Incorporated Societies - Parry Field Lawyers

Under New Zealand’s Incorporated Societies Act 2022 (“the Act”), incorporated societies now have more flexibility regarding governance and decision-making. One area that often sparks questions is whether a society can pay its Committee members for services rendered.
The short answer is yes, subject to certain conditions.

Full Powers Under Section 18 of the New Act

Section 18 of the Act grants societies full capacity to carry out any activity, enter into any transaction, and enjoy full rights, powers, and privileges to pursue their objectives. This includes the ability to pay Committee members for their services, provided that the payments are on arm’s-length terms (as outlined in section 24 of the Act).

Importantly, arm’s-length terms mean that the payment should be reasonable and comparable to what an independent third party would expect to receive for similar services, ensuring that it is fair and transparent.

This means that even if your society’s constitution does not specifically allow payments to Committee members, the society still has the power to make such payments under the Act. However, there are several factors to consider before doing so.

Limits on Power in the Constitution

While section 18 provides a broad power to make payments, it also allows a society’s constitution to restrict or modify this power. For example, many societies choose to require member approval before Committee members can be paid either at a general meeting or through a resolution in lieu, or mandate a (majority or unanimous) resolution from the Board before any payments are made. If your society wishes to exercise full powers under the Act, but restrict payments to Board members, your constitution can specify such conditions.

This allows societies to balance flexibility with control, ensuring that the payment process remains transparent and accountable.

Why Consider Including Payment in Your Constitution?

Even if your society chooses not to restrict its powers and allows for payments to Committee members, it may still be wise to set clear expectations within your constitution and set up a Committee policy on the topic.

This can outline:

When and how payments are made (e.g., for services rendered or as a reimbursement of expenses).
How decisions are made regarding payment.

Best Practices for Transparency and Governance

Setting clear guidelines on the payment of Committee members is essential for maintaining good governance, particularly for registered charities – as noted in the Community Toolkit and a Charities Services article, clear guidance for such payments is crucial. This can help prevent any potential conflicts of interest or mismanagement of funds, and maintain trust with members, stakeholders, and the public.

To ensure your society remains compliant and well-governed:

Update your constitution to clarify whether Committee members can be paid and under what circumstances.
Establish a Committee policy on payments, detailing the process and criteria for making such decisions.
Consider obtaining advice to ensure that payments to Committee members are made in a manner that complies with the new Act, as well as with any other relevant laws or regulations.

Conclusion

The Incorporated Societies Act 2022 provides societies with greater flexibility to manage their internal affairs, including the ability to pay Committee members for services. While the Act allows for such payments on arm’s-length terms, societies are encouraged to clearly define these arrangements in their constitution to ensure transparency, accountability, and good governance.

If your society is considering paying Committee members, or if you need guidance on how to properly amend your constitution, our team is here to assist. There are a couple of different ways we can go about assisting with this, including preparing a draft constitution for you that is based on our template – this also includes a clause on payment of Committee members.

Please note that this article is not a substitute for legal advice and you should contact your lawyer about your specific situation.

There are some accounting points you need to consider when you reregister under the Incorporated Societies Act 2022.

While we are not accountants, let’s look at some key questions and outline some points here. You may also want to review more details at the links below.

Issue 1: XRB reporting

You will need to comply with the External Reporting Board (XRB) reporting standards after reregistering. If you are a registered charity, there shouldn’t be much change, but there are 24,000 incorporated societies and only about 9,000 are registered charities, meaning there will be implications for many societies. Get ready now as you’ll need to comply from when you reregister.

Issue 2: Tiers

Which of the ‘tiers’ will you be in? The reporting requirements will alter depending which you are. In summary, the tiers are:

Tier 1: Total expenses of $33 million or more
Tier 2: Total expenses over $5 million
Tier 3: Total expenses above $140,000
Tier 4: Total operating payments below $140,000

Knowing which tier you are in will help you know how you will need to comply.

Issue 3: Small incorporated societies

These entities have operating payments below $50,000 in last two years and assets below that. If this is the case and they are not a registered charity, there are very minimum standards of reporting to comply with.

Issue 4: Statements of Service Performance

You might need to prepare this – a chance to tell your story well – so check if you will need to change how you report to comply. These are the storytelling aspects of what you do – the lives impacted.

If you have any questions, please feel free to reach out to us, or speak with your accountant. Also be sure to look at the other information available on our Incorporated Societies Information Hub and request a copy of our free guide on reregistering.

