Suspensions and Expulsions

Before discussing the legislative rules around suspensions and expulsions covered by the Education and Training Act 2020 (ETA), it is important to differentiate between them. Note the relevant sections in the ETA only apply to State schools (including State integrated schools).

A suspension involves removing a student from school for a period of time which expires after the earlier of seven school days or the date or time at which the suspension meeting is held and the matter is resolved.[1] Being stood-down is where a student is removed from school for up to five school days per term or ten school days per year.[2] Exclusion is where a student under the age of 16 is removed from school and required to enrol in another school. Lastly, expulsion is the removal of a student who is 16 years old or over from the school; the student may enrol at another school if they wish to carry on schooling.

Boards, principals and teachers must be fair and flexible when they deal with the misbehaviour of students or their risk to other students. This is in line with principles of natural justice; all circumstances and factors must be weighed up and considered before making any decisions.

Investigation

Following an incident regarding a student’s behaviour, a staff member or the school’s principal should investigate the matter. This aims to paint a true picture of what occurred. It is best practice to have procedures in place and to document this process; the Ministry of Education has produced an ‘incident report’ template in appendix 3 of their guidelines here.

Staff should provide students the opportunity to comment on the facts and record their responses; it is good practice to have another adult present. Before deciding to stand-down or suspend a student, ideally one of the following would be applicable: the student was caught in the act, the incident was witnessed by someone the staff believes to be credible, the student was clearly implicated by other circumstantial evidence, or the student freely admitted to being responsible.

Principal’s Decision

For a student to be stood-down or suspended, the principal must be satisfied the student’s behaviour amounted to gross misconduct or continual disobedience that is a harmful example to other school students, or risked the serious harm of other students.[3] If the behaviour does not fall into any of these categories the student may not be stood down.

Gross misconduct has been described by the High Court as “striking and reprehensible to a high degree”.[4] While continual disobedience is a firm pattern of misbehaviour. Further it would be setting a harmful or dangerous example to other students where, if the misbehaviour went unpunished, the discipline and safety standards would be undermined. Despite these, it is important for the student’s individual circumstances to be taken into account. This may also require talking to their parents.

Before making a decision, consideration should be given to the affect suspension will have on the student’s right to go to school.

Suspension or stand-down

Upon deciding to suspend a student it is the principal’s obligation to inform the student’s parents, the board and the Ministry of Education.[5] They are also obliged to take all reasonable steps to make sure the student obtains guidance and counselling under s 103 of the ETA. The student and parent needs to be given an Information for Parents pamphlet which sets out relevant information.

The Education (Stand-Down, Suspension, Exclusion and Expulsion) Rules 1999 (“the Rules”) require the principal to write a report for the board setting out the incident and why it amounts to conduct requiring suspension. The report, along with information regarding the suspension meeting, must reach the student and their parents at least 48 hours before the meeting.[6] It must take place between seven school days of the suspension. During the meeting the board determines whether to lift or extend the suspension with or without conditions; where it is more serious, they may decide to exclude or expel the student.[7]

Stand-downs have a similar process. A detailed report is not needed, though data about stand-down decisions must still be provided to the Ministry of Education. A meeting can be requested by the student or parent. There is a different pamphlet here. In both situations the student can attend school if it is appropriate or a parent requests it, provided the principal thinks it reasonable.[8]

Exclusion or expulsion

The board may decide to exclude or expel the student from school following a suspension meeting under s 81(1)(c) of the ETA. The principal may also decide to request the board reconsider their decision where a student did not comply with conditions imposed by the board; this may result in exclusion or expulsion.[9]

Upon a decision to exclude a student the parents and Ministry of Education must be informed. The principal has to try find another suitable school for the student to attend.[10] If the principal is unable to do this they must inform the Secretary (chief executive of the Ministry of Education) of the steps they undertook.[11] The Secretary can lift the exclusion, arrange the student to enrol in another school or a distance school, but must have made all reasonable attempts to consult the student, their parents and the board.[12] The Secretary can direct the board of another State school to enrol the student, but cannot direct the board of a State integrated school to enrol the student.[13]

Where a student is expelled the student’s parents and the Ministry of Education must be informed. The student should also be informed that the Ministry of Education can provide them assistance.

