IWI IKA - supporting iwi fisheries

AFL Income Shares

The AFL Income Shares will provide an additional source of income for AHCs from the end of 2010 when AFL pays its first dividend on income shares.  Here we provide a quick guide on how the AFL income shares are structured and how the dividend is calculated.  The key point is that every AHC should budget for the receipt of a dividend in their financial forecast – payment around December 2010.

AFL Share Structure

The AFL share structure is divided into 125,000 income shares and 125,000 voting shares.  100,000 income shares are allocated to the 57 Iwi listed in the Maori Fisheries Act based on population.  The remaining 25,000 income shares and all voting shares are held by Te Ohu Kaimoana.

Because Iwi only hold income shares they cannot directly influence AFL decision making as they would if they had voting shares.  However, Iwi do have a level of influence through the appointment of their representative on to the Electoral College.  The Electoral College then appoints the board of Te Kawai Taumata, which appoints the board of Te Ohu Kaimoana, which in turn appoints the AFL board.

Selling Income Shares

The Maori Fisheries Act applies strict conditions to the sale of AFL Income Shares - ss 69 to 74.  They can only be sold to another MIO or to an entity within the Te Ohu Group and in accordance with AFL’s constitution.  An iwi must hold its income shares for 2 years before it can sell them.  The exchange of income shares is also treated as a sale.

A MIO must first conduct a postal vote of adult iwi members to ascertain the level of support to sell.  At least 75 per cent of the adult iwi members who vote must support the sale.  Public and private notices must be issued to iwi members specifying the number of shares for sale and their approximate value.

If your Iwi is considering selling its AFL Income Shares, a lawyer and/or financial advisor should be consulted.

Calculating Your Dividend

Not less than 40 per cent of AFL’s (AFL Consolidated Group including all subsidiary companies) net profit after tax (NPAT) must be paid to income shareholders as a dividend.  However, if at any time circumstances exist that would put AFL at risk of breaching the solvency provisions of the Companies Act 2003, then it is not required to pay the 40 per cent dividend but presumably must pay a lower percentage.

AFL proposes to pay its first dividend by December 2010.  Do remember to incorporate an estimate of your AFL dividend into your budget forecast as income to be received around the end of 2010 – beginning of 2011.