A new bill introduces a provision that clarifies what directors should consider when they make decisions.  This is actually big news because it signals a move away from ‘shareholder primacy’ towards stakeholder capitalism where directors consider many perspectives when making decisions.

Section 131 of the Companies Act 1993 (the “Act”) explains that a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interest of the company.

The section is silent on what a director should consider when determining what the best interests of the company are.  Generally a key consideration of the past has been the generation of wealth for the company’s shareholders.

The Bill adds a new subsection (5) to section 131 that reads as follows:

(5)        To avoid doubt, a director of a company may, when determining the best interests of the company, take into account recognised environmental, social and governance factors, such as:

  • recognising the principles of the Treaty of Waitangi (Te Tiriti o Waitangi):
  • reducing adverse environmental impacts:
  • upholding high standards of ethical behaviour:
  • following fair and equitable employment practices:
  • recognising the interests of the wider community.

The key here is that this amendment introduces additional environmental, social and governance factors that directors may consider when determining the best interests of the company.  It is a statutory recognition that directors can (and should) look beyond the generation of wealth when making decisions for the company.

One question to consider – and possibly submit on – is whether the term “may” reduces the impact of this proposed change.  What if it were “must” instead.  Another argument some make (that we do not agree with) is that directors already do all this so no need to have a change.  In our view this is a helpful change which clarifies the position for directors.

You can here more about the proposed changes and what they mean in this Seeds Podcast episode, where our Partner Steven Moe interviews Dr Duncan Webb on his bill.

We have helped many for purpose entities over the years and would be happy to discuss your situation with you.  Please feel free to contact us at Parry Field Lawyers.

 

Introduction

With over 28,000 registered charities in New Zealand, the Charities Amendment Bill (the “Bill”) will have a far reaching impact in the for purpose sector. The Bill had its first reading on the 28th September 2022 and submissions are being accepted until 9th December 2022.  This article explains how you can make a submission, with Part 1 explaining the key changes introduced by the Bill.

What are submissions?

A submission is an opportunity to present your opinions, observations and recommendations on the Bill before a select committee. Submissions are written, but you can say within your submission that you would like to talk to the committee in person if you wish. Once the select committee has completed its work on the Bill, it will create a report that explains what it has learnt and suggests recommended changes to the Bill. The Bill will then move on to its second reading.

Making your submission

Before making a submission, we suggest you read our article on the key changes introduced by the Bill and look at the Bill itself. You may also find it helpful to do further research on what others are saying about the Bill, look at other submissions that have been made here, or even talk to people involved in your organisation about the Bill. You can listen to the discussion Sue Barker and Steven Moe had on the Bill here.

Once you have an idea of what you would like to say in your submission, you can write your submission. Parliament’s website explains that it is easier for a select committee to understand your submission if it is presented well.

You can make a submission by visiting this link on Parliament’s website and clicking the “I am ready to make my submission” box. You will be asked for your details, whether you want to make an oral submission and to either upload your submission or complete an online submission form. You can then review and submit your submission.

You have until 11:59pm on Friday 9th December 2022 to make your submission. Making a submission is a great way to share your thoughts on what you would like to see in the Bill and provide input on the law that affects all 28,000 charities in New Zealand.

Summary

We also have other free resources available for charities and for purpose entities that may be of interest:

We have helped many for purpose entities over the years and would be happy to discuss your situation with you. Please feel free to contact us at Parry Field Lawyers.

Introduction

With over 28,000 registered charities in New Zealand, the Charities Amendment Bill (the “Bill”) will have a far reaching impact in the for purpose sector. The Bill had its first reading on the 28th September 2022 and submissions are being accepted until 9th December 2022. This article sets out some of the key changes introduced by the Bill, with Part 2 explaining how you can make a submission. You can look at the progress of the Bill in Parliament here and see the Bill itself here.

1. Requirements for officers and governance of charities

The Bill includes some clarification and additional requirements for officers and the governance of charities. For example, the Bill sets out the role of an officer includes assisting the charity to:

(a) deliver its charitable purposes; and
(b) comply with its obligations under the Charities Act 2005 (the “Act”) or any other enactment.

