Charities/NFP - 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.

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If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers.

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.

Introduction

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

1. Requirements for officers and governance of charities

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

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

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

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

2. Financial reporting requirements

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

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

3. Regulatory decision-making

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

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

4. Appeals framework

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

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

5. Regulatory compliance and enforcement tools

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

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

Summary

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

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

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

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

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

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

Introduction

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

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

Timing of the new Act

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

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

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

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

Summary

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

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

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

Introduction

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

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

When an officer has interest in a matter

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

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

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

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

Duty of disclosure

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

The interests register

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

Consequences of an officer’s interest

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

Notice to members in certain circumstances

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

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

Permissible amendments to the conflict of interest disclosure procedure

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

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

What cannot be changed

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

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

Summary

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

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

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

Introduction

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

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

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

Name

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

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

Purposes

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

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

Control and management of finances

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

Winding up

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

Summary

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

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

More from this series

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

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

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

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

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

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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, 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.

Introduction

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

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

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

Dispute resolution procedures

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

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

Summary

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

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

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

More from this series

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

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

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

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

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

Introduction

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

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

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

Amendment procedures

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

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

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

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

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

Minor amendments

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

Summary

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

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

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

More from this series

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

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

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

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

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

Introduction

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

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

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

Committee

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

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

Appointment of officers

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

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

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

Functions and powers

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

Removal of officers

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

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

Further requirements

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

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

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

Contact person

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

How the contact person or persons will be elected or appointed must be set out in the society’s constitution.

Summary

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

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

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

More from this series

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

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

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

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

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

Introduction

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

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

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

Number of members

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

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

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

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

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

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

Member details

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

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

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

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

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

Summary

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

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

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

More from this series

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

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

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

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

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

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