Nanjing-Rotorua Town Project opening provides platform for many Rotorua businesses
 Rotorua's mayoral delegation of city officials and business people were recently in China for the official opening of Stage One of the Nanjing-Rotorua Town Project. The new residential development has been designed to honour Rotorua and its residents by replicating the look of many of our city's key public buildings, including the Civic Centre and the Convention Centre along with extensive gardens and small lakes.
The visiting delegation also included Warwick Lilley and Rakei Kingi, two of the three prominent artists from Rotorua whose sculpture designs have been selected for construction in Nanjing and permanent display in the new town.
Destination Rotorua Tourism Marketing general manager Don Gunn reported that the township opening had been “successful and spectacular.” He said it had been a period of full-on meetings with many prominent government officials and relevant business leaders” The Rotorua delegation to China participated in the opening ceremony of Nanjing-Rotorua Town.
Mayor Kevin Winters described the opening ceremony as an “amazing spectacle which incorporated both Chinese and New Zealand cultural elements”. Rotorua District Council's director of kaupapa Maori, Mauriora Kingi, blessed the Town Centre building as part of the elaborate ceremony. There were performers from the Nanjing Fang Shan drum group and the Beijing opera group, who were attired in traditional Chinese opera costumes.
 Rotorua responded with cultural items performed by deputy mayor Trevor Maxwell, Kahurangi Maxwell, Mauriora Kingi and Rakei Kingi. The entire delegation joined the performers on stage to sing Pokarekare Ana as a finale. The approximately 200 guests were very impressed, particularly as the mayor participated as well.
The development was opened by Mr Chen Gang, deputy mayor of Nanjing and was attended by a large number of government officials and local investors. Nanjing- Rotorua Town is being developed by the Nanjing Moon Building Company and will have 2,000 upmarket residential properties ranging in size from 190 to 290m2 and selling for between $300,000 and $550,000. The development also includes a kindergarten, school and shopping centre and a Rotorua Tourism centre on the ground floor and on the first floor the Rotorua / NZ business centre, which both provide Rotorua companies the opportunity to gain exposure to the Nanjing Market.
A special feature of property sale is the inclusion of Rotorua air tickets and holidays for purchasers. The programme is expected to attract around 5,000 wealthy Chinese visitors to New Zealand.
Mayor Winters was extremely impressed with the quality of the development and the speed at which it was progressing. “Nanjing Moon Building Company is a very impressive organisation demonstrating a high degree of professionalism with a focus on quality and customer service. I have no doubt that this development will be a great success and the benefits that will flow through to Rotorua and New Zealand will be huge.”
Mark Rawson, General Manager of Destination Rotorua Economic Development, said “The development is amazing and as a result of our negotiations we are now able to provide our businesses with some real leverage opportunities.
”While there we had excellent exposure, from being on China TV many times from flight arrival to the town opening and the many forums we have been guest speakers at to numerous paper articles.” Some of these opportunities include:
• Use of the main administration building area and the two tourism and business areas dedicated to Rotorua by NMBG. This is a great opportunity with full meeting, hosting and display areas available for use by Rotorua / NZ partners.
• A 800m2 retail space bordering the development as a Rotorua / NZ themed retail visitor attraction within its own right featuring a number of Rotorua / NZ retail products with a focus on the areas of Natural Food, Beauty, Cultural, Wool, Wood, Wine, Water and Health Products. This has been made even more risk free by the NMBG playing a wholesale purchaser role. The aim is to open this development in October 2007.
• An opportunity to connect with the groups of Nanjing-Rotorua Town residents who will visit Rotorua as part of the package when they purchase a house.
• A piece of land within the development to be dedicated to the development of a NZ pine constructed and fitted out show home. This house will also be utilised as a Rotorua / NZ guest house for official visitors to the Nanjing- Rotorua Town Project.
While in Nanjing the group also hosted a Rotorua business forum with 13 selected businesses from around the Jiangsu province. This was focussed in the wood and construction sector and provided Rotorua companies Red Stag Timber, Key Lumber and Hayes International with a number of opportunities to develop relationships and business propositions in that part of China.
