How TEIs may invest

Te whai pūtea tautoko mō ngā TEI

Last updated 9 November 2016
Last updated 11/09/2016

This page sets out the guidance for tertiary education institutions (TEIs) wishing to make investments.

Two Acts specify what investments are allowed

The Education Act 1989 (Sections 192, 202 and 203(4)) and the Public Finance Act 1989 (Section 65I) specify the types of investments in which Crown entities (including TEIs) may invest.

Investing in related entitites

TEI investments in related entities must meet the requirements of section 192 of the Education Act 1989. The section states that TEIs can only perform actions that relate to their core functions of education and research, or that can be performed in association with those functions.

Legislative changes in 2016 clarified how TEIs establish related entities and made changes to their reporting requirements. The new legislation made it clear that TEIs can invest in related entities without seeking approval from the Minister of Finance or undertaking any form of approval process from central agencies for those investments. 

For further information: Governance and accountability for TEI related entities (PDF, 1.1 Mb).

Other TEI investments

Some investments are allowed as of right for TEIs under section 65I of the Public Finance Act 1989. These include deposits within a bank approved by the Minister of Finance for that purpose and investments in public securities.

Ministerial approval is still needed for any other kind of investment that is purely for monetary gain and/or does not align closely with the with the core purpose of the institution.

We can help you through the process if you need Ministerial approval to invest. This is the basic information you will need to provide to us:  

1. Details of the investment ie, form (shareholding/loan/other), purchase price, current market value, term, repayment arrangements, options for renewal/redemption, security arrangements, interest rate/return, and maturity date of investment (if specified).

2. A description of the reason for investing in a security which is not allowed as of right under section 65I and the benefit to the TEI.

3. Commentary on whether the TEI has considered other investment alternatives ie, whether consideration has been given to the opportunity cost involved in the investment.

4. Commentary on how the investment fits with the TEI’s current investment plan, characteristic functions, investment policies and strategies, and capital asset management plans. 

The type and detail of information we will require will depend on the size of the investment compared to the TEI’s own assets (ie, materiality), the general financial status of the TEI, and the types of financial risks involved in the investment.

You can get information on how to make an approval application from our Manager, Monitoring and Crown Ownership. See contact details below.

Best practice for managing investments

We expect you to have best practice policies and procedures for managing treasury functions and investments. At a minimum, you should have a set of protocols to govern your investments and a process for making and approving investment decisions.

For more information

For any enquiries on investments please contact:

Manager, Monitoring and Crown Ownership at the TEC
Phone: (04) 462 5200

Email: Teifm.info@tec.govt.nz.