The Bill also expands the definition of officer to include a person who is able to exercise significant influence over the management or administration of the entity, along with trustees and members of the governing body. This expanded definition aligns with the definition of officer in the Incorporated Societies Act 2022. The Bill also requires at least one of the officers of the charity to be 18 years or older. This recognises the requirements in the Companies Act 1993 and Trusts Act 2019 for directors or trustees to be at least 18 years old, but also recognises that young people aged 16 or 17 can contribute to charitable work by being an officer.

In relation to governance, the Bill requires charities to review their governance procedures (whether those are set out in their constitution or trust deed or elsewhere) annually. The Explanatory Note suggests this promotes good governance and requires charities to check in on whether their governance procedures are up to date, work towards achieving their charitable purpose and help the charity to comply with the Act.

2. Financial reporting requirements

The Bill allows the regulator of charities to exempt very small charities from the tier four financial reporting standards. The charities that qualify for the exemption and the minimal reporting information that will be required from them will be set out in the regulations.

This change recognises that very small charities are often volunteer run and have limited resources. The Explanatory Note to the Bill explains that this change has been introduced to acknowledge the tier four reporting requirements for very small charities may be disproportionate to the transparency needed from them. We wonder whether the regulations will introduce standards similar to those in the new Incorporated Societies Act 2022 for small societies.

3. Regulatory decision-making

There are two regulators under the Act: Te Rātā Atawhai, the independent Charities Registration Board (the “Board”), and the chief executive of Te Tari Taiwhenua Department of Internal Affairs. The Bill increases the processes these regulators are required to comply with when they exercise their powers under the Act in order to align with best practice, enhance transparency, fairness and accountability of their decision making.

For example, the Bill includes more situations where an entity can object to a decision made under the Charities Act, allows charities to be heard by the decision maker in person, increases time frames for lodging objections and increases the number of members on the Board.

4. Appeals framework

Rather than the High Court hearing first instance appeals on the Charities Act, the Taxation Review Authority (the “Authority”) is given that power. The Explanatory Note discusses how the Authority is the most appropriate existing tribunal to hear these appeals owing to the historical connection between tax and charities law.

Authority decisions can then be appealed to the High Court, or referred to the High Court on questions of law or where the Authority decides the High Court should hear the appeal.

5. Regulatory compliance and enforcement tools

The Bill makes some changes to better the compliance and enforcement functions of the regulators. For example, the Bill explicitly states that charities must remain qualified for registration by maintaining its charitable purposes, have officers that are qualified under the Act and maintaining its rules. This doesn’t introduce new obligations for charities, rather it clarifies what was already there.

The Bill also clarifies the definition of serious wrongdoing and gives Te Rātā Atawhai, the independent Charities Registration Board, greater discretion to disqualify an officer.

Summary

This article is a summary of the key changes in the Charities Amendment Bill. You can find the Bill itself here. To learn how to make a submission, check out our article here.

We have helped many for purpose entities over the years and would be happy to discuss your situation with you. Please feel free to contact us at Parry Field Lawyers.

We also have other free resources available for charities and for purpose entities that may be of interest:

• Our Charities in New Zealand: A Legal Handbook
• Our Information Hub on the new Incorporated Societies Act 2022
• We host monthly impact calls to hear from a variety of voices across the for purpose sector – you can find out more here
• Below is a discussion of the Charities Amendment Bill with Steven Moe and Sue Barker – this goes into more detail about the changes and how you can make a submission

Charitable trusts and incorporated societies are two common legal vehicles for doing good in New Zealand. There is often confusion around the different structures. We have provided a brief summary outlining the benefits and drawbacks of each option below:

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 24,000 incorporated societies in New Zealand. The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which has been long overdue for an upgrade. We have discussed ten key changes for incorporated societies to be aware of in our article here and provided a lot of detailed information in the form of articles and seminars here. Contact us for a copy of our comprehensive handbook.

This article will discuss when all of these changes start to affect your society.

Timing of the new Act

The old Act is still in force, with the new Act coming into force in stages up until the transition date. Clause 3 of schedule 1 of the new Act explains that the transition date is the later of 1 December 2025 and the date that is two and a half years after clause 4 comes into force. Companies Office guidance suggests the transition date will be April 2026.

An application for the incorporation of a society under the old Act may not be made after clause 4 of schedule 1 of the new Act commences. This clause will commence any time between now and 5th October 2023 per section 2 of the new Act. Under clause 2 of schedule 1 of the new Act, a society which does not register under the new Act by the transition date will cease to exist from that date. Companies Office has also released guidance here.