The Waiariki Institute of Technology representatives were introduced to a number of similar opportunities in their fields from universities to technical institutes.
While in china the delegation also visited Shanghai. Our sister city which is the Wuzhong District or Suzhou City and Beijing.
In conclusion this has provided a number of practical opportunities that we will be working through early next year, so if you are a company looking to break into the Chinese market or just looking for some information on the potential opportunities or contacts within this market please make contact with Mark Rawson or Chris Heywood at Destination Rotorua Economic Development on 07 348 4199.
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RETAIL in ROTORUA
2007 will bring a new focus for Retailers in Rotorua, Promoting a CBD as a shopping destination is a very difficult thing to do. The main demands of our customers are consistent shopping hours, well presented shops and ease of finding your way around.
A shopping mall can do all of that very easy, after all the mall owners have control over the opening hours and promotions so getting individual shops to open later or 7 days a week is part of their lease conditions. CBD or downtown retailers are a different kettle of fish and at times are their own worst enemies. They mainly open to suit their lifestyle, don't work together and 7 day or late night shopping is a rarity. The challenge ahead is to join our Central Mall and downtown retailers together and make it one destination. This is currently being addressed through the CBD Revitalisation Strategy and I look forward to that gaining momentum over the coming year.
If we all work together and accept the challenges that these changes will require I believe we will be a retail area that is unequaled in NZ.
Merry Christmas and a fruitful new year
Graham Brownrigg
Retail Rotorua
Money for Nothing?
Did you know that Amazon made more money from licensing its 'One click' patent technology than from selling books? Or that IBM generates around US$1 billion per year, just from licensing patented technology it wasn't using?
Internationally, businesses now realise that commercialising their Intellectual Property (IP) is more than just protecting their core business. Your IP may have been developed with a specific end in mind, but can also be of significant value to others. Astute businesses make this IP available in return for a royalty, or some other benefit.
 The first steps of any such process is to audit what intellectual property and assets you have. Registered IP is easy to identify, but many businesses overlook their unprotected Intellectual Assets (IA). These comprise your trade secrets and know how, the skill and experience of your staff, your systems and networks, as well as anything else in your business which gives you a potential edge over competitors. In many cases it is the IA of a business which let it out-compete others. For instance, your manufacturing and distribution channels may let you deliver finished product quicker and more effectively than your competitors. Alternatively, it may be your quality control systems which make you the market leader. Investing in your IA whether it be staff training, improved systems, or in other areas will generally increase the competitiveness of your business, as well as its value. Intellectual Assets are one of the few assets which tend to appreciate in value rather than depreciate.
SKF, the bearing manufacturer, was troubled by expensive tendering processes. Preparing a tender often required identifying the problem and solution, before costings could be applied. The potential customer commonly used SKF's solution to approach an SKF competitor to provide the product at a cheaper rate. SKF's solution? Create a consulting section which generated income by analysing problems and coming up with a solution. This was a pre-requisite to any tendering process. Here they recognised that their in-house expertise (i.e. their IA) allowed them to set up a second independent business which complemented their core business. Many businesses have sufficient in-house expertise in their staff to allow them to set up a secondary consulting side to the business, an added benefit being offering clients a more complete range of services.
Licensing IP and IA is also becoming more common, but not just for the core business. Instead businesses look at other areas which could benefit from the technology and expertise they possess though this does involve looking outside your own industry. For instance, inkjet printers were developed for printing on paper, but it didn't take long to realise the technology could be applied for printing on difficult surfaces such as eggs or fruit; now the technology is being developed to create free-form 3-dimensional articles.
There can even be advantages to licensing IP or IA to your competition. Given that they compete with you anyway, why not create income from their efforts? Also, collectively, you may even gain a greater market share. Consider Sony's Beta video recording technology; Sony tried to go it alone while VHS was licensed to a number of major manufacturers. This was a very short competition with VHS winning.
