Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 23,000 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 either 1 December 2025 or 2.5 years after clause 4 comes into force.

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. MBIE 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 23,000 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 s 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 the 1st of December 2025 or two and a half years after clause 4 of schedule 1 commences, whichever date is later (the “transition date”). Whilst 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 23,000 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 23,000 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. We have prepared detailed notes on the requirements for the dispute resolution procedures.

  • At a high level though, 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 23,000 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

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 23,000 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 general meetings.

General meetings

The new Act expands on the old Act in setting out several requirements for general meetings, which must be included in the society’s constitution. The requirements for general meetings are in sections 84 to 93 of the new Act. We are preparing detailed notes on the requirements for general meetings but have canvassed below the key elements of the new Act to be included in a society’s constitution.

Timing of annual general meetings

The intervals between annual general meetings (“AGMs”) must be set out in the society’s constitution. Under section 84 of the new Act, a society must call an AGM no later than 6 months after the society’s balance date and no later than 15 months after the previous AGM. There is an exception to this rule for a society which is newly incorporated – a society does not have to hold its first annual general meeting in the calendar year of its incorporation but must hold that meeting within 18 months after its incorporation. Logically this would only apply to a newly incorporated society, not a society who is reregistering under the new Act.

Procedure at annual general meetings

Unlike the old Act, the new Act is prescriptive and requires the constitution to provide for the information that must be presented at general meetings. As set out in section 86 of the new Act, the required information is:

  • an annual report on the operations and affairs of the society during the most recently completed accounting period;
  • the society’s financial statements for that period; and
  • notice of the disclosures and types of disclosures made under the duty of officers to disclose when they are interested in a matter under section 63 during that period, including a brief summary of the matters or types of matters disclosed. We have more information on the conflict of interest disclosure procedure here.

Under section 84 of the new Act, minutes are required to be kept for AGMs. This requirement must be included in the society’s constitution.

Passing of resolutions

Under the new Act, a society’s constitution should include whether, and if so, how resolutions may be passed in lieu of a general meeting. If the constitution allows for a resolution to be passed in lieu of a meeting, then sections 89 to 92 of the new Act will apply. We have included more information on such resolutions in the notes we are preparing on general meetings.

How meetings are called

Similar to the old Act, the new Act requires the society’s constitution to provide for the manner of calling general meetings. The new Act also requires the society’s constitution to include the time within which, and the manner by which, notices of general meetings and notices of motion must be notified. The society’s constitution must also provide for the quorum and procedure for general meetings (including for example whether votes may be cast by electronic means), including voting procedures, procedures for proxies (if any), and whether the quorum takes into account the members present by proxy or casting postal votes or votes by electronic means.

The society’s constitution must also include the arrangements and requirements for special general meetings under section 64(3), unless that provision has been negated under section 67. Section 64(3) requires a special general meeting of the society to be called to consider and determine a matter which half or more of the officers are prevented from voting on. You can find a full discussion of these sections and the conflict of interests procedure in our article here.

AGMs and meetings are important for an incorporated society – they are one of the key differences from other entities, so it makes sense that there are rules about them which had been lacking before.

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: Amendment procedures

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

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 23,000 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.

Committee

The old Act only required a society to have officers. Under the new Act, a society must have a committee. The society’s constitution must include the composition, roles, functions, powers and procedures of the society. This involves several requirements discussed below and in other articles in this series, which you can find here.

The society’s constitution must include the number of members that must or may be on the committee. Under section 45 of the new Act, the committee must comprise of 3 or more officers who are qualified to be elected or appointed under section 47 (discussed below). A majority of the officers must also be members of the society or representatives of bodies corporate that are members of the society.

Appointment of officers

The society’s constitution must include the requirements for the election and appointment of officers. Section 47 of the new Act sets out the qualifications of officers, including that the officer:

  • is a natural person;
  • has consented in writing to be an officer; and
  • certifies they are not disqualified under section 47(3) of the new Act.

There is a long list of disqualifications under section 47(3) of the new Act, but this list is largely similar to that in legislation regulating other legal entities. Someone under 16 years of age or someone who is an undischarged bankrupt are examples of persons who are disqualified from being elected or appointed as an officer. It would be prudent to include in the society’s constitution the list the qualifications of officers along with the procedure for election or appointment of officers although it could be kept as a separate policy document.

Functions and powers

The society’s constitution must also include the functions and powers of the committee. These are set out in section 46 of the new Act, which says that the committee’s function is to manage or directly supervise the operation and affairs of a society. Accordingly, the committee has all the powers necessary for managing, and for directing and supervising the management of, the operation and affairs of the society.

