Incorporated Societies - Parry Field Lawyers

We are often called on to assist incorporated societies with disputes. This is why the Incorporated Societies Act 2022 requires all incorporated societies to have a dispute resolution procedure.

While a procedure is a great starting point, on its own it is not a silver bullet. In this article we discuss why and offer practical tips on disputes.

What disputes do we see?

The most common disputes we see are due to:

People interpreting the rules differently due to ambiguity in the constitution. Where there is ambiguity, there is room for different and even contrasting interpretations and therefore conflict.
Officers simply not following the society’s constitutions. This is a fundamental obligation and failure to do so can raise the ire of members and prompt actions to remove officers.
Personality and behaviour clashes between members or between members and officers, or between officers.
Officers pursuing opposing agendas, leading to conflict within the Committee.

What are the consequences

There is often an emotional toll for people involved and for the wider society. We have seen lifelong friendships destroyed and societies wound up. When lawyers are required, there is also a financial cost for the society that will likely be borne by the society as a whole.

How to prevent disputes

Here are our top tips for avoiding disputes:

Have a clear constitution – Remove ambiguity from your constitution.
Follow the rules – The rules bind members and officers. If the rules are no longer fit for purpose, change them, but avoid simply not following the rules because they are inconvenient.
Communicate well – Members are at the heart of incorporated societies. Keep members informed of what decisions have been made and why. In our experience, the greater the transparency, the higher the trust.
Set behaviour expectations – Constitutions (rules) generally focus on what to do without much focus on behaviour. Consider using a Code of Conduct to set out behaviour expectations, or embed these in the constitution. Consider making it an obligation of membership to adhere to specific behaviours.

How we can help

We can help by updating constitutions and drafting a Code of Conduct. We can also advise on the best way to communicate with members on sensitive matters. Reach out to us if you would like to discuss your situation.

If the dispute escalates, our disputes team is highly skilled in seeking the best legal outcome.

Increasingly, Trustees are asking whether they might become personably liable. This is an excellent question and one that all officers of charities should consider.

We were recently asked whether Trustees can be held personally liable if a Trust becomes insolvent. The short answer is yes, in certain circumstances. However, there are some protections which can limit liability and it will depend on what action the Trustees took. For example, if there was some dishonest action, Trustees could be liable, but for genuine decisions this is less likely.

These principles would also apply to officers of other entity types such as to officers of incorporated societies or directors of charitable companies.

Inbuilt protections for Trustees

Our trust deed limits the liability of Trustees using indemnity clauses like this:

No Trustee hereof will be liable for any liability or expense arising from any cause whatsoever when acting with the authority of the Board and will be entitled if the Trustee has paid the expense or discharged the liability out of the Trustee’s own funds, to reimbursement from the Trust Fund.

However, this is usually followed by wording like this:

UNLESS such liability or expense arose from the Trustee’s dishonesty, wilful misconduct or gross negligence or was incurred without authority from the Board.

In other words, if a Trustee is dishonest, engages in wilful misconduct or gross negligence, or creates liability without the approval of the Board, the Trustee may be held liable. This makes sense – liability limitations exist to ensure Trustees are not unreasonably held accountable for their decisions, while at the same time requiring them to avoid poor behaviour.

If you would like help to create or amend a trust deed, please contact us.

Can insurance help?

Trustee insurance (often called Directors and Officer Liability Insurance) policies may help but often exclude the insolvency of the Trust and any dishonest activities by Trustees.

Insolvency

If the Trust is unable to pay its debts it may apply for voluntary liquidation under section 24 of the Charitable Trusts Act 1957 (“CTA”). A creditor or Official Assignee (a government-appointed person responsible for managing liquidations) may also apply to the Court for the liquidation of the Trust under section 25 of the CTA. In either situation, section 301 of the Companies Act 1993 may apply, and interestingly, this may apply to Trustees as well as Directors of Companies.

Section 301 permits the court to require Trustees to personally repay money or return property, or pay compensation if it appears to the Court that a Trustee “has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company.

While we have not seen any case law about section 301’s application to Trustees specifically, it is useful to be aware that this is a possibility in certain circumstances.

How do Trustees protect themselves?

In many respects, Trustees have similar responsibilities to directors of companies when it comes to insolvency. They need to pay close attention to their financial situation and understand if they are reaching a point when they may not be able to pay their creditors. We recommend:

Paying close attention to the financial situation.
Asking, “Will we be able to pay for the contracts we have with creditors?” If you are unsure, avoid entering into the contract.
If insolvency is looming, seek professional advice urgently.
Consider whether you should contact IRD to explain the situation. IRD and employees rank highly among creditors. IRD often initiates liquidation proceedings.