What about Student Discipline in Private Schools?

Private schools decide their own rules and policies in relation to discipline but must behave fairly and reasonably. The rules around suspensions, exclusions and expulsions under the ETA do not apply to private schools.

However, clause 16 in schedule 7 of the ETA sets out that where a student has been suspended or expelled from a private school the principal must provide the Chief Executive and Secretary (the Secretary) of the Ministry of Education written notice of the student’s name, address, and the day they were expelled or suspended, along with the reasons for such suspension or expulsion. The Secretary can arrange for them to be enrolled at another school after making reasonable attempts to consult the student, the student’s parents, and the board.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions.

[1] Education and Training Act 2020, section 81.

[2] Education and Training Act 2020, section 80(2).

[3] Education and Training Act 2020, section 80(1).

[4] M & Anor v S & Board of Trustees of Palmerston North Boys’ High School [2003] NZAR 705, 712 (decided 5 December 1990).

[5] Education (Stand-Down, Suspension, Exclusion and Expulsion) Rules 1999, rules 9 and 10.

[6] Education (Stand-Down, Suspension, Exclusion and Expulsion) Rules 1999, rules 15.

[7] Education and Training Act 2020, section 81.

[8] Education and Training Act 2020, section 80(3).

[9] Education and Training Act 2020, section 81(3)-(4).

[10] Education and Training Act 2020, section 81(6).

[11] Education and Training Act 2020, section 81(7).

[12] Education and Training Act 2020, section 82.

[13] Education and Training Act 2020, section 87(3).

There are three levels to New Zealand’s education system. The first level is early childhood education (ECE) for children from infants to school entry age. This is not compulsory, but 96.8% of children attend ECE and government subsidies are available for children attending ECE for 20 hours a week.

The second level of New Zealand’s education system is primary and secondary education which extends from Year 1-13. Primary education goes from Years 1-8 for children generally aged 5-12. Secondary education starts at Year 9 and goes through to Year 13 encompassing children aged 13-17 generally. Kids must attend school from ages 6 to 16.

The third level is tertiary education.

Forms of Schools that are Recognised in New Zealand

State schools are non-religious, state-owned, and state-funded schools and make up most schools within New Zealand. They teach the national curriculum and are free if the child is a New Zealand citizen or permanent resident and are aged 5 to 19.

The board of a State school is a body corporate and is a crown entity under the Crown Entities Act 2004. The board is responsible for the governance of the school, including setting the policies by which the school is to be controlled and managed.[1] The principal is the board’s chief executive in relation to the school’s control and management. The principal must comply with the board’s general policy directions (and all applicable legislation) but has discretion to manage the school’s day to day administration.[2]

Primary and secondary state schools are required to design a curriculum in accordance with principles and values set out in the national curriculum. Primary education is predominantly foundational learning with a focus on competency in literacy and numeracy along with a variety of other subjects. Secondary schools provide a balanced curriculum but allow students to specialise in different courses and subjects from Years 11-13. In these years students can achieve the National Certificate of Educational Achievement (NCEA) at three levels. Some state schools also offer alternative academic pathways such as the International Baccalaureate programme and the Cambridge International General Certificate of Secondary Education and AS & A Levels.

State integrated schools are State schools operating in partnership with privately owned Proprietor boards. State-integrated schools exist to provide education with a special character. This is defined under the Education and Training Act 2020 (ETA) as a framework of education with general religious or philosophical beliefs and associated with observances or traditions relating to those beliefs.[3] The education at each state integrated school will reflect its own values within the context of its specific philosophy or religion. Attendance dues may be payable for attending State integrated schools.

Private schools are privately owned schools that operate more independently of the State school system. They are generally funded by charging school fees though they do also receive some government funding. It is not compulsory for private schools to follow the national curriculum. They are free to design their own curriculum or adopt a particular form of curriculum. Private schools are governed by their own independent boards. However, reviews of private schools are undertaken by the Education Review Office, and the chief executive of the Ministry of Education (the Secretary) has powers to act where private schools are not satisfying requirements set out under the ETA.[4]

Kura kaupapa Māori or kura are state schools that teach in te reo Māori and operate in a manner that reflects Māori values and culture. They follow Māori-medium teaching, learning and assessment and may have students from years 1-8 or years 1-13.