As part of the changes under the new Act, every society will be required to reregister under the new Act (which we discuss in some detail here). Companies Office has advised that as long as a society’s constitution complies with the old Act, a society can make changes to its constitution that reflect and include references to the new Act. This means that your society can start to think about what changes it will need to incorporate into its constitution now in preparation for the new Act. This is something we can help you with, as we have already helped many societies update their rules to reflect the new Act.

Although the new Act is not yet in force, we encourage you to begin discussions with your society around the changes in the new Act. It will take time to agree to the required changes for your society’s constitution, and you may even find that a society is not the best legal vehicle for you (find out more here).

Summary

We have been helping societies amend their rules for the new Act and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have many more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 24,000 incorporated societies in New Zealand. The new Act replaces the Incorporated Societies Act 1908, which has been long overdue for an upgrade. We have discussed ten key changes for incorporated societies to be aware of in our article here.

In this article we will do a deep dive into one of the many changes in the new Act, namely the conflict of interest disclosure procedure. This will be important for incorporated societies to get right to ensure those involved are not conflicted, or if they are that the conflicts are disclosed.

When an officer has interest in a matter

The new Act requires an officer to disclose when they are interested in “a matter”. A matter is defined in section 62(4) of the new Act as meaning a society’s performance of its activities or exercise of its powers, or a transaction made or entered into, or proposed to be entered into, by the society.

Under section 62 of the new Act, an officer is interested in a matter if they or one of their relatives may obtain financial benefit from the matter, or they or one of their relatives may have a financial interest in a person to whom the matter relates, or they are interested in the matter because the society’s constitution says so. However, an officer is not interested in a matter:

  • simply because they receive indemnity, insurance cover, remuneration, or other benefits authorised under the new Act; or
  • if the officer’s interest is the same or substantially the same as the benefit or interest of all or most other members of the society due to their membership; or
  • if the officer’s interest is so remote or insignificant that it cannot reasonably be regarded as likely to influence the officer in carrying out their responsibilities under the Act or the society’s constitution; or
  • the officer’s interest is of a kind that is specified in the society’s constitution for the purposes of section 62(2)(d).

The starting point then is to work out if there is a conflict using those criteria. Not everything is a conflict.

Duty of disclosure

If an officer is interested in a matter relating to the society, under section 63 of the new Act they must disclose the details of the nature and extent of the interest (where possible including monetary value of the interest) to the committee and record it on the interests register (discussed below). This disclosure must be made as soon as practicable after the officer becomes aware of their interest in the matter.

The interests register

The interests register is a register of all of the disclosures made by officers under section 63. It is kept and maintained by the committee, and may be inspected by an officer at any reasonable time as set out in section 73 of the new Act.

Consequences of an officer’s interest

As a result of their interest in the matter, the officer cannot vote or take part in a decision of the committee relating to the matter or sign any document relating to the entry into a transaction or the initiation of the matter, as set out in section 64(1)(a)-(b) of the new Act. However, the officer can take part in discussion relating to the matter and be present when the committee are making a decision (unless the committee decides otherwise). All of the officers who are not interested in the matter can consent to the interested officer doing the acts set out in section 64(1)(a)-(b), thereby allowing the interested officer to do any of these acts. Despite this, if half or more of the officers are interested in the matter and therefore cannot vote, the committee must call a special general meeting to determine the matter under section 64(3).

Notice to members in certain circumstances

If an officer does not disclose their interest in a matter under section 63 or is interested in a matter but still takes part in a vote, decision making or signing of documents in relation to the matter in contravention of section 64, then the committee must notify the members of the society in accordance with section 65(1) of the new Act. This notice would be of the failure to comply with section 63 or 64 and should list any transactions affected, and be sent out as soon as practicable after the committee becomes aware of the failure.

Where an officer is interested in a transaction, section 68(1) of the new Act allows a society to avoid the transaction up to three months after the society has notified its members under section 65(1). It’s not as easy as that, though – there are further limitations set out below.

Permissible amendments to the conflict of interest disclosure procedure

There is some flexibility here. The new Act gives a society the ability to negate, limit or modify the above (except for section 62, which explains when an officer has an interest in a matter). Under section 67 of the new Act, a society’s constitution may negate, limit or modify any provisions of sections 63, 64, 65(1) and 73 as long as the changes still satisfy the conditions prescribed by the regulations (if any).