It is not recommended that you freely license everything, however there is often much that even small businesses can use to their advantage. Reviewing and auditing your IP and IA can not only identify potential further income, it can also highlight weaknesses which are preventing you from competing more effectively. As the world becomes more of a single global market, NZ businesses need to keep fit to compete effectively against foreign companies. Free Trade with China is worrying for some, but many NZ businesses have the IP and IA to let them out-compete China in a number of areas. They just need to recognise and build on the unseen assets they have. For those who wish to take their business to new levels, the first step is contacting a specialist IP firm such as IPRIMA.
Antonia Sims principal of IPRIMA
www.iprima.biz
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Finely balanced decisions…
The October Official Cash Rate Review was one of the more finely balanced decisions we believe the RBNZ has made for a long time. Markets went into the meeting evenly divided, both in pricing and in opinions, with neither side of the fence carrying much conviction in their views. Ultimately the RBNZ refrained from hiking: we saw that as the correct decision from an economic perspective.
The Review statement was 'hawkish' and roughly similar in tone to the September MPS: "The balance of inflation risks remains skewed to the upside. Further monetary policy tightening cannot be ruled out, and any easing of policy remains a considerable way off."
The weaker short-term inflation outlook from lower petrol prices and Statistics New Zealand's reweighting of the CPI 'shopping basket' was noted right up-front (Westpac now expects inflation to fall to 2.8% by year-end, against 3.8% prior to the publication of the new CPI weights). The main significance of lower headline inflation was said to be a favourable impact on inflation expectations - the general public's perceptions of where inflation will sit in the future.
However, we cannot help feeling that despite the above rhetoric, headline inflation is foremost in Dr Bollard's mind. Lower headline inflation seems to be the key factor that stayed the RBNZ's hand at the last minute despite persistent and high non-tradable inflation and stronger medium-term inflation risks.
Those medium-term risks did still get a lot of airplay: capacity utilisation, tight labour market, the resilience of housing and the strength of inward migration. The RBNZ is also keeping a watchful eye on a possible pick-up in consumption following petrol price decreases. The RBNZ retained the concerns expressed in September, but evidently felt that the line had not been crossed.
And even though the Q3 CPI (released in late October just prior to the OCR Review) was a touch lower than expected at 0.7% q/q, it did show a worrying uptrend in housing construction and maintenance costs. That will have given the RBNZ little relief, and keeps up the importance the RBNZ places on a slower housing market to rein in non-tradables inflation. And on the housing market front the latest REINZ figures show a jump in house prices after several months of more modest growth. That will have got the RBNZ's attention.
However, other key data, such as employment growth and retail spending, have been benign enough that the RBNZ has time to wait and see. A petrol-induced drop in inflation affecting much of 2007 will also give the RBNZ some comfort that inflation expectations are at much less risk of remaining high. That reduces the risk that high inflation persists through the notion that merely because we think inflation will be high our behaviour then leads to a self-fulfilling prophesy.
We expect the RBNZ will remain on hold but, as was the case after the September MPS, tolerance of further upside inflation surprises is thin. Easings are also going to be a long way off as long as domestic inflation pressures are slow to ease.
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Free fees for school leavers is an attractive offer
Waiariki Institute of Technology has been inundated with enquiries since the recent announcement that all secondary school leavers who sign up to study at Waiariki next year will have their course fees waived.
“Waiariki is changing. Our region's economic future is our responsibility. It is our job to ensure that local employers and industry have a ready supply of skilled staff for their growth and prosperity,” said Pim Borren, chief executive.
Students could save up to $4,000 through the scheme as well as have the added benefit of being able to stay in their home town. For many students this option is appealing as it means they can study and be debt-free. Waiariki is the only polytechnic in the region. It has some of the best teachers and its aim is to generate a fun and vibrant campus atmosphere.
Free Fees apply to most full-time and part-time courses, available at all four campuses: Rotorua, Taupo, Tokoroa and Whakatane. Some conditions apply.