If you’d like to know more specifics on the points raised in this article, we suggest taking a look at these links for more on these topics:

– Companies Office guidance

– XRB guidance

– Small societies outline from Companies Office

– Grant Thornton overview

As you may know, all incorporated societies in New Zealand must re-register under the new Incorporated Societies Act 2022 (the “new Act”).

For more information about this, we have written an article about it here.

The new Act mandates that an incorporated society’s name must end with either ‘Manatōpū’, ‘Incorporated’, or ‘Inc’, or a combination of these. However, it is important to note that you cannot simply change your society’s name at the time of re-registration. To change your society’s name, the process involves two distinct steps:

Re-registering your society under the new Act – This process does not allow for an immediate name change, even if the name is only being altered by a single word.
Applying separately for a name change – Once your society has been re-registered, you can then apply to the Registrar of Incorporated Societies for a name change.

An incorporated society cannot simply change its name by re-registering with the Companies Office. This is because, under the Incorporated Societies Act 1908, the process of name change involves more than just administrative paperwork – it is a formal amendment process, which ensures that members are properly informed and consulted. The society cannot bypass this procedure by simply re-registering with a new constitution.

How to Apply for a Name Change

To change the name of your society, you will need to follow these steps:

Set up the necessary accounts: You’ll need a RealMe® login, an Incorporated Societies Register online services account, and the requisite authority within your society to manage the society’s register.
Submit the name change application: Log into your online services account, select the ‘Name Change’ option from the ‘View Details’ page, and enter your proposed new name. You can check if your desired name is available by using the ‘Name Availability Check’ tool. See Companies Office for more information about naming your society here.
Provide supporting documents (if applicable): If any third parties have given consent for you to use a particular name (such as a trademark holder), ensure you attach the relevant documentation.
Complete the signatory details and submit the form for approval.

The Registrar will review the application and, if everything is in order, will approve the name change within three working days. Once approved, you will receive an email confirming the name change and an updated Certificate of Incorporation will be issued.

Importantly, you will not need to update your society’s constitution immediately, as the new name will be considered to be part of your constitution. However, it is advisable to update the constitution at your next general meeting.

Changing Your Name Immediately After Re-registration

While the above outlines the two-step process for a name change, it is possible to include specific wording in your society’s constitution that allows for an immediate name change once you have re-registered under the new Act. This can provide greater flexibility and streamline the process. If you are considering this option, it is best to consult with legal experts to ensure your constitution includes the appropriate provisions.

We have supported many incorporated societies and have free guides and resources on our Incorporated Societies information hub here.

This article is not a substitute to legal advice and if you have any questions please do not hesitate to contact our experts here at Parry Field Lawyers.

We are available to help with unincorporated and incorporated societies and can answer any questions you have. If you would like to discuss further, please contact one of our team.

新法新要求

新西兰现有约2万4千个法人社团（Incorporated Society），涵盖体育俱乐部、兴趣爱好者团体、社区支持组织等广泛领域。这些法人社团都必须依法完成重新注册。

规范法人社团及其管理人员权利与义务的法律法规已完成了期待已久的修订，并于2022年4月获得皇家批准，即《2022年法人社团法》（下称“新法”）。

因为所有的法人社团或多或少都需要进行合规审查以符合新法的规定，我们将关键注意事项列举如下供您参考。同时，也会在我们的信息中心持续更新相关内容。

每个法人社团都要有新的社团章程，以符合重新注册的资格。有些可能调整变更幅度较小；有些可能会大幅增补且需要较为复杂地调整。对于有些法人社团而言，这也是一次机会，重新考量是否继续以法人社团的形式继续运营，还是以其他形式更为适合，比如慈善信托的形式。

关于我们

Parry Field 律师事务所乐于为您助力 – 提供您所需的信息，助您更顺畅地推进整个流程。我们律所长期致力于支持社区组织，善于根据具体情况量身定制方案，尤其是制订社团组织章程方面。

我们推出了《慈善机构健康检查》指南，您可以访问我们的网站查看下载。我们也欢迎您通过电话电邮的方式与我们联系。我们律所拥有约100名员工及4个办公室，是一家拥有全面综合业务的律所，可以就房地产、争议解决及合同等事务提供支持全方位的支持与服务。