The society’s constitution may also negate or limit the society’s ability to avoid a transaction under section 68(1) as long as the changes still satisfy the conditions prescribed by the regulations (if any). This means, for example, a society could require two thirds of officers to be interested in the matter before a special general meeting is called to determine the matter rather than half. We have prepared detailed notes on what your constitution must contain under the new Act which are available here, and can help you to consider your options in relation to your conflict of interest disclosure procedure.

What cannot be changed

There are some parts of the new Act that cannot be altered by the society’s constitution:

  • Section 65(2)-(3), which explains that any failure to comply with section 63 or 64 does not affect the validity of the new act, but this does not limit a person’s right to apply for judicial review.
  • Section 66, which says that regulations may require every member of the society to be notified or for notification to be made to the members as a group.
  • Section 68(2)-(4), which says that a transaction cannot be avoided under section 68(1) (discussed earlier) where the society received fair value under it. Fair value is defined in section 69 and the onus of proving fair value is set out in section 70. Additionally, a transaction can only be avoided on the ground of the officer’s interest, and a constitution cannot allow a transaction to be avoided in any circumstances other than those set out in the new Act.
  • Section 71, which explains that if a third party has acquired property from a person other than the society for valuable consideration and without knowledge of the circumstances of the transaction under which the other person initially acquired the property from the society, the avoidance of a transaction will not affect the third party’s title or interest to or in the property.
  • Section 72, which reiterates that the conflict of interest procedure does not apply in relation to salary, wages or other payments paid to officers in accordance with section 24(1)(h), or an indemnity given or insurance provided in accordance with subpart 6.

Summary

With the new Act comes a lot of changes to the requirements for an incorporated society’s constitution. We have helped many incorporated societies over the years and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have a lot more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

Following the introduction of the new Incorporated Societies Act 2022 (the “new Act”) there are many changes that will be relevant to your society.

One really big change is existing societies will need to reregister under the new Act. A consequence of not reregistering is that the society will cease to exist from either 1 December 2025 or two and a half years after clause 4 of schedule 1 commences, whichever date is later (the “transition date”). Companies Office guidance suggests the transition date will be April 2026. While there is still time, it would be prudent for societies registered under the Incorporated Societies Act 1908 (the “old Act”) to understand how to reregister under this new regime. If this is you, a review of your rules is needed to ensure it complies with these new regulations. We have written a series of articles on the requirements for your constitution under the new Act, which you can find here.

How do I reregister my society?

The first schedule to the new Act sets out the process for existing societies under the old Act to reregister as societies under the new Act. Until the transition date or until reregistration, the old Act will still apply to existing societies. Before that date, a society can apply to the Registrar of Incorporated Societies to be reregistered as long as it is not in liquidation. Provided all the requirements for incorporation under the new Act are met, the society will be reregistered.

What is needed in an application to be reregistered?

Clause 5 provides for the necessary documents and information needed in an application. Namely, that an application must be created in a manner prescribed by the regulations and have in it, or accompanied with it:

  • The information prescribed by the regulations; and
  • The society’s proposed name;
  • At least 1 contact person’s name and contact details;
  • A copy of the society’s proposed constitution; and
  • The fee prescribed by the regulations.

‘Regulations’ mean the regulations as set out in the new Act. An existing society may amend its rules in accordance with clause 9 or make a new constitution in accordance with clause 10 to ensure they comply with the new Act’s requirements. We have written a series of articles on the requirements for your constitution under the new Act, which you can find here.

Reregistration by the registrar

To issue a society with a certificate of incorporation and register a society’s name and constitution, the Registrar must be satisfied with the society’s application for reregistration. Additionally, the grounds in section 8 and 11 to 13 must not apply. These are grounds for the Registrar to refuse to incorporate a society, including:

  • the society is ineligible to be an incorporated society;
  • the society’s name does not comply with the requirements;
  • the society’s purposes do not comply with the new Act; and
  • the society’s constitution does not comply with the new Act.

However, if any of these grounds apply, the Registrar may still reregister the society subject to terms and conditions ensuring the grounds are addressed within a reasonable time. If the grounds are not addressed the society may be removed by the Registrar.

What happens to your society after reregistering?