Removal of officers

The new Act requires the society’s constitution to include the grounds for an officer’s removal from office. Section 50 of the new Act says that an officer may cease to be an officer if they are removed in accordance with the society’s constitution, or if the officer:

  • resigns;
  • becomes disqualified from being an officer under section 47(3);
  • dies; or
  • otherwise vacates office in accordance with the society’s constitution.

Further requirements 

The new Act requires the constitution to also include the following information:

  • the terms of office of the officers;
  • how the chairperson (if any) will be elected or appointed and whether that person will have a casting vote if there is an equality of votes; and
  • the quorum and procedure for committee meetings, including voting procedures.

The intention behind all of these new requirements is to improve governance for incorporated societies by setting out how they need to act.

Contact person

Section 113 of the new Act introduces a new requirement for a society to have at least one contact person at all times (and it may have up to 3 contact people). The purpose of this requirement is for the society to have someone the Registrar can contact when needed. The contact person must be at least 18 years old and ordinarily resident in New Zealand (in accordance with section 114 of the new Act).

How the contact person or persons will be elected or appointed 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: 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

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 23,000 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 membership.

Number of members

Membership is a key point of difference for incorporated societies compared to other legal forms. It is a source of strength as a member led organisation can draw on the enthusiasm of its member base.

Under section 74 of the new Act, a society must have at least 10 members to register as a society. This is a decrease from the 15 members required under the old Act.

A body corporate is still treated as being 3 members for the purpose of determining the number of members, as per section 14 of the new Act.

There was no continuous minimum membership requirement under the old Act, but section 74 of the new Act dictates that a society must have at least 10 members at all times. This will be something that societies need to keep an eye on – especially smaller ones.

Under section 75 of the new Act, if a society has fewer than 10 members the Registrar may intervene and give the society six months to increase its membership. If the society fails to increase its membership, the Registrar may apply to the High Court to put the society into liquidation or remove the society from the register.

Section 26 of the new Act does not require a society to include the membership minimum in its constitution, but it may wish to do so because of the consequences of falling below 10 members.

Member details

Both the old Act and the new Act provide that a society’s constitution must set out how a person becomes a member of the society and how a person ceases to be a member of the society.

The new Act stipulates that a society’s constitution must contain a requirement that a person consents to being a member of the society. Consent is required under section 76 of the new Act, which also explains the consent of a body corporate may be given on its behalf in writing by a person acting under the body corporate’s express or implied authority.

Under section 79 of the new Act, a society must keep a register of its members which contains the following details for each member:

  • name;
  • last known contact details (which at least includes a phone number, along with a physical or email address);
  • the date on which they became a member; and
  • any other information prescribed by the regulations (if any).

The society’s register must be updated as soon as practicable after the society becomes aware of the need for an update. The society’s constitution must include its arrangements for keeping its register up to date according to these requirements set out in section 79 of the new 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 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

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

Introduction

A big change has finally arrived that will affect all 23,000 incorporated societies who have operated for generations under an antiquated Act.  The Incorporated Societies Act 2022 (the “new Act”) finally received Royal Assent on 5 April 2022.  The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which had been long overdue for an upgrade. Under section 2 of the new Act the provisions for making regulations came into force the day after the date of Royal Assent, but the remainder of the new Act comes into force in stages by no later than 5 October 2023.

One fundamental point that will impact on next steps is that a new constitution (the rules of the organisation) will need to be adopted and reregistration will be required.  We have some detailed notes on the implications of this, which you can find on our page dedicated to incorporated societies.

However, in this article we have set out ten key changes in the new Act for incorporated societies to be aware of:

1. Committee required

The old Act does not require a society to have a committee, only officers.  Under section 45 of the new Act a society must have a committee, which comprises of 3 or more qualified officers.  The committee is responsible for managing the operation or affairs of the society and is defined in the Act as “the governing body of the society, however described (for example, a board)”.

An officer is defined as:

  • a natural person who is a member of the committee; or
  • a natural person occupying a position that allows them to exercise significant influence over the management or administration of the society (such as a treasurer or chief executive); or
  • any other natural person who is declared to be an officer by regulation.

Section 47 sets out the qualifications of officers, including that:

  • the officer is a natural person;
  • has consented to be an officer; and
  • certifies they are not disqualified under section 47(3) of the new Act.

There is also a long list of disqualifications under section 47(3) of the new Act, but this list is largely similar to that in legislation regulating other legal entities.