Designated character schools are state schools that have a character that is in some specific way or ways different from the character of ordinary State schools. Kura kaupapa Māori can also be designated character schools. The board of a designate character school may refuse to enrol a student whose parents do not accept that the school operates consistently with its different character.

Distance learning is available for children who may have reasons for not attending schools such as special needs students or students that live a long way away from a school. Te Aho o Te Kura Pounamu (Te Kura) is New Zealand’s correspondence school which teaches the first two levels of New Zealand’s education system through online learning. Te Kura (also known as the Correspondence School) caters for students with health difficulties, or who for other reasons cannot attend a local school. Te Kura is New Zealand’s largest state school. Its health schools are based in Auckland, Wellington and Christchurch, though it covers the entire country (and some overseas based students). Teachers can work with students both at home and in the hospital.

Special schools provide education to students that have particular needs as a result of special talents, learning or behavioural issues. Special schools operate using the New Zealand curriculum.

Home-schooling is where parents seek to educate their children themselves rather than enrolling them at a school. Registration for home-schooling requires the Ministry of Education to be satisfied that parents wanting to home-school their children will teach their child regularly, and at a similar level as to what the children would be taught in a registered school. Upon being satisfied with this, the Ministry of Education provides a Certificate of Exemption to parents that apply to home-school their children.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions.

[1] Education and Training Act 2020, section 125.

[2] Education and Training Act 2020, section 130.

[3] Education and Training Act 2020, s 10 (definition of education with a special character).

[4] Education and Training Act 2020, Sch 7, cls. 9-10.

Now is a great time to consider whether the legal vehicle of your society is best serving your needs. We’ve outlined the pros and cons of Incorporated Societies and Charitable Trusts as entities here.

If you believe a Charitable Trust is right for you, we can help you transition from an incorporated society. The process if relatively straightforward but can take some time. A few key points to consider are:

Bequests – have you received many bequests in the past? Once your current incorporated society is wound up, there is a chance that a bequest meant for you may not find its way to the new entity. There are ways to help prevent this (e.g. notifying key stakeholders that they should update their will, keeping the same charities services number or even keeping the society as a shell for a period of time), but it is still a risk.
Accounting input – We strongly advise seeking accounting input throughout the transition process, as there may be tax obligations or timing obligations that you need to aware of. If you don’t have a regular accountant then we can point you towards specialists in this area.
Employees – if you have any employees, you need to make sure you engage with them throughout the process and give them time to consider the change. We have a specialist employment team who can help you throughout this process.
Contracts – you will need to move any contracts across to the new entity and inform key stakeholders of the change – this can take time. If you own any property, this would need to be transferred too. We and our specialist property team could assist throughout this process.
IRD and Charities Services numbers – you will need to apply for a new IRD number. If you have tax donee status, this will need to transition from the society to the charitable trust. The good news is you can keep your number with Charities Services despite moving to a different type of entity.
Taking people on the journey with you – it’s so important to take members and stakeholders on the journey with you. This means it can take some time to transition, but is well worth it when it comes time to vote.

Here’s what the transitioning process would look like:

Parry Field Lawyers could help with each step of the process. If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, yangsu@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

When is a charitable company the best option?

It is a common understanding that Charities must be trusts. However, of the 28,000 total registered charities many of them are other entity types such as incorporated societies, associations and companies. What did you have for breakfast? A famous example that probably was involved in supplying some part of that is the registered charitable company is Sanitarium.

It would be suitable for a charitable company to be used where the entity has a purpose that is capable of fitting one of the four heads of charity: advancing education, relieving poverty, advancing religion or other purposes that benefit the community. In describing this purpose, it will need to be ensured that it does not stray into “helping entrepreneurs” as the entity should not be about individuals making more profit.

Setting up a new legal entity that is a charitable company does two things. Firstly, it helps to crystallise the identity for a project in mind which will be helpful when talking with collaborators, customers, other unions and government. Secondly, it will “ring fence” liability so if something goes wrong, only that new entity ends and it does not cross infect to other persons or entities.