For further information on
Free Fees phone 0800 Waiariki
(0800 924 274) or www.waiariki.ac.nz
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ENERGY EVENTS CENTRE NEW YEAR PRESENT FOR CITY
      A New Year's present for Rotorua will be the impressive new Energy Events Centre, a project funded by the Rotorua District Council, Rotorua Trust and participants in the Rotorua Partners' Programme. The centre is on schedule to open its doors for the first time on 20 February, in time to host the national 'Learning@Schools' conference with more than 1000 delegates expected to put the centre through its ropes. This will be followed by a string of conferences and other events already booked into the complex with a formal opening weekend expected in early March.
With the opening of the new events complex Rotorua will justifiably be able to lay claim to being one of the country's elite conference and events destinations. The Rotorua community will not only have an outstanding facility for community events, but will benefit enormously from the significant economic impact accruing from thousands of out-of-towners coming for big events at the centre.
Event Venues Rotorua sales and marketing manager, Diana Moore, says the Energy Events Centre will be one of the largest facilities of its type in New Zealand, firmly positioning Rotorua alongside Auckland and Christchurch as a location for large scale conferences and events and complemented by its already established reputation for smaller and medium sized conferences and exhibitions.
For the past 18 months Diana and colleagues have been flat out marketing the Energy Events Centre around New Zealand and Australia, and spreading the message that Rotorua has one of the country's most comprehensive inventories of quality accommodation and visitor support infrastructure. And the conference, exhibitions and events industries have not only been sitting up and taking notice; they've been beating a path to Diana's door to get their bookings in.
“The amount of business we've signed up for the first year alone has shot all forecasts out of the water. It's been nothing short of staggering. Marketing a new facility like this, when it's yet to be built and hasn't had the chance to develop a track record, was never going to be easy. But our marketing effort seems to have captured the imagination of so many movers and shakers around the country that we've struggled to accommodate all the requests we've had to date - and we haven't even opened the doors yet! Events at the Energy Events Centre are going to boost our local economy by many, many millions of dollars,” says Diana.
Major conferences and exhibitions already booked at the Events Centre in the first year include Building Officials Institute conference (around 300 delegates), TRENZ tourism expo (1750), GPs' conference (500), Institute of Financial Advisors (750), Health Care Providers' conference (250), Mortgage Brokers' conference (450), LIANZA Library and Information Association conference (800), Waste Water conference (800), Early Childhood conference (2000), Medical conference (500), ANZICS Intensive care (1000), and National Bank Young Farmers (1500).
Other events using the Energy Events Centre include the Rotorua Marathon in April (1000 participants), National Young Leaders in May (1000), Career Expo also in May (1000), National Filipino Festival (3000), along with Women's Lifestyle Expo, Wearable Colour show and Rotorua Business Awards Dinner.
Diana Moore says there's no doubt Rotorua has really come of age as a top conference and events destination, and the Energy Events Centre will provide us all with plenty to celebrate in the New Year.
For more information the Energy Events Centre contact:
Diana Moore, Sales and Marketing Manager, Event Venues Rotorua,
phone 07 350 1741, mob 027 249 8677, email diana.moore@rdc.govt.nz, or
visit http://www.eventvenues.co.nz/
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Energy Management and Savings
This month Power Solutions look into one of the bigger energy users in industry, motors.
A survey was conducted nation wide in the early nineties which showed on average 64% of motors installed in a wide range of plants and processes were running at their full (load) capability, in many cases 60% or lower.
A motor running lightly loaded is much less efficient than a motor fully loaded or running at its optimum duty point. THIS WASTES ENERGY.
On average a motor has at least a 20 year life and the energy cost over its lifetime can easily be many times more than its capital purchase and installation cost. Hence an assessment of its likely operating cost prior to purchase is warranted.
Such assessments can show it is cost effective to either:
a) Purchase a smaller motor that is better matched to the operational duty; or
b) Provide associated energy saving devices working in concert with the motor such as variable speed drives and/or specific control systems to better schedule motor use; or
c) Purchase an “enhanced efficiency motor”.
In this latter regard, the government have recently introduced legislation banning new lesser efficient motors from sale and through taking advantage of recent modern motor technology improvements, making more efficient motors available in the market place under the MEPS (Minimum Energy Performance Standards) regime.