In a nutshell

Trust Deeds indemnify Trustees for certain matters. These do not include dishonesty, wilful misconduct or gross negligence or taking steps without authority from the Board.
Insurance usually excludes insolvency.
If a Court determines a Trustee has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company, the Trustee may be personally responsible for reimbursement.
Trustees must understand the Trust’s financial circumstances and make decisions that will avoid insolvency.

We can help

We have acted for hundreds of charities and can help your charity as well. Please contact us for specific advice on Trustee liability for your circumstances and how to prevent it.

The deadline for incorporated societies to re-register under the Incorporated Societies Act 2022 was 5 April 2026. If your society has not re-registered, the consequences of missing the deadline are serious.

This article outlines what happens for those societies that failed to re-register, and what options are available if that occurred.

The consequences of failing to re-register

Societies that did not re-register by the deadline were removed from the Incorporated Societies Register on 5 April 2026. The practical consequences of this are significant:

The society will no longer be able to operate as a legal entity.
All assets, including property, will need to be disposed of in accordance with the society’s constitution.
The Registrar may step in and direct how assets are distributed, overriding decisions that would ordinarily be made by members or committee members.
Banks will freeze society’s accounts and refuse officers access, making it difficult to pay employees or meet other financial commitments.
Existing contracts including as leases or supplier agreements may be affected, as the entity named in those arrangements will no longer legally exist.

Can a society be reinstated after removal?

Yes, but it involves time, cost, and a period of ongoing uncertainty.

Under the 2022 Act, a society can apply for reinstatement on the ground that it was operating at the time of removal and there is a proper reason for it to continue to exist. This is the most relevant ground for societies that simply missed the deadline.

To apply, the society (or a member, creditor, or other eligible party) will need to provide the societies latest financial statements (if not already filed), confirmation the society has at least 10 members, contact details, and evidence of operation. Evidence of operation can include things such as financial records, meeting minutes, or legal documents. The society will also need to pay a restoration fee of $177.78 plus GST. Applications for this can be made online through the Incorporated Societies Register.

Importantly the society must also submit a constitution that complies with the requirements of the 2022 Act, read more about these requirements here.

Once an application is accepted, it is publicly notified, and there is a 20 working day period during which objections can be made. If no objections are received, the society will generally be restored the following working day.

It is worth bearing in mind that the Companies Office is likely to receive a large volume of reinstatement applications, and there are time frames mentioned above, which mean it will not be quick.

What should your society do now?

If you have missed the deadline and are uncertain about your society’s options, we encourage you to get in touch with us. We can help you understand the reinstatement process and take steps to get your society back on track as quickly as possible.

If you have been successfully reinstated, please see here for more information on the 2022 Act and what obligations and responsibilities your Society has.

Starting a charity or for-purpose organisation is an exciting step, but choosing the right legal structure is key if you want to create impact in Aotearoa. The option you select will shape how your organisation operates. Each structure comes with its own advantages and limitations, so it is worth taking the time to understand what fits best with your goals, values, and long-term vision. Below, we explore the three main options available in Aotearoa New Zealand, and what each one could mean for your organisation.

1) Charitable Trust

Charitable trusts are the most common structure for purpose-led organisations in Aotearoa. They are well understood by funders, regulators, and the public, and are designed specifically for charitable purposes.

One of their biggest advantages is perception. Trusts are widely seen as mission-driven and focused on public benefit, which can make it easier to attract donors and partners. They also offer long-term stability, as trustees can provide continuity over time, as well as flexibility.

However, trusts cannot have shareholders or investors, which can limit access to capital. They also come with ongoing compliance obligations through Charities Services, which can add administrative work.

2) Charitable Company

A charitable company is essentially a company operating for a charitable purpose. Companies are one of the most familiar legal structures in Aotearoa, with clear governance rules under the Companies Act. This makes them attractive for organisations wanting strong structure, scalability, and flexibility.

They can also raise capital through shareholders or investors, which can be useful for growth or social enterprise models.

That said, the word “company” can create perception challenges. Many people associate companies with profit maximisation, which may make it tougher to attract donors. Additionally, companies may face higher compliance costs and do not automatically fit within the charitable framework unless they clearly advance a charitable purpose. Therefore, extra caution must be placed to ensure the company aligns with its charitable purposes.

3) Incorporated Society

An incorporated society is a membership-based structure, making it ideal for community-led initiatives. Members have voting rights and can directly influence the organisation’s direction, creating strong engagement and accountability.

This democratic approach can be a strength, but it also comes with trade-offs. Decision-making can be slower, and governance can become complex or even political as membership grows. In some cases, internal dynamics can become challenging to manage.

So, which is right for you?

If your focus is long-term charitable impact and public trust, a charitable trust is often the best fit. If you need flexibility, scalability, or investment, a charitable company may be worth considering. If your organisation is driven by community participation, an incorporated society could be the right choice.