重新注册的要求

自2023年10月5日起至2026年4月5日，根据新法要求，所有法人社团必须在此期间完成重新注册程序。

公司注册局（Company Office）简化了流程且不收取任何费用，仅需要填写在线申请表，并提供下列主要信息：

新西兰商业编号（NZBN）及注册编号；
拟注册的办公室实际地址；
财务结算日；
指定联络人信息；
所有拟任干事的姓名，并就每位干事提供以下内容：
- 实际地址（不会向公众披露）；
- 担任干事的书面同意；
- 声明—确认其未被取消担任干事的资格—公司注册局提供的标准模板；
确认法人社团拥有至少10名成员；
确认一名干事已审核拟议社团章程并确认其符合新法规定。

此外，法人社团必须上传一份符合新法要求的社团章程。就此专题，我们撰写了六篇文章予以详述。您可以在我们的网站信息中心查阅这一专题。我们律所协助了众多法人社团进行新法合规审查与修订，也希望为更多的法人社团服务助力。

如何做好准备

目前是重新审核社团章程及运营机制的良机—确保您的社团符合新法规定。比如，审核是否已建立争议解决机制？对于干事的利益冲突是否有明文处理程序？在我们的网站信息中心，提供了大量的关于新法对于法人社团影响的资料信息，供您查阅。我们也乐于协助您的社团做好全面的准备。欢迎您致电致函联系我们。我们将为您定制个性方案，竭诚为您服务。

注：本文内容不构成法律建议。如需进一步协助，请随时联系 Parry Field 律师事务所。

Who is liable if there is a breach of health and safety? A new case gives us some insights.

A former Port of Auckland CEO was found guilty for breaching his duties as an officer under the Health and Safety at Work Act 2015 (the “Act”). It is an important reminder that all officers have critical roles to play in health and safety – even if they are operating at some distance from ‘where the work is done’.

The former CEO, Mr Gibson, was found guilty as an officer of failing to exercise due diligence under section 44 of the Act. A port worker died while loading containers on a ship berthed at the port. The judgment found Mr Gibson had exposed the worker to a risk of being struck by objects falling from cranes.

In this situation, the port was first found guilty and required to pay a fine of $561,000.

Why is this newsworthy?

We are more used to hearing about directors and / or entities being charged with health and safety at work breaches. This situation is about an officer being found in breach.

Under the Act, any person that has ‘significant influence over a Person Conducting a Business or Undertaking’ (“PCBU”) may be an ‘officer’ and subject to officer duties and liable for any breaches of these.

It is a little confusing as to why the Board itself was not also held liable.

What does due diligence mean?

The Act (Section 44) requires officers to exercise care, diligence and skills to ensure the PCBU (in this case the port) complies with its duty. The Act says that due diligence includes taking ‘reasonable steps’, as set out in column A of the table below. Note the use of the word ‘and’ at the end of each point – officer due diligence includes all of the matters.

Failure to exercise due diligence is a strict liability offence – an officer need not have acted recklessly or intentionally to be found in breach of the requirement.

In this situation, the Court noted, among other things, that the CEO had been put on notice regarding insufficient monitoring of ‘work as done’ in a report from KPMG and had not taken action to implement its recommendations.

The Court also noted that the CEO should have known there were shortcomings around the management of exclusion zones and should have addressed these in a timely manner.

What can officers do to help ensure they are exercising due diligence?

In column B we provide some suggestions for how an officer might exercise due diligence, including useful questions for officers to ask.

We do not suggest relying on this or any other industry guides – what due diligence constitutes is specific to the circumstances and the nature of the work. The court may consider industry standards and guidelines when determining if an officer has exercised due diligence, but this is not determinative.

Column A	Column B
(a) to acquire, and keep up to date, knowledge of work health and safety matters; and	How mature is the PCBU’s safety culture? What message does leadership send through its actions and words? Are we continuing to upskill our health and safety governance knowledge?
(b) to gain an understanding of the nature of the operations of the business or undertaking of the PCBU and generally of the hazards and risks associated with those operations; and	Know the business, what it involves, the tasks and how they are performed. What are the special health and safety implications for our work? Get expert advice on the hazards and risks.
(c) to ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking; and	What policies and procedures are in place? How often are they reviewed and updated? What personal protective equipment is available? What training is provided?
(d) to ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards, and risks and for responding in a timely way to that information; and	What health and safety monitoring is done, how often and by whom? Are ‘near misses’ recorded? What trends are emerging from the data?
(e) to ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under this Act; and	What action is taken following any near misses or incidents? How well do you understand the duties set out in the Act?
(f) to verify the provision and use of the resources and processes referred to in paragraphs (c) to (e).	What records are there to confirm that actions around health and safety?