Clause 11 of the new Act provides that upon reregistration a society will continue as the same legal entity – it does not create a whole new legal entity. Subject to the rights or obligations imposed on the society by the new Act or its constitution, the property, rights and obligations of the existing society are not affected by reregistration. Similarly, any proceedings the existing society is involved in (or will  be involved in) can continue (or commence) following reregistration, as set out in clause 11(5).

 What are the consequences of not reregistering?

Where an existing society does not reregister and is still incorporated under the old Act, upon the transition date, they will cease to exist and be deemed under the new Act to have been removed by the Registrar as per clause 12. If this happens its surplus assets will be distributed according to part 5 subpart 5 of the new Act. However, the Registrar, or the court in prescribed circumstances, has the power to restore an existing society to the register under section 185 or section 188. Note this cannot be done if six years has passed since the existing society ceased to exist. Clause 12(3) of schedule 1 sets out what happens where a society’s application to reregister has not been fully determined by the transition date.

Summary

With the new Act comes a lot of changes to the requirements for an incorporated society’s constitution. We have helped many incorporated societies over the years and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have a lot more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 24,000 incorporated societies in New Zealand. The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which has been long overdue for an upgrade. We have discussed ten key changes for incorporated societies to be aware of in our article here and provided a lot of detailed information in the form of articles and seminars here. Contact us for a copy of our comprehensive handbook.

All incorporated societies will be required to reregister under the new Act, so it is a chance to revisit all aspects of these organisations. Section 26 of the new Act sets out what a society’s constitution must contain. This is important as the society’s constitution must comply with the new Act in order to reregister. We have detailed notes on the reregistration process here and are helping many comply with the requirements.

In a series of six articles we have set out the key requirements for your society’s updated constitution, as prescribed by section 26 of the new Act. This article will discuss what your constitution needs to provide in relation to governance.

Name

Similar to the old Act, the new Act requires the society’s constitution to include its name. The new Act also explains the Registrar must refuse to incorporate a society under a particular name in the circumstances set out in section 11 of the new Act, such as:

  • The use of the name would contravene legislation;
  • the name is identical or almost identical to the name of another society, company or body corporate; or
  • where the name does not include the word “Incorporated”, “Inc”, or “Manatōpū” (or 2 or more of those words) as the last word or words of the name.

Purposes

The new Act requires the society’s constitution to include its purposes, which is similar to the requirements of the old Act. Under section 12 of the new Act, the Registrar must refuse to incorporate a society if its purposes include an unlawful purpose or a purpose of carrying on the society for the financial gain of any of its members.

We think having purpose clearly set out is a good idea and discuss that a lot more over here.

Control and management of finances

Similar to the old Act, the new Act requires the constitution to provide for how the society will control and manage its finances.

Winding up

The new Act expands on the old Act, setting out particular requirements for the distribution of the society’s property on liquidation. The society’s constitution must nominate a not-for-profit entity, or a class or description of not-for-profit entities, to which any of the society’s surplus assets should be distributed on liquidation or removal from the register. Under section 216 of the new Act, the surplus is the remaining assets of the society after all of the costs, debts and liabilities have been paid. Section 216 also sets out what happens where more than one not-for-profit entity has been nominated in the society’s constitution. Section 5(3) of the new Act defines a not-for-profit entity and subpart 5 of part 5 sets out other matters relating to the removal or liquidation of a society.

Summary

With the new Act comes a lot of changes to the requirements for an incorporated society’s constitution. We have helped many incorporated societies over the years and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have a lot more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

More from this series

The new Incorporated Societies Act 2022 and your constitution: What has changed for membership?

The new Incorporated Societies Act 2022 and your constitution: What has changed for governance?

The new Incorporated Societies Act 2022 and your constitution: Requirements for general meetings

The new Incorporated Societies Act 2022 and your constitution: Amendment procedures

The new Incorporated Societies Act 2022 and your constitution: Dispute resolution procedures

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 24,000 incorporated societies in New Zealand. The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which has been long overdue for an upgrade. We have discussed ten key changes for incorporated societies to be aware of in our article here and provided a lot of detailed information in the form of articles and seminars here. Contact us for a copy of our comprehensive handbook.

All incorporated societies will be required to reregister under the new Act, so it is a chance to revisit all aspects of these organisations. Section 26 of the new Act sets out what a society’s constitution must contain. This is important as the society’s constitution must comply with the new Act in order to reregister. We have detailed notes on the reregistration process here and are helping many comply with the requirements.