2. Officers’ duties

The new Act codifies some existing common law officers’ duties.  These duties are owed to the society, not its members, and are set out in sections 54-61 of the new Act.  In short, these include:

  • duty to act in good faith and in the society’s best interests;
  • duty to exercise powers for a proper purpose;
  • duty to comply with the new Act and the society’s constitution;
  • duty of care;
  • duty not to create substantial risk of serious loss to creditors; and
  • duty not to agree to the society incurring obligations that it cannot perform.

These last two were subject to some criticism in the final reading of the Bill, with some MPs arguing that they are more appropriate for commercial contexts where directors are well compensated.  However, they have now been adopted here.

As a result of these new officers’ duties and the wide definition of officer in the new Act, we suggest that incorporated societies have director and officer insurance.

3. Membership minimum changed

Under section 74 of the new Act, a society must have at least 10 members to register as a society. This is a decrease from the 15 members required under the old Act.

A body corporate is still treated as being 3 members for the purpose of determining the number of members, as per section 14 of the new Act.

There was no continuous minimum membership requirement under the old Act, but section 74 of the new Act dictates that a society must have at least 10 members at all times. This will be something that societies need to keep an eye on – especially smaller ones.

Under section 75 of the new Act, if a society has fewer than 10 members the Registrar may intervene and give the society six months to increase its membership. If the society fails to increase its membership, the Registrar may apply to the High Court to put the society into liquidation or remove the society from the register.

4. Consent

Under section 76 of the new Act, a person must consent to become a member of the society.  To comply with this section, a society should review its membership application processes and constitution to ensure the person consents to becoming a member of the society.

5. Dispute resolution

Under section 26(1)(j) of the new Act, a society’s constitution must include procedures for resolving disputes.  The society can develop its own procedures, so long as those procedures are consistent with natural justice.  Clauses 2 to 8 of schedule 2 set out 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.

6. Reregistration

Under schedule 1, a society will continue to be subject to the old Act until it reregisters as a society under the new Act.  A society must reregister by the transition date, which is the later of 1 December 2025 and the date that is 2 years and 6 months after the commencement of clause 4. If a society fails to reregister in time, it may cease to exist on the transition date (the date where the old Act is repealed).

In order to reregister, the society’s constitution must meet the requirement of the new Act and include the information set out in section 26 of the new Act.  We can help you ensure your constitution is up to scratch before reregistering under the new Act, including ensuring your constitution provides for the changes set out above.

7. Financial reporting

What will be the standards needed for financial reporting?  Well, part 3, subpart 7 of the new Act sets out new accounting standards.  The incorporated society will need to prepare their financial statements in accordance with the standard that suits the size of their society.  For example, a small society may prepare their financial statement according to generally accepted accounting practice, a non-GAAP standard that applies for the purposes of section 102, or the requirements set out in section 104.

Within six months of the balance date (which is the date specified in the constitution, adopted by the committee or 31 March), the society must:

  • complete the society’s financial statements for that balance date;
  • date and sign those financial statements by or on behalf of the society by 2 members of the committee; and
  • give copies of those financial statements to the Registrar for registration.

Under section 105 of the new Act, larger societies will need to have their financial statements audited.

8. Amalgamation

The Law Commission noted in its report that the old Act had limited restructuring options, including no provision for amalgamation.  In response to this, the new Act sets out a simplified version of the Companies Act 1993 amalgamation process in Part 5, subpart 2.  This should allow societies to join together, either into one of the societies or a new society.

9. Enforcement

Part 4 of the new Act sets out civil law enforcement provisions that explicitly state the order a court may make and who may apply for a court order. This could help, for example, a member of a society to apply to the court where they believe the society’s constitution has been breached.

10. Offences

Subpart 6 of part 4 of the new Act sets out criminal offences. Infringement offences are less serious and include matters such as failing to notify the Registrar of amendments to the constitution. A society that commits an infringement procedure may be liable to a fine not exceeding $3,000.

The new Act also sets out several serious offences, such as: making false statements; fraudulent use or destruction of property; falsification of register, records, or documents; operating fraudulently or dishonestly incurring debt; improperly using “Incorporated”, “Inc”, or Manatōpū.  These provisions supplement the dishonesty provisions in the Crimes Act 1961 and some of the offences could result in a fine of up to $200,000 and/or a term of imprisonment of up to 5 years.

Summary

With the new Act comes a lot of changes to the requirements for an entity to be an incorporated society.  We have helped many incorporated societies over the years and would be happy to discuss your situation with you.  You can contact us any time by email or phone.

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:

Further helpful resources

Resources for the Incorporated Societies Act 2022

Charitable Trusts vs Incorporated Societies: Which is best?

How to Create an Impact Driven Organisation in New Zealand

Companies Office – Incorporated Societies

Institute of Directors – What leaders of incorporated societies need to know about the new Bill