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NZ government to overhaul rules for credit unions, mutuals

Friday 12th September 2008

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New Zealand's government plans to overhaul rules governing credit unions and mutual institutions, bringing them more in line with the Companies Act, Commerce Minister Lianne Dalziel said today.

"Mutuals will be subject to the same rules of disclosure and transparency and will have to be managed by a board whose directors will be subject to the same duties and qualifications required of company directors," Dalziel said in a statement.

The proposed law change will complete the second stage of the Review of the Friendly Societies and Credit Unions Act 1982, which was put on hold pending broader reforms of the financial sector.

Dalziel said governance rules for credit unions and building societies will "retain flexibility that recognises the special character of mutual financial institutions."

Under legislation passed last week, credit unions and building societies must be licensed as deposit takers by the Reserve Bank. Under the changes proposed, credit unions will have a legal personality which lets them have limited liability, own property, have perpetual succession and sue and be sued, Dalziel said.

By Jonathan Underhill

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