In a series of six articles we have set out the key requirements for your society’s updated constitution, as prescribed by section 26 of the new Act. This article will discuss what your constitution needs to provide in relation to disputes resolution procedures.

Dispute resolution procedures

Unlike the old Act, the new Act requires the society’s constitution to include dispute resolution procedures, including provision for how a complaint may be made, in accordance with sections 38 to 44.

  • A society can develop its own dispute resolution procedures, so long as those procedures are consistent with natural justice. This is provided for by section 39 of the new Act.
  • Clauses 2 to 8 of schedule 2 sets out disputes resolution procedures a society may decide to include. Should a society include the schedule 2 procedures, its dispute resolution procedures will be presumed to be consistent with natural justice according to section 41 of the new Act.
  • If a society’s constitution does not contain dispute resolution procedures, under clause 6 of schedule 1 the constitution will be treated as including those procedures set out in the Act.

Summary

With the new Act comes a lot of changes to the requirements for an incorporated society’s constitution. We have helped many incorporated societies over the years and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have a lot more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

More from this series

The new Incorporated Societies Act 2022 and your constitution: What has changed for membership?

The new Incorporated Societies Act 2022 and your constitution: What has changed for governance?

The new Incorporated Societies Act 2022 and your constitution: Requirements for general meetings

The new Incorporated Societies Act 2022 and your constitution: Amendment procedures

The new Incorporated Societies Act 2022 and your constitution: Name, purposes and winding up

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 24,000 incorporated societies in New Zealand. The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which has been long overdue for an upgrade. We have discussed ten key changes for incorporated societies to be aware of in our article here and provided a lot of detailed information in the form of articles and seminars here. Contact us for a copy of our comprehensive handbook.

All incorporated societies will be required to reregister under the new Act, so it is a chance to revisit all aspects of these organisations. Section 26 of the new Act sets out what a society’s constitution must contain. This is important as the society’s constitution must comply with the new Act in order to reregister. We have detailed notes on the reregistration process here and are helping many comply with the requirements.

In a series of six articles we have set out the key requirements for your society’s updated constitution, as prescribed by section 26 of the new Act. This article will discuss what your constitution needs to provide in relation to amendment procedures.

Amendment procedures

The new Act includes guidance around the amendment procedures to be included in the society’s constitution.

Under section 30 of the new Act a society may amend its constitution in the manner provided by the constitution, but every amendment must be:

  • in writing;
  • approved at a general meeting by a resolution passed by the relevant majority (discussed below) required by the constitution (or by resolution passed in lieu of a meeting in accordance with section 89 of the new Act); and
  • otherwise made in accordance with the society’s constitution.

This procedure must be set out in the society’s constitution, including whether the relevant majority is a simple majority or a higher majority and any additional requirements beyond those set out in section 30 of the new Act. Under the new Act a relevant majority means either:

  • a simple majority of the votes of those members entitled to vote and voting on the issue; or
  • where a higher majority is required by the society’s constitution, that higher majority of the votes of those members entitled to vote and voting on the issue.

Minor amendments

Section 31 of the new Act sets out the procedure for minor or technical amendments. Such amendments have no more than a minor effect, correct errors or make similar technical alterations. Where there needs to be a minor or technical amendment to the constitution, the committee must ensure written notice of the amendment is sent to every member in accordance with the society’s constitution. This notice must include the text of the amendment and the member’s right to object to the amendment. If the committee does not receive an objection from a member within 20 working days after the date on which the notice was sent (or any longer period specified in the constitution), the committee may make the amendment. If an objection is received, then the committee may not make an amendment. This section 31 procedure must be set out in the society’s constitution.

Summary

With the new Act comes a lot of changes to the requirements for an incorporated society’s constitution. We have helped many incorporated societies over the years and would be happy to discuss your situation with you, especially when it comes to amending your society’s constitution so it meets the requirements set out in the new Act. You can contact us any time by email or phone.

We have a lot more resources at this page dedicated to the Incorporated Societies Act 2022.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:

More from this series

The new Incorporated Societies Act 2022 and your constitution: What has changed for membership?

The new Incorporated Societies Act 2022 and your constitution: What has changed for governance?

The new Incorporated Societies Act 2022 and your constitution: Requirements for general meetings

The new Incorporated Societies Act 2022 and your constitution: Dispute resolution procedures

The new Incorporated Societies Act 2022 and your constitution: Name, purposes and winding up