For motors that run for extended periods, an economic assessment can show it is beneficial to spend the approx 30% more on an enhanced efficiency motor to save on the ongoing operating cost and recover the investment within a reasonable period of 2-5 years.
PSL has carried out many energy audits of industrial plants and packages which show numerous motors are idling and/or running lightly loaded when provision of energy saving devices and/or controls could reduce the kWhrs used and hence cost of operations.
Many motors can easily be over sized. It is understood plant designers and manufacturers want to safe guard their design by ensuring the motor is adequate, but there is a need to ensure that safe guard is not an “over sized “ contingency.
Discussing the finer points of the customers’ operations and requirements well in advance can produce benefits in the design process, when the “ENERGY USE” component is considered early.
A design audit from an energy perspective before the commitment to manufacture, assembly or fabrication is made, can provide significant benefits and some government funding assistance may be available to help pay for a design audit.
PSL can help investigate these matters and research the funding issues.
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Mobile broadband gives you more time in the sun
The benefits of mobile broadband are being realised by many New Zealand businesses, and a growing number are using mobile broadband to increase the productivity and capability of their businesses.
Mobile broadband is high speed Internet delivered wirelessly through devices such as mobile phones, PDAs and laptops with mobile datacards. Telecom started building the first mobile broadband network in NZ in 2004, and since then mobile broadband coverage has grown to cover over 70% of where New Zealanders work and live.
 The business benefits of mobile broadband are immediately obvious to companies who rely on mobility, such as couriers and freighting, sales people and many parts of the adventure tourism industry. But there are also many productivity gains to be made in other industries.
Harcourts real estate agents use mobile broadband and their Telecom HTC Apache PDAs to ensure they have the most up to date property details and listings at all time no matter how long they've been out of the office.
Busy bars such as Malt in Auckland realised that long queues were stopping people from buying drinks, so their staff now use mobile EFTPOS terminals to allow customers to pay for their drinks where they're sitting.
Many tradespeople are realising the benefits of mobile broadband for managing job bookings and product orders over laptops or PDAs without having to return to the office. Small portable printers attached to laptops with mobile datacards enable them to print invoices or inventories on the job.
There are also benefits at an individual staff level. A seasonal example is the ability to use mobile broadband to stay connected to emails and urgent work while still being able to get away from the office and spend time with friends and family over the Christmas period.
Telecom's current mobile broadband is on par with the best networks in the world. From December, Telecom will be rolling out the ground breaking network upgrade 'Revision a'. This upgrade will bring even better performance, and with it new opportunities for business applications and a broad range of new capabilities over mobile broadband.
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EMAIL FOR BUSINESS the do’s and the don’ts
'Cheap and tacky' wedding email goes global as jilted marquee company's revenge turns sour.
• http://www.theregister.co.uk/2006/11/22/when_emails_go_bad/
Hager outlines contents of Brash emails book (+ audio).
• http://www.nzherald.co.nz/search/story.cfm?storyid=00027A8C-2C42-1562-A69383027AF1002A
These are just two of a dozen stories to hit the headlines where someone in New Zealand has had their emails published by the media over the last twelve months. The best result can be some embarrassment for the individual and company, while the worst can be court cases. Either way, both the email author and the business are legally and financially exposed. Email is a ubiquitous tool in the modern business world. As an absolute minimum, organisations should have measures in place to protect themselves, their staff, their clients or stakeholders from email related risks. But email accidents can and do cost you not only your reputation, but endanger your job. Every email you send affects the way people perceive you and that alone can affect how well you can get your job done and whether you move up the company.
So what exactly are the dangers of using email for business?
1. Other people are reading your emails, including ISPs.
Emails are sent as packages of plain text, which are easily scanned (or "sniffed") and read by anyone on the Internet or company network. Sniffing tools are now in common use and easily available from an Internet search. Company executives are personally liable for every email that is sent out of their organisation therefore are obliged to check all communications on the corporate network. Emails are archived so that they can be retrieved at any time for the protection of the company.