As the entity has a hybrid structure it also has hybrid obligations. The new entity would need to register with Charities Services. A registered charity will ensure:

Credibility with others such as philanthropic trusts or Councils;
A better tax position; and
The ability to give donation receipts to those who donate (as they get 1/3 back).

The company would also need a constitution that sets out how it operates and importantly makes clear the charitable purpose and prevents private gain. You can pay salaries from the company but they must be at market rate.

There are many times when a charitable company will be the best legal structure to choose – don’t just assume that you should set up a charitable trust.

—

If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, yangsu@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

The tax benefit of making donations: How does it work?

We help set up many charities and are often asked about the tax benefits. We go into this in our “Charities in New Zealand” book, but want to outline some key points here.

Charities benefit from receiving donations and donors often benefit from the ‘feel good factor’ of helping out worthy causes. Registered charities do not pay tax and their donors can benefit further by applying for a ‘tax credit’ to get a third back, either by applying directly to IRD or by way of ‘payroll giving’.

Direct donations

People often make donations to charities directly. The donor can then submit the receipt to IRD who will issue a ‘tax credit’, which effectively returns 33.3% of the donation to the donor. Find out more about claiming tax credits for direct donations.

What is payroll giving?

Payroll giving occurs when employers enable their employees to make donations directly from their gross wages. The tax benefit is that the amount of PAYE or withholding tax the employee pays is reduced by the amount of their donation. They also receive a ‘tax credit’ from the donation, which is 33.3% of the donation value.

Payroll giving is therefore a bit simpler as the donor does not have to submit their donation receipts to IRD to claim the tax credit.

What needs to be in place for payroll giving?

Employers will only be able to offer this service if they file their payroll taxes electronically. They can either use the myIR online service, or attach files from their own payroll software.

Even if an employer has the ability to use payroll giving, it is discretionary. Employers may also use their discretion to choose how the donations will operate, for example, they may designate specific charities that can be donated to, and they may designate a minimum donation amount.

Only ‘donee organisations’ can receive payroll donations.

What is a donee organisation?

IRD maintains a list of donee organisations. Charities are added to the list if they use at least 75% of their funds within New Zealand (that is, they operate “wholly or mainly” here), or for the public good if an organisation is not a charity. For more on the threshold, you can check to see if a charity is on the IRD donee organisation list here.

Other resources:

The IRD has put together this excellent guide to payroll giving.

It is also possible to claim tax credits on donations to charities supporting overseas causes.

We help with charity set ups and answering questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, michaelbelay@parryfield.com, sophietremewan@parryfield.com, or yangsu@parryfield.com at Parry Field Lawyers

There are around 28,000 officially registered charities in New Zealand doing important work to make Aotearoa a better place. People donate around $1.5 billion annually to New Zealand charities to enable them to do their work.

When it comes to an organisation, the term ‘charity’ has special meaning. To call itself a registered charity, an organisation needs to go through a proper process, which is governed by the Charities Act 2005 (the Act).

This law exists to promote public trust and confidence in the charitable sector and to encourage and promote the effective use of charitable resources. In a nutshell, it is about ensuring good practice by charities, which is a great thing for everyone.

To obtain charitable status an entity must have legitimate charitable purposes, and these are set out in the Act as: relieving poverty; advancing education; advancing religion; or other purposes beneficial to the community. In other words a cause may be good but it may not be capable of registering as a charitable entity.

This doesn’t mean that a cause that falls outside of these categories is not worthy; it simply means that by law that cause is unlikely to be able to become a registered charity – it may still be a charity which is incorporated with Companies Office though.

We realise this area of law can be confusing so have written a free guide about this for those who want to set up charities which is available here

Does charitable status matter?

There are some advantages for organisations to be registered charities. Funders and donors often feel more comfortable giving to a registered charity because they know that registered charities are required to adhere to good practice. There may also be tax advantages for the organisation, and for donors, who may qualify for tax rebates and be able to claim back 1/3 of what they give to the charity.