What else can officers do in terms of health and safety?

Leaders set the tone from the top. When leaders demonstrate visible leadership in health and safety, it shows that it is an important part of the organisation’s culture.

Visible leadership includes more than just making and following rules. It means taking a genuine interest in how health and safety is managed and understanding and acting to remove any barriers to a safety culture. Officers should ask to visit the relevant PCBU and to speak to workers, to ask workers what is working well and what could be improved when it comes to safety.

They should also act in a timely manner to address any shortcomings in health and safety.

Resources

There are many resources available to help officers at all levels with health and safety governance, such as:

Institute of Directors Health and Safety Governance: A Good Practice Guide: https://www.iod.org.nz/resources-and-insights/guides-and-resources/health-and-safety-a-good-practice-guide#

Parry Field Lawyers Charities Healthcheck Part 3 People: https://www.parryfield.com/wp-content/uploads/2024/06/Part-3_People_Charities-Healthcheck_PF.pdf

Worksafe – Health and safety leadership guide: for owners and company directors of small to medium businesses: https://www.worksafe.govt.nz/managing-health-and-safety/businesses/guidance-for-business-leaders/

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.

All incorporated societies in New Zealand need to reregister under the Incorporated Societies Act 2022 by April 2026 or they will cease to exist and have their assets distributed.

What does this mean in practice? The consequences are significant for your existence, assets and name.

The incorporated society will cease to exist. This means the incorporated society would be removed from the register and its assets distributed. There are only limited reasons that this could be undone, so it’s important for incorporated societies to meet the reregistration deadline.
The incorporated society will no longer have the right to make decisions on its own behalf, including what happens to any assets. The Registrar could put the society into liquidation and have its assets distributed in accordance with its constitution.
The name of the incorporated society will no longer be protected, so another group may take that name, impacting on the brand and marketing.

Before they can reregister, all incorporated societies must update their constitutions to meet the requirements under the new Act.

We are New Zealand’s legal experts on incorporated societies. We are helping incorporated societies of all types and complexities to update their constitutions – we would be delighted to assist your society as well.

Find out more on our comprehensive Incorporated Societies Information Hub or get in touch for a free 20 minute conversation.

Succession planning is a critical component of effective governance for any board, whether it’s for a corporate entity, charity, or for-purpose organisation. In New Zealand, where governance practices are guided by both legal frameworks and best practice principles, succession planning ensures that a board remains dynamic, diverse, and capable of steering the organisation into the future. This article outlines some practical considerations to keep in mind when developing a succession plan for your board.

1. Primary Responsibility of the Current Board

Succession planning is one of the board’s most important responsibilities, ensuring continuity and stability during leadership transitions.

(a) Evaluating Leadership Roles

Start by assessing the current leadership. Who is your Chair and how long have they been in the role? It may be time to consider appointing a deputy Chair who can learn the ropes now and ensure a smooth transition when the time comes for the current Chair to step down. Planning ahead mitigates risks associated with abrupt leadership changes and maintains strategic continuity.

(b) Emphasising Diversity of Thought

When considering successors, resist the temptation to simply replicate the existing board members. Instead, focus on bringing in new perspectives. Diversity of thought fosters innovative solutions and more resilience. Actively seek out individuals who bring different experiences, skills, and viewpoints to the table. We have also created a Board Skills Matrix which you can access over here.

(c) Mapping Out a Succession Plan

A clear, structured succession plan is essential. Consider implementing a rotation schedule for trustees, this could be legally enshrined in your Trust Deed. For instance, a trustee might serve for a term of three years, renewable for another three years, with a maximum of three terms (3+3+3), after which they must stand down for at least a year. This ensures regular infusion of fresh ideas while maintaining experienced leadership.

(d) Encouraging Healthy Board Renewal

Term limits and rotation schedules naturally create opportunities for board renewal. These mechanisms facilitate necessary discussions about new leadership without making it personal. Focus these conversations on the organisation’s needs rather than individual preferences to prioritise the entity’s long-term success.

2. Utilising a Skills Matrix

A skills matrix is a valuable tool for evaluating the board’s current composition and identifying gaps in expertise or experience. This can be used to decide where there may be areas to bring people in on. By regularly updating the skills matrix, you can keep your board aligned with the evolving needs of the organisation. Here is ‘needs matrix’ example from SportNZ.