If you would like to discuss which structure is right for your entity, feel free to reach out and contact us. We also provide many resources in the form of articles, guides, videos, webinars and more.

New regulations have provided an interim fix for residents associations left in limbo by new requirements under the Incorporated Societies Act 2022. But as a temporary exemption, residents associations will still need to consider their future structure.

Background

A Residents Association is a type of incorporated society that exists for the benefit of the community it serves. It might maintain community facilities or common areas, or simply serve as a forum for residents to come together and organise community activities. Some Residents Associations will own common land as well.

Most Residents Associations will be registered under the Incorporated Societies Act 1908, which means that they will need to prepare for and re-register under the Incorporated Societies Act 2022. However, the new Act prohibits surplus assets from being distributed to members where the society is wound up.

This will cause issues for many Residents Associations who own common land, as “winding up” provisions often provide that surplus assets should go to the members. For Residents Associations with common land, this ensures that the residents will get a share in the land when and if the society winds up.

This prohibition is to preserve the principle that incorporated societies should not operate for the financial gain of members. However, for Residents Associations that own common land or other property on behalf of residents, if the association was wound up, residents would lose rights to property they justifiably see as being theirs.

What does the exemption mean for residents associations?

In response to these concerns, a temporary exemption has been made allowing Residents Associations to retain the clause in their constitution that enables distribution of surplus assets to members for the transition period.

The exemption is provided for under the Incorporated Society regulations. Residents Associations will still need to re-register under the 2022 Act by the deadline of 5 April 2026. At the same time, they must also notify the Registrar that the constitution they are submitting retains a clause permitting distribution of surplus assets to members if the association winds up.

The temporary exemption will remain in place until 5 October 2028. During this period, Residents Associations must either amend their surplus assets provisions to comply with the Incorporated Societies Act 2022 or consider an alternative ownership structure.

Time to consider an alternative structure?

Although this exemption does not provide a permanent fix for Residents Associations under the new Act, what it does do is provide time for Residents Associations to consider their options and what the best structure will be going forward.

If your Residents Association is in this situation, let us know – we are happy to support you in considering your options moving forward. For further information on how the requirements under the Incorporated Societies Act 2022 will affect Residents Associations, check out this article.

We help with unincorporated and incorporated societies and answer questions all the time. If you would like to discuss further, please contact one of our team.

With the introduction of the Incorporated Societies Act 2022, every incorporated society must have a fair, transparent, and accessible process for dealing with disputes and complaints. This change is intended to help disputes to be resolved efficiently, while ensuring all parties are heard and treated fairly.

The below is a general guide on navigating a dispute under the Incorporated Societies Act 2022, please refer to your society’s constitution for further details, or get in touch for assistance.

When would an issue be called a ‘dispute’?

Disputes commonly arise between a society and its members, between members themselves, or between a member and an officer of the society where the matter relates to the affairs, rules, or decision-making of the society.

A dispute may concern:

an alleged breach of the constitution or policies;
unfair treatment of a member (for example, a member’s rights or interests have been damaged); or
conduct that is said to be inconsistent with the Act or the society’s governing documents.

Current and former members may bring complaints where the issue relates to their membership or prior involvement with the society.

How do I make a complaint?

If you have a complaint, you should read through and follow the process outlined in the society’s disputes policy. Usually this involves raising your complaint in writing and providing it to the society’s secretary or another officer nominated to receive complaints.

The complaint should clearly identify:

who is making it;
who it concerns;
the substance of the issue; and
sufficient detail so that the society can understand what has occurred and what outcome is sought.

Once the complaint has been received, the society should acknowledge the complaint within a reasonable timeframe and outline the steps that it will follow under its disputes process.

Investigating and determining a dispute

After the society receives a complaint, it must determine whether its disputes process should be engaged. If it does proceed, the committee may investigate and determine the matter itself or appoint an independent person or panel to do so. Whoever undertakes this role for the society must act impartially and without conflicts of interest.

The investigation should be proportionate to the nature of the dispute. This may involve seeking further information from the parties, reviewing relevant documents, and making reasonable inquiries to understand the facts.

When all relevant information is considered, the decision-maker must reach a determination. This must be fair, reasonable, and consistent with the Act and the society’s constitution. The outcome, together with reasons for the decision and any required actions, should be communicated to the parties in writing.

If I raise a complaint, what are my rights?

A person who makes a complaint must be given a reasonable opportunity to be heard before the dispute is determined. In most cases this will involve providing written submissions and supporting information. Where appropriate, the decision-maker may also allow the complainant to be heard orally.

What if I’m the subject of a complaint?

Any person who is the subject of a complaint is entitled to procedural fairness. They must be informed of the complaint and the allegations made against them in sufficient detail to enable a proper response.

Before any adverse decision is reached, you must be given a reasonable opportunity to present your position, provide explanations or evidence, and address the issues raised. No disciplinary or other adverse action should be taken unless this opportunity has been afforded.

