Policy title
Audience (Primary)  Internal
Business Owner (Dept)  Democracy
Policy Author
Joanne Tasker
Review Date
March 2026



Whangarei District Council
Council Appointment to  Policy
Outside Organisations
018

Page: 1 of 7

Purpose
The purpose of this policy is to comply with section 57 of the Local Government Act 2002 (LGA)
and outline an objective and transparent process for the appointment and remuneration of directors
to council organisations, council-controlled organisations, and council-controlled trading
organisations.
The policy is further intended to provide guidance on the appointment of Whangarei District
Council (Council) representatives to all outside organisations, of which council organisations,
council-controlled organisations, and council-controlled trading organisations are a subset. At
times, Council is asked to appoint an Elected Member to an organisation. This requires appropriate
consideration in line with this policy.

Definitions
The following terms are utilised by Council throughout this Policy but are not defined in legislation.
•  Rules document – the organisation’s founding document that outlines the rules of the
organisation. This includes, but is not limited to, trust deeds, constitutions, agreements, and
terms of reference. It includes any subsequent amendments.
•  Outside organisation – is any organisation where Council has the ability to appoint a
representative or is asked to appoint a representative. This includes formal Council
advisory groups and cross-sector working group and parties.

The following terms are defined in further detail under section 6 of the LGA.
•  Council organisation (CO) – is an organisation where one or more local authorities hold or
control voting rights, or have the right to appoint one or more of the directors to the board.
This includes all council-controlled organisations and council-controlled trading
organisations.
•  Council-controlled organisation (CCO) – is a type of council organisation where one or
more local authorities hold or control 50 per cent of the voting rights, or have the right to
appoint 50 per cent of the directors to the board.
•  Council-controlled trading organisation (CCTO) – is a type of council-controlled
organisation that operates a trading undertaking for the purpose of making a profit.
•  Director – is a member of the organisation’s board or governing body. This includes
trustees, directors, managers, or office holders (however described in the organisation).

For the sake of clarity, the term organisation is used throughout this policy when referring to all of
the following: outside organisations, CO’s, CCO’s, and CCTO’s.

Legislative Requirement
The LGA requires Council to adopt a policy on the appointment of directors to COs (including
CCOs and CCTOs). The policy must outline an objective and transparent process for:
•  the identification and consideration of the skil s, knowledge, and experience required of
directors of COs,
•  the appointment of directors to a CO, and
•  the remuneration of directors of a CO.

Policy
This policy is intended for all organisations as defined above. The process to appoint a community
representative to a CO is different to the process to appoint Elected Members to outside
organisations, and these are detailed in the staff process portal Promapp.
This policy may not be applicable where the Rules document requires Council to appoint a director
or provide remuneration in a way that dif ers from this policy.

When to Appoint
Council appointments to organisations should only be made where there is a very clearly
established reason, and the role, functions, and expectations for the appointee have been clearly
defined.
A clearly established reason may include:
•  Council is required to make an appointment (i.e. it is required by a Rules document or
legislation)
•  there is a close funding or functional relationship with Council, or
•  there is a significant benefit to Council or the community in making the appointment.
Appointments of Council representatives are made in line with Council process. Council wil  make
the final decision on whether to appoint.

Skills, Knowledge, and Experience
To ensure legislative compliance when appointing a director, Council must:
•  ensure that any director they appoint to a CO, CCO, or CCTO has the skil s, knowledge, or
experience to guide the organisation, given the nature and scope of its activities,
•  ensure that any director they appoint to a CO, CCO, or CCTO has the skil s, knowledge, or
experience to contribute to the effectiveness of the objectives of the organisation, and
•  consider whether knowledge of tikanga Maori may be relevant to the governance of a CCO.
These principles may apply when Council appoints a person to an outside organisation.

Appointment of Elected Members
Office of the Auditor General Guidance
The Office of the Auditor General (OAG) best practice is that appointing Elected Members to CCO
or CCTO boards

“should be the exception.*”
If Council chooses to appoint Elected Members to their CCO or CCTO board, then

“the appointment should be open and transparent, and subject to the same criteria as for
independent directors.”*
The OAG note that the risks in appointing Elected Members as directors to CCOs and CCTO’s
include that:
•  “there is an inherent conflict between a council or-director’s obligations to the Council and
their community and their obligation to the subsidiary (CCO or CCTO), “
•  Elected Members are “more likely to be subject to, and swayed by, pressure from
community groups, so that it may be more difficult for a council or-director to maintain
confidentiality of commercial and other information about the CCO’s business”, and
•  Elected Member directors “often lack the skil s to perform well as a director.”*

Whangarei District Council’s Position
Elected Members may be appointed to a CCO where there are compelling reasons, or where it is
required in the CCO’s Rules document. Elected Members wil  decide in Council whether to appoint
an Elected Member to a CCO. Council should consider:
•  OAG guidance on appointment of Elected Members
•  reasons for an Elected Member to be appointed
•  the particular circumstances of the CCO
The Elected Member being considered for appointment cannot participate in discussions or vote on
their appointment.
Appointing an Elected Member to a CO or outside organisation may be appropriate. These
organisations do not have a legislative requirement for reporting to Council. The appointment of an
Elected Member may help provide oversight.
Appointing an Elected Member to a joint CCO may be appropriate.  A joint CCO is where
Whangarei District Council appoints a minority of directors, or holds a minority of shares, while a
number of local authorities jointly hold the appropriate level to meet the legislative definition.
Where an Elected Member is appointed to an organisation, the same statutory provisions apply,
and the Elected Member should have the requisite skil s, knowledge, or experience to contribute as
a director.
Elected Member appointments to outside organisations wil  be determined at the beginning of the
triennium, in line with Council process. Council wil  make the final decision on appointments to
outside organisations.