Your email is never private nor confidential.
Still don’t believe? See http://www.bizibox.co.nz/woolworths.pdf
2. Other people have copies of your emails.
When emails cross the Internet, they pass through many anonymous servers. Copies are saved on these servers and backed up to archives that last for years. You have no control over where your email goes, or over who has access to the servers that retain the copies.
In the USA, ISPs are legally obliged to save your emails, and new legislation in Europe is set to bring in similar measures. It is like the Post Office or a courier company taking copies of every letter or document you send through their service.
3. You are legally and financially exposed and liable.
There is a common misconception that emails are not legally binding. Think again –they are! Company executives are liable for what employees put in their emails! If sending any personal, private or confidential information you must guarantee the integrity and confidentiality of that information. If you cannot, then you are breaking the law, as well as contravening a number of rules of best practice that govern data transfer. There are many confusing national and internationally recognised legislations, sector regulations, and standards concerning the tracking, auditing, security of information, electronic transactions, electronic communications, and privacy legislations around the world.
In NZ, legislations to watch out for are:
o Electronic Transactions Act 2002.
o Privacy Act 1993.
o Telecommunications (Interception Capability) Act 2004.
We recommend you speak to your legal representative about these Acts and how
they apply to you.
4. It is very easy for someone else to alter your emails.
As your email passes across the Internet to the recipient's inbox, it is easy for a third party to intercept and alter it. Attachments can be added or removed, viruses inserted and crucial information changed, all without your knowledge or control. There is no way to stop this from happening, and there is no way to know that this has occurred.
5. It is very easy to pretend to be you.
Anyone can pretend to be you simply by spoofing your email address. Spoofers do not require access to your computer or email account, but you are liable for the content. There is no way to prevent this from happening, and there is no way to stop it once it has started. Conversely, how do you know that the email you have received is legitimately from the person claiming to have sent it?
6. Email delivery is unreliable.
Email delivery can fail for many reasons – for example a failure in part of the network that it passes through, a server glitch, or a network lag. Increasing reliability on spam filters means that valid emails are often blocked and/or deleted. Recipients can deny receiving an important email and you have no way of knowing whether or not they are lying to you.
7. Password protections are easily broken.
It is possible to put a password on a document (such as a Word document) or an email but password recovery tools are easily found on the Internet, and they take only seconds to crack.
8. Your business is at risk.
Reports in the UK have suggested that up to 70% of security breaches are caused by staff, both by accident and intentionally. One report stated that 40% of workers have received confidential information that was not meant for them and have admitted using the company email network to export stolen confidential information, such as address books and databases.
9. Anti-virus, Anti-spam and Firewall systems are not security.
Having anti-virus, anti-spam, or firewall systems do not mean your emails are secure. They do not tackle the underlying issues that make email an insecure form of communication.
10. Staff Accidents
When sending an email, you are creating an image of yourself in front of the other person. Sometimes, that image might not be credible, considerate or polite and you could find yourself in trouble. Similarly you might have written something snide or catty about a colleague that could have been sent to the wrong person. Do not hit the 'Reply to All' button and send messages that not everybody should see. Recipients can, and do, forward emails on either accidentally or deliberately without your knowledge. Trade secrets could be released and you could end up in court if somebody feels that something in your email is libellous.
So how do I protect myself and my business?
Here are the key actions you should undertake:
1. Identify, authorise and audit your staff
Ensure that every user is reliably identified and controlled. Eliminate uncontrolled users (anyone who has not been specifically authorised to use the system) to remove the risk of damage they cause.
2. Eliminate delivery across the general Internet
Don’t use general Internet delivery technology – it’s the cause of all the problems that you currently face and there are alternatives.
3. Protect all messages and files at all times
Protect your messages, documents and files at all times, so they cannot be sniffed, read or otherwise tampered with. But do not just stop at encryption. Good protection requires a comprehensive solution integrating encryption, system defences, with extensive and ubiquitous control over all activities at all times.