If you are concerned that an issue may engage your society’s disputes resolution procedure, or if you would like to know more about what procedure your society should follow – get in touch with us.

In New Zealand, residents’ associations have been a common way of managing a common area of land around residents’ houses or units, or sometimes they are used as advocacy and community. In this article we focus on residents’ associations that own or manage property for the benefit of residents. Residents’ associations are often established as incorporated societies, existing for the benefit of their community of residents and to manage an area of common land or facilities.

Due to a change in the law, all incorporated societies in New Zealand will need to re-register to comply with the Incorporated Societies Act 2022. It’s important to note that if an incorporated society does not reregister by April 2026 then it will cease to exist.

When considering re-registration, residents’ associations should take into consideration:

If there is a common area used by residents, and who owns this property?
Who manages the insurance of the property?
Will the current area of the property be subject to change in the future?
Are there other obligations and parties we need to consult (i.e. councils, developers).

It’s important to note that if your residents association does own property, it needs to consider whether it would like to re-register – more information here.

If you would like assistance with your residents’ association, please get in touch.

In January 2026, new regulations provided a temporary exemption for Residents Associations under the Incorporated Societies Act 2022. You can read more about this here.

We support incorporated societies and regularly answer related queries. If you would like to discuss further, email incorporatedsocieties@parryfield.com and a member of our Parry Field Lawyers team will be in touch.

For-purpose entities – such as charities, trusts, incorporated societies, and other not-for-profits – play a vital role in New Zealand’s social, cultural, and environmental fabric. Whether your entity is updating governance documents, reviewing its structure, or addressing a legal issue, engaging a lawyer can be an important step in ensuring compliance with the law and safeguarding the organisation’s mission and resources. To make the most of this investment, it helps to approach the process strategically. Here are some practical tips for for-purpose groups to consider before engaging legal advice.

1. Review What’s Working (and What’s Not)

Before engaging a lawyer, take time to review your existing documents – such as your trust deed, constitution, governance policies, or operational frameworks. Identify what is functioning well and where you are experiencing challenges. Are there clauses that no longer reflect the way your organisation operates? Are governance roles clearly defined? This internal review allows your lawyer to focus on areas that genuinely require attention, saving time and cost.

2. Engage Early, Not Late

Legal input is most effective when sought early – before you begin drafting changes or responding to a legal issue. Waiting too long may result in duplicated effort or the need to undo work that isn’t legally sound. A brief initial conversation can help your lawyer identify key priorities, assess risks, and ensure your proposed approach is on the right track from the outset.

3. Be Clear and Organised in Your Instructions

When engaging a lawyer, provide clear and detailed instructions. Outline your goals, the context behind any proposed changes, and any concerns you have. Include relevant background materials such as past minutes, correspondence, or current governance documents. The more context your lawyer has, the more efficiently they can provide targeted and useful advice.

4. Keep Focused on the Big Picture

Avoid getting bogged down in minor technicalities unless they materially affect your organisation. It’s important to prioritise the key challenges – such as legal compliance, governance structure, and decision-making authority – that can impact your ability to function effectively. For example, are your governance structures consistent with the Incorporated Societies Act 2022 and/or the Charities Act 2005, or other relevant legislation? Are you meeting your obligations under the Trusts Act 2019? Keeping your focus on strategic matters ensures your legal budget is used wisely. For more information on whether your entity is consistent with the relevant legislation, see our Information Hubs on our website here.

5. Value Quality Over Speed

It’s natural to want to minimise costs, but rushing legal work can lead to oversights that may prove costly down the line. Investing in quality legal advice can help prevent disputes, clarify responsibilities, and ensure your documents reflect both legal requirements and your organisation’s needs. In the long term, this can provide both peace of mind and financial savings by avoiding future legal issues.

Need legal help?

If your for-purpose entity requires guidance on governance, compliance, or restructuring, the team at Parry Field Lawyers can help. We work with a wide range of non-profit and charitable organisations to ensure their structures are robust, lawful, and fit for purpose. Reach out to us for more information.

This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

What if our incorporated society doesn’t want to reregister?

The Registrar is encouraging societies that don’t want to reregister to either appoint a liquidator or apply for dissolution (see here). This gives the society more certainty around the wind up process and control over how assets are distributed (which of course needs to be done in accordance with the constitution).

We have helped a number of incorporated societies wind up and are well placed to assist should you wish to do the same – please feel free to get in touch.

What if our incorporated society wants to continue to exist?

If your society wants to continue to operate and doesn’t want to lose control of its assets, then you will need to reregister under the new Act. The biggest step in this process is preparing a new constitution that aligns with the new Act. If you’d like help with this, please feel free to get in touch with our team as we’ve helped dozens of societies with this process.

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.