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REPORT OF THE ESTABLISHMENT UNIT
PART A - MATTERS REQUIRING A COUNCIL DECISION
1. ROADING LATE (CANROAD CONSTRUCTION LTD)
Officer responsible Author Director of Operations Warren Brixton/John Mackey Corporate Plan Output: Table III Corporate DevelopmentThe purpose of this report is to advise the Council of the progress achieved in: 1. Transfer of an undertaking to the LATE in accordance with the legislative requirements. 2. Transit New Zealand's requirements. 3. The establishment of the Roading LATE to become fully operational from 1 July 1996. TRANSFER OF UNDERTAKING In December 1995 the Council set up an establishment unit "to consider the options with regard to transferring an undertaking to a LATE (local authority trading enterprise) and make recommendations to the Council on the option to be chosen" in response to implications arising from recent changes to the law in regard to land transport matters. Specifically the Establishment Unit's task was to: (a) To identify with reasonable precision the undertaking that is to be transferred to the LATE. (b) To value any such undertaking or determine a method for its valuation. (c) To determine the price that should be paid or the method for determining the price that should be paid by the LATE for any such undertaking and the extent to which the price should be met by the issue of equity securities and debt securities to the local authority from which the undertaking is to be transferred. (d) To specify the debt securities required to be issued pursuant to section 594zi of the Local Government Act. (e) To prepare in draft form a Memorandum of Association, Articles of Association and Statement of Corporate Intent for each LATE. (f) To determine the best manner in which, and time within which, any undertaking of the local authority should be transferred to any LATE. 1 Cont'd (g) To determine a fair and equitable system for the transfer of appropriate employees from the local authority to the LATE (but without making determinations in respect of individual employees). The Establishment Unit met on a regular basis to work through the various issues, culminating in the presentation of "establishment plan for roading LATE". This was presented to the Council at its April meeting for adoption. Due public notification of the Establishment Plan was given. The Establishment Unit has continued to meet, but on a less regular basis, for the purposes of: * To provide guidance and background information to the new company's directors, as a means of assistance in helping it get up and running. * To act as the Council's agent, in the negotiations with the new roading company in the negotiation for and transfer of the various assets from the Council to the company. * To maintain a watching brief, to ensure the fair and equitable requirement of the transfer process, is achieved. TRANSIT NEW ZEALAND REQUIREMENTS The Act provides that no payment from the Land Transport Disbursement account is permissible unless the price is determined by a competitive pricing procedure and no payments are permitted to a local authority or to a LATE: "Unless the Board is satisfied that the LATE was established and an undertaking has been transferred to it and it is operating in accordance with the Local Government Act and also with any ministerial determinations." As evidence of the establishment of a LATE, Transit NZ has determined a set of criteria to be met covering the production of: (a) A copy of the Council resolution adopting the Establishment Plan or to incorporate the company. (b) A copy of the adopted Establishment Plan containing at least the information required by the Local Government Amendment Act (No 2). (c) Documentation of registration or incorporation of a company. (d) Names and affiliations of the directors. (e) A certificate whereby the Mayor certifies that the LATE has been established in accordance with the Local Government Act 1974. This information was provided to Transit NZ on 22 May 1996. Advice was received from Transit New Zealand on 10 June 1996 that it is satisfied that Canroad Construction Ltd has been established in accordance with section 20(3)(c) of the Transit NZ Act 1989.
1 Cont'd ESTABLISHMENT OF ROADING LATE Company Registration/Name The new roading LATE was registered with the Registrar of Companies on 15 May 1996 as Canroad Construction Limited. The name of the company embodies the main elements of the company's activities, other names previously selected, being already in use by other companies elsewhere in New Zealand. Directors A process for the selection of directors was determined in April and the sub-committee appointed for the task, appointed the three Directors, Messrs D A Anderson, W F Fox and M J Hadlee. The company at its first meeting appointed Mr Anderson as its Chairman. The company has met on several occasions in a determined effort to sort out the various tasks, prior to commencing full operations on 1 July 1996. Directors have also attended recent meetings of the Establishment Unit to be firstly briefed on the Establishment Plan process, followed by face-to-face discussions on such matters as land requirements and purchase or lease thereof, the valuation of the assets to be transferred etc. Attention has now been given to: * Appointment of General Manager.
* Conditions of employment for transferring staff.
* Formulation of policy.
* Terms and conditions of land, buildings and plant transfer.
* Loan agreement.
* Working capital requirements.
* Service agreements. TRANSFER OF UNDERTAKING In order to demonstrate that the transfer of the undertaking is being carried out in terms of the specific requirements, a summary of those matters follow: (a) Identity Undertaking The Establishment Unit considered eight separate options choosing one only after careful evaluation of each. The details of the actual undertaking to be transferred were contained within the "Establishment Plan for Roading LATE", approved by the Council at its April meeting. (b) Value of Undertaking and Method of Valuation Refer to report in public excluded section. 1 Cont'd
(c) Price to be Paid Refer to report in public excluded section. (d) Debt Securities Refer to report in public excluded section. (e) Memorandum of Association, Articles of Association
and Statement of Corporate Intent The draft form of these was contained within the Establishment Plan. (f) Manner and Time of Transfer A process has been followed by the Establishment Unit which led to the formation of Canroad Construction Ltd with a planned transition date of 1 July 1996. (g) System of Transfer of Staff A process based on consultation, discussion and negotiation with the relative staff and their bargaining agent has been commenced by the Personnel Manager to ensure in the outcome that the requirements for fairness and equity are met. SIGNING OF DOCUMENTS During the course of the next few weeks various documents (eg share issue certificates, loan issue) will need to be signed as part of the establishment of the company. The Establishment Unit has agreed in order that such matters can be dealt with, without delay the Director of Finance be granted delegated authority to sign such documents. Recommendation: That delegated authority be granted to the Director of Finance to execute the documents necessary to carry out the transfer of the undertaking to the LATE and its financing by the Council. CONSIDERED THIS 26TH DAY OF JUNE 1996 MAYOR