4. Create consequences at all times
Ensure clear, irrefutable audit reporting on every user activity to encourage good behaviour by eliminating any potential to hide anti-social or illegal actions.
5. Share important documents and files securely
Improve your control over the distribution of your files and information and reduce security risks by sharing files rather than emailing them as attachments – use an encrypted file sharing system. Preferably with access and user controls, plus audit trails.
6. Establish email policies and enforce their use.
New Zealand law firm Bell Gully has some useful suggestions which can be found in Chapter 9 on page 47 at http://www.bellgully.co.nzresources/pdfs/E_
Commerce_Guide.pdf).
To comply with the Privacy Act 1993 employers must tell their employees in some formal way - either as part of their employment contract or through a signed "Acceptable Use Policy" - that their internet use and email content will be watched.
Ask your lawyer, accountant, doctor, or insurance/financial advisor what ‘secure’ email system they use. Are they compromising your privacy by using normal email? You might be surprised by the response.
7. Think about what you are doing.
As a guide to composing a message:
• Think before you write. Think about what your message is, who the reader is, and should the reader actually have the message in the first place. Is the message appropriate to write? What if this was published in the newspaper?
• Respect the reader. Respect their time and make sure the message you send is useful. Look at what you are writing from a reader's point of view.
• Read it before you send it. If it’s sensitive, difficult or important save it as a draft and review it the next day before sending.
• Stop and think about what would happen if someone else sees a copy of your email.
• Do not let emails build up in your Inbox. Create folders and set up rules to automatically file them.
• Keep the jokes to a minimum and make sure you do not send out anything that could be construed as offensive or libellous.
About Bizibox
Bizibox is the Australasian supplier of the usable and affordable IQ Confidential secure messaging and collaboration system. IQ Confidential is independent of, but complementary to, MS Exchange or Lotus Notes and is available as an Enterprise Solution or as a Service Platform. Visit our website at www.bizibox.co.nz or feel free to call me direct on 06 877 7541 or
email Neil.Sherratt@Bizibox.co.nz for further details.
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Business Law Review
The legal framework within which businesses must operate seems to become increasingly complex every year. This is as a result of changes made by legislation and decisions of the courts. 2006 has proved to be no different, and businesses will have new legal issues to grapple with in 2007. This article touches upon some of those.
The Holidays Act 2003 has been amended so that as from 1 April 2007, the minimum annual leave entitlement for all employees will be increased from 3 to 4 weeks. Under the Act all employers must inform their employees at the time an employment agreement is entered into of their rights under the Act.
On the same date the KiwiSaver Act 2006 will come into force. This scheme will allow full and part-time workers to elect to put 8% of their gross earnings automatically into a savings fund. Subject to certain exceptions, those funds cannot be accessed until the employee reaches the age of 65. Employers are not required to fund the scheme, but it will impose administrative responsibilities on them. They will be required to advise the IRD of new employee details, provide new employees with information packs and ensure payroll systems are set up to deduct contributions from an employee's wage.
The courts have delivered a number of important decisions on a range of business issues.
These include:
• A reminder to company directors that they must keep themselves informed as to what is happening within the company, or face the prospect of personal liability. In one case the directors were held liable for the fraudulent actions of the company's manager where they ignored evidence that the company was in financial strife, and allowed the company to continue to trade.
• The concept of a fiduciary duty (or a duty of loyalty) owed by persons who carry on some business activity together (whether by way of a joint venture, partnership or otherwise) is receiving increasing emphasis from the courts. Persons who enter into business arrangements with another, then endeavour to act on their own to the detriment of the other party, may well be held liable to account to that party for their actions.
• An important case for both businesses and their legal advisers was the removal of barristers' immunity from civil liability as a result of the negligent conduct of court proceedings.
• The Personal Property Securities Act is now coming under increasing scrutiny before the courts. The Act came into force on 1 May 2002, and is one of the most important pieces of legislation passed for many years. It introduced a brand new regime relating to securities over personal property (as distinct to real property in other words land). There have literally been cases where persons claiming a security interest in personal property have lost millions of dollars due to failing to register their security interest on the Personal Properties Security Register for a cost of $3.00. Businesses should be particularly aware that if they sell goods on the basis that they reserve ownership until paid for in full, that they must register their interest on the Register in order to protect their position. They should also revise their terms of trade in regard to the provisions of the Act.