3. Long-Term Vision: “Where Will We Be in 50 Years?”

While succession planning often focuses on the near to medium term, it’s crucial to consider the long-term legacy of the current leadership. The question, “where will we be in 50 years?” encourages the board to think beyond immediate challenges, nurture potential leaders, anticipate future trend and position the board to respond to long-term challenges and opportunities.

4. Conclusion

Board succession planning is not just about filling seats—it’s about ensuring that the board remains effective, diverse, and forward-thinking. By taking a proactive approach, utilising tools like a skills matrix, and thinking long-term, your board can continue to provide strong governance that drives the organisation’s success for decades to come.

If you would like to listen to a short podcast on this topic, the Institute of Director’s have released an episode featuring a Chartered Fellow of the Institute of Directors here where Steven Moe (the host of the show) talks through governance and board considerations.

If you need assistance in developing a succession plan tailored to your board’s needs or have legal questions regarding governance, contact one of our experts at Parry Field Lawyers.

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.

We have helped many incorporated societies transition into charitable trusts and an issue that always arises is what happens to bequests to the incorporated society? The answer, in short, is “it depends”. This article will look at two situations; what happens to bequests when the incorporated society is wound up and what happens when the incorporated society is left as a shell entity.

Wound up incorporated society

Firstly, if a gift is left to an incorporated society that has been wound up, the executer would look to supporting documents that show a relationship with the trust and whether it is essentially the same entity. This would include, for example, the background section of the trust deed and the resolution to wind up and transfer assets from the society to the charitable trust.

The court may need to get involved if the executer is not satisfied the charitable trust is essentially the same as the incorporated society or where the wording of the Will is clear that the funds are only to go to the society. In this unlikely case, the court will seek to carry out the wishes of the Will-Maker when deciding which charitable entity to gift the funds to.

This means that even where there is a background section in the trust deed, there is no absolute certainty that the charitable trust will receive a bequest meant for the society. It is likely they will, due to the clear documentation that the charitable trust is essentially the same as the society, but there still remains a risk. Unfortunately, we have talked to MBIE about this and they cannot make any regulations for the new Act to remove this risk.

It is therefore advisable that if your incorporated society has transferred to a charitable trust, that you get in touch with your supporters and let them know they should amend their Wills. If you need help with this wording please do not hesitate to contact one of our experts here at Parry Field Lawyers.

Shell incorporated society entity

Secondly, whether bequests are paid to the charitable trust when the Will states it is to an incorporated society and/or quotes the charitable trust depends on what the Will says, how the executor feels about the bequests and if the residuary or other beneficiaries will raise issues.

Where a Will is clear that the bequest is for the incorporated society and it contains the Companies Office number or Charities Service number, the executor will generally be able to find the contact details for the society. It could then be explained to the executor that the charitable trust is undertaking the same work as the incorporated society. It will be at the executor’s discretion as to whether they transfer the funds to the charitable trust directly or require the funds to be transferred to the incorporated society. It would be prudent for the incorporated society to keep a bank account and to be active for this very reason, so it can transfer any bequests made to it.

The executor may be a close relative (e.g. child) of the Will-Maker who is aware of the Will-Maker’s wishes and can interpret the gift left in the Will to the society as being meant for the charitable trust. By contrast, the executor might be distanced from the Will-Maker or unaware of their involvement in the charitable trust and therefore unwilling to make the gift to the society.

A situation may arise where a beneficiary of the Will is challenging the gift made to the society, in which case it could be helpful to avoid any challenges to the validity of the gift itself.

These may be a reason to keep the society as a shell entity, to avoid a lot of these situations. It is prudent to consider how long you should leave the incorporated society as a shell for, as there may be some people who have drafted their Wills recently but won’t pass for a long time.

Some Wills contain a clause which discusses the “successor” entity which that would work in the charitable trust’s favour. Alternatively, some Wills say that if a gift fails then it gets added to the residue, or if the provision falls short, then it automatically gets added to the residue, this would not be in the charitable trust’s favour.

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We have helped many incorporated societies transition to a charitable trust and have an incorporated society information hub here and a charitable trust information hub here. This article is not a substitute for legal advice and our experts here at Parry Field Lawyers would be happy to answer any of your questions.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com sophietremewan@parryfield.com or annemariemora@parryfield.com .

As you may know, all incorporated societies in New Zealand must re-register under the new Incorporated Societies Act 2022 (the “new Act”). If this is news to you, we have written an article about it here.