Appointment of Council Employees
Office of the Auditor General Guidance
OAG guidance on the appointment of Council employees is that

“Many of the advantages and disadvantages with council or-directors will apply also to
managers as directors. There is also real potential for a manager’s role as adviser to the
Council to conflict with his or her obligations to the CCO (or CCTO) as director.”*

Whangarei District Council’s Position
As with the Elected Member appointments, there should be compelling reasons for a Council
employee to be appointed to a CO.
In appointing a Council employee to an organisation, the appointment of Council representatives to
CO process should be fol owed. The Council employee should have the skil s, knowledge, and
experience to contribute effectively to the organisation.
In making the appointment, Council wil  consider the potential for the candidate’s role within
Council to conflict with any obligations to the organisation, and the extent to which the appointment
might impact on the organisation’s independence.

Removal of Directors
Where Council appoints a director, they can be removed by Council at any time by way of a
resolution of Council.
Where removal of directors is addressed in the Rules document of the organisation, that document
wil  hold precedence over this Policy.

Term of Appointment
Appointments to outside organisations wil  align with the local government elections. An Elected
Member wil  cease to be member of the organisation at the end of the triennium or when they
cease to be an Elected Member of Council, unless detailed otherwise in the Rules document.
During the term, Elected Member appointees to external Committees (formal Commit ees) and
CCOs are expected to regularly report back to other Elected Members, Council, or the relevant
Commit ee.
For appointment of Council representatives to organisations, Council should consider the Rules
document of the organisation when determining the length of a director’s term.
Council may also consider the length of other director’s terms.

Conflict of Interest
Directors wil , as far as possible, avoid situations where their actions may give rise to a conflict of
interest. Where a conflict of interest arises, the director must declare the interest and manage the
risks appropriately.

Code of Practice
Council appointed directors are expected to follow the New Zealand Institute of Directors’ Code of
Practice for Directors. This is to ensure they understand and observe high standards of ethical
behaviour. This includes, but is not limited to:
•  acting in good faith and in the best interests of the organisation
•  guiding the organisation toward achievement of its purpose
•  complying with the law
•  recognising and managing risk
•  fostering constructive relationships.
Directors wil  undertake due diligence to ensure that they understand the purpose of the
organisation, their mandate as director, Council’s expectations, and any reporting requirements.

Remuneration
Office of the Auditor General Guidance
OAG best practice, from the report Governance and Accountability of Council-controlled
Organisations, holds that

“a CCO director is responsible for the governance of the CCO. The position, if discharged
properly, involves work, so remuneration is appropriate.”*
The report further identified some examples of matters that the OAG considered might help
Councils who have CCOs and CCTOs, this included considerations in setting the amount of
remuneration.

Whangarei District Council’s Position
Council has the discretion to provide funding for remuneration of directors on CCOs, CCTOs, and
COs. The decision to provide funding for remuneration wil  be made by Council.
Council staff members responsible for developing the proposal to remunerate should include the
appropriate General Manager and representatives from the Finance Department and Democracy
and Assurance Departments.

Council should be cautious on decisions relating to remuneration of directors of COs, CCOs, and
CCTOs.  If Council utilises their discretion to provide remuneration, they wil  need to consider:
•  the level of remuneration
•  who to remunerate
•  why to remunerate
•  the timeframes for provision of remuneration
•  how to manage the provision of the remuneration.

In setting the level of remuneration Council should consider factors such as the need to at ract and
retain appropriately qualified and skil ed people, the external market for comparable positions, and
the objectives of each organisation.  Remuneration may reflect that there is an element of public
service involved in the role.
Elected Members or Council employees that are appointed as directors wil  not receive
remuneration, if they are appointed to a director role in that capacity.
The remuneration decision wil  be clearly communicated to the organisation.
Where funding for remuneration is not provided by Council, the organisation may choose to
remunerate directors from its available funds, so long as this is consistent with any Rules
document.

Promapp Processes
Appoint an Elected Member to an Outside Organisation
Appoint a Council Representative to Organisations

Relevant Legislation
Local Government Act 2002.

Related Policies and Documents
New Zealand Institute of Director’s Code of Practice for Directors.
Controller and Auditor-General Governance and Accountability of Council-controlled Organisations
(Office of the Auditor-General, September 2015).

*Where text is italicised, it reflects a direct quote from the Governance and Accountability of
Council-controlled Organisations report.

Adopted
Date of meeting:

23 March 2023
By:

Whangarei District Council

Approval
This Policy has been approved by the workflow process within the policies and strategies portal in
Kete.

Document Outline