To help ensure charities are operating well, registered charities must submit annual reports to Charities Services. The reports are all publicly accessible on the Charities Register, so anyone can see how the charity is performing.

It is an offence to even imply that you are a registered charitable entity if you are not registered, because it is misleading. Being a ‘charitable trust’ does not mean an entity is a registered charity. The term ‘charitable trust’ is simply the legal structure. A charitable trust still needs to be registered to have genuine legal charitable status which is done by applying to Charities Services.

Registered charity or not?

It’s easy to check if an organisation is a registered charity by doing a quick search using the Charities Register.

Dealing with bogus ‘charities’

If you discover that an entity is wrongfully describing themselves as a charity to seek an advantage, you can email compliance@dia.govt.nz. Find out more about making a complaint on the Charities Services website.

We deal with charities and those who want to set them up a lot and have many free resources on our website here.

—

If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, yangsu@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

Advertising your fundraising effort

Your business is thriving and you need substantial additional capital to fund the next stage of your growth. You have read up on the Financial Markets Conduct Act 2013 (“FMCA”) (available here) and would prefer to raise funds through one of the Schedule 1 exemptions from product disclosure statement requirements (discussed here). Being proactive, you have already approached your close business associates, relatives, and employees while also taking full advantage of your statutory small offers limit, but it is still not enough.

You decide that it is time to widen the pool of potential investors – you need to reach the deeper financial resources of Wholesale Investors (discussed here) by advertising your offer to them. But how do you that and what are some of the risks in advertising to Wholesale Investors?

Inserting a Disclaimer

To begin with, it is important to be open and honest with the people who come across your offer that your investment is only open to Wholesale Investors. Doing so will avoid potential misunderstandings and hopefully prevent a flood of enquiries from people that will not qualify for the Wholesale Investor exemption. We have seen offers include a disclaimer similar to the one below to highlight that the offer is only available to Wholesale Investors:

“DISCLAIMER: [These] offers are only open to investors who fall within the exclusions applicable to offers made to “wholesale investors” as set out in Schedule 1, clauses 3 (2)(a)-(c) and 3 (3)(a)-(b)(ii) of the Financial Markets Conducts Act 2013 (FMCA). You can obtain further information on FMCA requirements, and whether you come within the exclusions and their requirements at [our website]”

Promotional Conduct

Making it clear that your offer is only open to Wholesale Investors is just the first step. You also need to ensure that your promotional efforts are not misleading or deceptive (see S19 of the FMCA). The recent case of Du Val Capital Partners Limited v Financial Markets Authority [2022] NZHC 1529 offers some key takeaways in respect of the S19 fair dealing requirements:

In assessing whether your offer may be misleading or deceptive, your target audience matters. In this regard, your choice of marketing channels is relevant: advertising your Wholesale Investor-restricted offer in social media and other online channels may be a factor in the Financial Markets Authority (“FMA”) determining that your offers were targeted at inexperienced investors.
You cannot assume that because your offer is restricted to Wholesale Investors, your advertising audience will be more experienced and knowledgeable. Wholesale Investors are not all inherently more sophisticated than non-Wholesale Investors.
If your promotional material is misleading, it cannot be saved by subsequently making more detailed materials available to investors.

Final Caution

The FMCA requires that an offeror know its target audience and engages with them openly and honestly. This includes ensuring that promotional materials are not misleading or deceptive. If you have any questions on fundraising, please feel free to reach out to us if you would like specific input on your context. We have helped many companies with their fundraising efforts and each situation is unique. Please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, yangsu@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

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

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

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

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

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

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

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

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

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

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

Introduction

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

What are submissions?

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

Making your submission

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

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

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

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

Summary

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

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

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

Introduction

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

1. Requirements for officers and governance of charities

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

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

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

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

2. Financial reporting requirements

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

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

3. Regulatory decision-making

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

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

4. Appeals framework

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

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

5. Regulatory compliance and enforcement tools

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

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

Summary

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

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

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

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

What about Student Discipline in Private Schools?

Forms of Schools that are Recognised in New Zealand

When is a charitable company the best option?

Christchurch CBD

Christchurch – Riccarton

Rolleston

Hokitika

Auckland