The above comments are of a general nature only. You should seek legal advice in regard to any specific concerns that you may have in light of the above comments.
This article has been contributed by
Richard Pryce (Partner) and
Andrea White (Staff Solicitor).
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On being an ‘Investment Fiduciary’
The past few years have seen a phenomenal growth in the formation of Discretionary Family Trusts. There have been advertisements, seminars and books promoting the benefits of creating a Trust to hold assets for succession and protect them for beneficiaries in the future. However there has not been a lot of emphasis on the role, responsibility and stewardship required by trustees in the management of Trusts.
An ‘Investment Fiduciary’ is someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.
The term ‘fiduciary’ can be divided into three groups:
1. Investment Steward -
A person who has the legal responsibility for managing investment decisions (including trustees and investment committee members)
2. Investment Advisor -
A professional who is responsible for managing comprehensive and continuous investment decisions (including wealth managers, financial advisors, trust officers, financial consultants, and financial planners).
3. Investment Manager -
A professional who has discretion to select specific securities for separate accounts, mutual funds, and unit trusts.
The focus of this article is on the role of the trustee as an ‘Investment Steward’. Prudent practices for Investment Stewards have legal substantiation in legislation and case law from the: • Trustee Act of 1956
• Superannuation Scheme Act of 1989
• Investment Advisors (disclosure) Act of1996
If an Investment Steward read all three Acts and identified the fiduciary practices common to all three, the Steward would discover seven common practices referred to as “Global Fiduciary Precepts”. These are common to nearly every country that has some form of fiduciary legislation. They are:
1. Know standards, laws and trust provisions
2. Diversify assets to specific risk/return profile of client
3. Prepare investment policy statement
4. Use “prudent experts” (for example, an Investment Manager) and document due diligence
5. Control and account for investment expenses
6. Monitor the activities of “prudent experts”
7. Avoid conflicts of interest and prohibited transactions.
Investment fiduciaries are exposed to legal and practical scrutiny – it comes from multiple directions and for various reasons. What process will you need to show to prove you prudently managed investment decisions? The critical concept is that it is the role of the fiduciary to ‘manage’ the investment process, and the laws dealing with investment fiduciary responsibility further re-enforce this important concept. Fiduciary liability arises when the process is not defined and/or is inconsistently applied. It’s not whether you win or lose – it’s how you play the game.
From Precepts to Practices:
• Precepts are principles founded in law
• Practices are applications of the precepts, founded in law and research
• A standard of practice constitutes a body of knowledge as to what is required for a person or organisation to meet recognised expectations.
Fiduciary status can be difficult to determine, and is based on facts and circumstances. In general, the issue is whether a person has effective control or substantial influence over investment decisions. It is not uncommon for fiduciaries to be unaware of their status, which is one of the reasons why a standard of practice is recommended. There can be numerous parties involved in the investment process and each should have their role and responsibility documented in writing (generally in the Investment Policy Statement). This ensures continuity of the investment strategy and helps to prevent misunderstandings between parties and helps to prevent omissions of critical functions. Those designated as fiduciaries need to acknowledge their level and understanding of fiduciary responsibility.
To conclude, fiduciary responsibility can never be delegated away but it can be reduced by following prudent practices. Therefore for those of you out there who are acting in a trusteeship capacity and more particularly, have a responsibility as an investment steward or fiduciary, a future requirement will be to demonstrate a standard of excellence or best practice in managing your trust investment decisions.
This article was submitted for the interest of members by Stuart King of Nairn Fisher Limited, Chartered Accountants. The content includes information supplied by the ‘Fiduciary 360’ organisation whom the writer acknowledges and thanks. It should be used as a guide only and it is recommended that you consult with your tax advisor or Nairn Fisher Limited before acting on any of the information contained in the article.
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