The Māori Trustee owns shares, in its own right, in around 180 Māori Land Blocks
How did this ownership issue arise?
Back in the 1940’s and early 1950’s there was a push for Māori land title improvements. The objective was to encourage amalgamation of uneconomic Māori Land interests to reduce fragmentation of ownership titles and also to make it easier to bring useable land into production.
Some shares were compulsorily acquired
The Māori Affairs Act 1953 addressed the title improvement measures by enabling the Māori Trustee to purchase uneconomic interests (defined as any share in Māori Land that was valued at less than £10 (later changed to £25)) and make the shares available for purchase by other owners in the Block. The acquisition of uneconomic interests was known as “compulsorily acquired shares”.
Voluntary sales were possible, called Live Buying, and there was strong uptake
This same Act also made it possible to voluntary sell shares to the Māori Trustee, which was known as “Live Buying”. Again, the Māori Trustee paid cash for the shares, amalgamated the shares, and made them available for purchase by other owners in the Block. Many owners sold shares to allow them to repay debts, or to assist in the purchase or building of a new home, or for other purposes. This occurred at a time of substantial Māori migration from rural to urban locations for work purposes, so uptake was high.
Very high number of owners sold their land interests voluntarily
From the late 1950’s to the mid 1960’s Māori Trustee acquired substantial interests in Māori Land, both through compulsory acquisition and through voluntary sale. Increases in the size of share parcels and the value of the shares made resale extremely difficult, resulting in a poor overall percentage uptake. Nevertheless, a large number of shares acquired were actually resold.
Compulsory acquisition abolished – Live Buying continues
Many Māori later became unhappy with the Legislation, in particular the compulsory share purchase aspects. Many felt the loss of shares in ancestral lands compromised their right/ability of tūrangawaewae. Due to general discontent, the compulsory acquisition of uneconomic interests was abolished in 1975. Live buying continued, principally to assist financing housing proposals under the Māori Purposes Act [No. 2] 1973.
Conversion Fund abolished 1987
Māori attitudes to live buying also changed after the abolishment of compulsory acquisition. It was generally recognized that land interests were the link that Māori had to the land of their ancestors and a link that should be retained. On 14 April 1987 the Maori Affairs Amendment Act 1987 came to pass and the Conversion Fund was abolished. At this time the Māori Trustee owned shares in over 5,000 Māori land blocks.
Compulsorily acquired shares given back to original owners at no cost
Compulsorily acquired shares were returned to original owners (free of any charge).
Shares acquired through Live Buying were valued as at 01 April 1987
Valuer-General made a special valuation of the Māori Trustee’s interests in each Block, taking into account the restricted marketability of the shares.
Shares valued at less than $1,000 written-off and vested in other owners
Any shares held by the Māori Trustee in a Block valued at less than $1,000 were vested in the other owners of the land in proportion to their shareholdings.
Creation of mechanism for Māori Trustee’s shares to be acquired by other owners
The value of Māori Trustee’s shares were deemed to be an advance, made by the Māori Trustee to the owners of the other shares in the Block in proportion to their ownership interests – the term used was “Presumed Advance”. In effect the Legislation created a debt owed by all the other owners of a Block to the Māori Trustee. Upon repayment of the debt, the shares owned by the Māori Trustee vest in the other owners in proportion to their existing holdings.
The value of the Māori Trustee’s shares remains the same today
No interest is payable on the Presumed Advance. The Presumed Advance remains the same value as it was in 1987.
Māori Trustee uses any distributions he receives to pay down the Presumed Advance
All income and other money arising from the shares owned by the Māori Trustee are used to pay down the Presumed Advance, until it becomes zero and then the shares vest in the other owners. The other owners may at any time resolve to pay down the Māori Trustee’s Presumed Advance first.
All compulosily acquired shares were given back to the original owners at no cost – they didn’t have
to repay the cash they originally received.
The Māori Trustee is effectively holding the shares he owns in trust for the other current owners of the Block. No-one else has any ability to acquire the Māori Trustee’s shares, including those who may have originally sold them.
The value of the Māori Trustee’s shares is the same as it was in 1987 whereas land prices have risen considerable since then. The other owners therefore have the ability to purchase the Māori Trustee’s interests at a discount to what they would be worth on the open market today.
The mechanism for ownership change from Māori Trustee to the other owners is covered by legislation. The Māori Trustee has no ability to alter the mechanism, negotiate changes, gift, write- down, or write-off the Presumed Advance.