or anomalies not already identified and to determine Trinity Lands compliance with the Financial Reporting Standards 4.2. The review did not identify any other issues or anomalies and the Compliance Accountant has provided that below report on Trinity Lands adherence with NRS: 98 2 4.1. Trinity Lands’ financial statements have been prepared by BDO Waikato in accordance with Tier 2 reporting standards. • The financial statements meet the requirements of GAAP. • Trinity Lands does not meet the International Accounting Standards Board’s (IASB) of public accountability. • Trinity Lands incurred less than $30 million in annual expenses in the last two financial years. • The financial statements were audited by a qualified auditor, BDO. • The financial performance and position appear reasonable in line with the size and purpose of the charity. • No unusual items were identified in my review and the financial activity appeared reasonable for the purpose of the charity. • The annual return was completed correctly and no discrepancies were identified between the information found in the annual return and the financial statements 5. Summary of Conclusions O ffi ci al In fo rm at io n Ac t1 • It has been established that Trinity Lands was set up to take over the assets of the three Trusts ,all of who were existing registered charities at the time. 5.2. The significant asset growth since establishment in 2012 relates to revaluations to market rates and the initial asset transfer of $161m and then the further purchase of property, plant and equipment, inventory and G3 Kiwifruit licences. 5.3. Charities Services has no issue around the amount of charitable funds that needs to be distributed, as the act does not stipulate how a charity is to distribute their funds or percentage that the charity needs to distribute for charitable purposes. 5.4. Though the financial statements do show that each year the charity is distributing the profits back to the shareholding Trusts for them to distribute the funds effectively, as well as making their own charitable donations. se d un de rt he 5.1. Entities are able to pay their staff salaries that they see fit and in for a company of this size this does not appear to be excessively high and there is nothing to indicate that the executives are being paid above market rate. R el ea 5.5. 5.6. It is not considered out of the ordinary that the Directors and Executives were involved in organisation that transacted with Trinity Lands, as the associated trusts and companies appear to be involved in the same industry. 5.7. While both the Aroha-Nui and Stockbridge have significant investments in related entities which have grown in value over time, it does not appear that they are investing further resources in these entities. Rather, the increase in the investments reflects an increase in the market value of the investments. Page 11 of 12 The investments have generated low returns between 2011 and 2017, however this would be considered reasonable in the context of the PSA Kiwifruit vine disease which affected the kiwifruit industry in NZ beginning in 2010. It is not likely these investments would be considered inappropriate given that it does not appear further investment has been made despite the low returns. 5.9. The trusts carry significant investments in Montrose Partnership and the nature of this investment and the relationship of this entity to the trusts is unclear, though the investment appears to be generating significant returns to the trusts. 98 2 5.8. Ac t1 6. Summary of Recommendations The financial review has concluded that the financial statements show no apparent evidence of wrongdoing around the concerns raised by the complainant or any further concerns identified. The concerns were either unfounded or are not covered by specific stipulations in our act. 6.2. It is recommended that there is no further investigation required over these concerns. Should the investigator see fit they may want to make inquiries with the Aroha-Nui and Stockbridge to determine the nature of the investments in Montrose Partnership and its relationship, if any, to the trusts. 6.3. Both the Aroha-Nui and Stockbridge Trusts should be notified of non-compliance with financial reporting standards and directed to correct for this in future financial statements. R el ea se d un de rt he O ffi ci al In fo rm at io n 6.1. Page 12 of 12