Maritime New Zealand has dropped charges against Otago Boy High School and a veteran rowing coach over an accident last year in which three teenage rowers were hit by an out-of-control support boat.
Two 14-year-old boys were seriously injured when a motor boat operated by coach Fred Strachan, 91, collided with a rowing skiff on Otago Harbour.
Spokesman for Maritime New Zealand Harry Hawthorn said the safety watchdog had not realised that as a Crown Organisation, the school could not be charged under the Maritime Transport Act.
The compensation paid to the victims by the school is equal to what the court might have awarded, Mr Hawthorn said.
An investigation found that Mr Strachan was not wearing a lanyard that would normally be attached to a motor cut-off switch.
He was earlier charged with operating a ship in a dangerous or risky manner, while the school's board of trustees faced charges of permitting dangerous or risky use of a ship.