The new Act requires a society’s name to end with either ‘Manatōpū’, ‘Incorporated’ or ‘Inc’ (or more than one of these if you so wish). However, to change your society’s name, even just one word, you must reregister first then apply to the Registrar for a name change.

To change the name of your society, you need a RealMe® login, an Incorporated Societies Register online services account, and you need the requisite authority in your society to manage information on your society’s register. You need to log into your online services account and select ‘Name Change’ on the ‘View Details’ page and type in the new name. You may click ‘Name availability check’ to make sure you can use the name. If there are any documents in support of your name change (i.e. if another entity has provided consent for you to use the name) you should include these. Then, after completing the signatory details you can submit it. See Companies Office for more information about naming your society here.

The Registrar must then approve the name and will send an email confirmation that they have registered the change within three working days. An updated Certificate of Incorporation will be sent to you. You do not need to update your society’s constitution as it will be treated as having the new name; however, this should be done in your next general meeting.

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We have supported many incorporated societies and produce many free guides and resources on our Incorporated Societies information hub here. This article is not a substitute to legal advice and if you have any questions please do not hesitate to contact our experts here at Parry Field Lawyers.

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 on stevenmoe@parryfield.com sophietremewan@parryfield.com or annemariemora@parryfield.com.

The Incorporated Societies Act 2022 (“Act”) has created new requirements that all incorporated societies must meet in order to reregister under the Act. The most relevant requirements that may prevent your Residents Association from reregistering under the Act are discussed below.

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.

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 members 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 reregister under the Incorporated Societies Act 2022. We have an Information Hub dedicated to the changes in the new Act and what organisations need to do in order to reregister – you can find it here.

There are some requirements under the new Act that may impact your Residents Association and your ability to reregister – here’s what you need to know.

Nominating a not-for-profit entity on wind up

Section 26 of the new Act sets out a list off requirements for what incorporated societies must include in their constitution. We have written a series of six articles on these requirements, which you can find on our Information Hub.

The key requirement for Residents Associations to be aware of is set out in section 26(1)(l). This explains that incorporated societies must nominate a not-for-profit entity (or a class or description of not-for-profit entities) to which any surplus assets are distributed to on liquidation or removal from the register. The definition of a not-for-profit entity is set out in section 5.

Generally, the members of Residents Associations are homeowners in the subdivision or community, so Residents Associations like this who hold land on behalf of members wouldn’t be able to distribute property to members under this provision on wind up.

This will cause issues for many Residents Associations who own common land, as the “winding up” provision will often say that any surplus assets should go to the members – that way the residents will each get a share in the land when the society winds up. If your Residents Association is in this situation just let us know – we are happy to support you in considering your options moving forward.

Purposes – can’t be for the financial gain of members

Under section 26(1)(b) of the new Act a society’s constitution must include its purpose. This makes a lot of sense and may not seem like an issue on the face of it, but the new Act also sets out that the Registrar may refuse to incorporate a society if its purposes are unlawful. An unlawful purpose includes where a society is carried on for the financial gain of any of its members. Section 23 of the new Act then explains that a society must be treated as having the purpose of being carried on for the financial gain of its members where:

it distributes, or may distribute, any gain, profit, surplus, dividend, or other similar financial benefit to any of its members (whether in money or in kind); or
it has, or may have, capital that is divided into shares or stock held by its members; or
it holds, or may hold, property in which its members have a disposable interest (whether directly, or in the form of shares or stock in the capital of the society or otherwise).

The most relevant clause to Residents Associations is the third provision. If the Residents Association’s assets are set to go to members on wind up, then those members would have a “disposable interest” in property. A clause such as this or any other clause in the constitution that suggests members should get the Residents Association’s assets would then be in breach of the new Act.

Section 24 of the new Act provides a list of examples of when a society does not have a financial gain purpose. We think that although some of these could be stretched to apply to Residents Associations, section 23(1)(c) is so clear that it would not make sense to interpret the new Act in that way.

What now?

As some Residents Associations won’t be able to reregister under the new Act with their current land ownership and constitutional structure, it’s time for each of these Residents Associations to consider their options moving forward. This is something we are well placed to advise on, as we regularly come alongside both incorporated societies and property holding organisations to consider their structure options.

If you believe your Residents Association may be unable to reregister under the Act due to the reasons above, please feel free to contact Judith Bullin or Sophie Tremewan at Parry Field Lawyers. Our team are more than happy to assist you to make the changes needed to reregister under the Act.

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.