Incorporated Societies Act 2022: Information Hub

In January 2023, the External Reporting Board (XRB) issued a framework of Climate Standards to facilitate the aim for Aotearoa New Zealand to ensure capital is allocated to activities which promote the transition to a low-emissions and climate-resilient future. To foster this objective it produced three climate-related disclosures (NZ CS 1, 2 and 3) for some entities to comply with.

In this article we break down the requirements because while currently it applies to the largest companies, it is likely to apply to others in the future as well. This will increasingly impact governance and reporting responsibilities for directors in the future.

NZ CS 1, 2 and 3

The first Climate Standard (NZ CS 1) sets out disclosure requirements for Governance, Strategy, Risk Management and Metrics, and Targets so entities consider how their activities raise climate-related risks and opportunities. It applies to entities that must prepare climate statements, by virtue of the Financial Markets Conduct Act 2013, to comply with the framework.

The second climate-related disclosure standards (NZ CS 2) allows for exemptions from the disclosure requirements to recognise that high-quality disclosures will likely take time to develop. Entities may use adoption provisions 1 to 4 (see exemptions in blue) under the NZ CS 2 during their first reporting period. Entities in their first, second and third reporting period can use adoption provisions 5 to 7 (see exemptions in orange) and provisions 6 and 7 are available to entities who have previously prepared climate statements but not in the immediately preceding reporting period.

Under NZ CS 1 entities are required to disclose the following for each area:

Governance

The governance body responsible for overseeing climate-related risks and opportunities along with a description of their role and the body’s: processes, frequency of being informed, skills and competencies available to give oversight, way of considering risks and opportunities when implementing strategies and how it oversees the achievement of metrics and targets;
The management’s role in assessing and managing climate-related risks and opportunities, including how responsibilities are assigned to management-level positions/committees and when and how they engage with the governance body.

Strategy

The entities’ current climate-related impacts (physical, transition and financial);
The scenario analysis used to identify climate-related risks and opportunities and its business models’ resilience, including how it analysed 1.5 degrees Celsius, 3 degrees Celsius or greater, and a third climate-related scenarios.
The short, medium and long-term climate-related risks and opportunities and its links to strategic and capital plans, and decision-making processes around funding;
Anticipated impacts, including financial impacts, of climate-related risks and opportunities the entity reasonably expects;
Information regarding its current business model, strategy, business plan, internal capital deployment and decision-making to show how it will arrange itself while the global and domestic economy moves toward a low-emissions, climate-resilient future.

Risk-Management

Processes for identifying, assessing and managing climate-related risks and how these are integrated into its overall risk assessment processes by describing: the tools/methods used to identify and assess the scope, size and impact of the risk (and how frequently this is done), the short, medium and long term horizons, how the entity prioritises climate-related-risks in relation to other risks, and whether parts of the value chain are excluded.

Metrics and Targets

Relevant metrics of: gross greenhouse gas emissions (including standards used to measure this, the approach used, the sources of emission factors and global warming potential) and its intensity, transition and physical risks, the amount of assets, business activities, expenditure, financing, investment or remuneration aligned with or used toward climate-related opportunities and risks, and internal emissions prices;
Relevant industry-based metrics of the entities’ industry or business model, as well as other performance indicators, used to measure and manage climate-related risks and opportunities;
The targets used, and their performance, to manage climate-related risks and opportunities including information about timeframes, interim targets, the base year to measure progress from, descriptions of performance, and for each greenhouse gas emissions target: whether they have an absolute or intensity target, how it contributes to global warming to 1.5 degrees Celsius (and its basis for determining this), and the extent the target relies on offsets (and how these are verified);

NZ CS 3 sets out the following principles and general requirements to provide for high-quality climate-related disclosures:

Disclosures must achieve a fair presentation by meeting NZ CS 3 principles;
Disclosures must be relevant (i.e. capable of affecting primary users’ decisions), accurate (free from material error), verifiable (possible to corroborate information), comparable (enables primary users to understand similarities and differences in and among items), consistent (uses the same method from each reporting period), timely (available for primary users to make decisions in time);
The presentation of disclosures must be balanced (free from bias and manipulation), understandable (with clear and concise information), complete (does not leave out details that may result in information being false or misleading), coherent (presentation of disclosures explains context and relationships with other disclosures);
Disclosures may be prepared as a specific document or included within other documents such as annual reports;
When determining its climate-related risks and opportunities an entity is to consider the exposure of its value chain too (the range of activities, resources and relationships of an entity’s business model and external environmental it operates in);
Entities are to prepare climate-related disclosures for the same reporting period as its annual financial statements and use the same presentation currency that is in their financial statements;
Information must be disclosed where it is material (i.e. if leaving it out or obscuring it may reasonably influence primary user decisions);
Comparative information is to be disclosed for each metric for the immediately preceding two reporting periods and their trends, and changes to the methods of disclosure are to be explained to enable consistency;
Entities are to disclose their methods, assumptions and data and estimation uncertainty as well as methods, assumptions and limitations of methods to estimate greenhouse gas emissions;
Entities who comply with the Aotearoa New Zealand Climate Standards are to have a statement of compliance.

Exemptions under NZ CS 2

Entities who are in their first reporting period may adopt provisions 1 to 4 to be exempt from disclosing:

The entities’ current financial impacts of physical and transition climate-related impacts under paragraph 12(b) of NZ CS 1 (see ‘Strategy’ above).
Anticipated financial impacts of climate-related risks and opportunities the entity reasonably expects under paragraph 15(b) of NZ CS 1 (see ‘Strategy’ above).
Information regarding its current business model, strategy, business plan, internal capital deployment under paragraphs 16(b) and 16(c) of NZ CS 1 (see ‘Strategy’ above).
Gross greenhouse gas emissions under paragraph 22(a)(iii) of NZ CS 1 (see ‘Metrics and Targets above).

Entities who are in their first, second or third reporting period may adopt provisions 5 to 7 to be exempt from disclosure of:

Comparative metric information for immediately preceding two reporting periods under paragraph 40 of NZ CS 3, where entities have used adoption provision 4 above they are exempt from greenhouse gas emission metrics in second and third reporting periods (see NZ CS 3 principles above);
Comparative metric information disclosure for the immediately preceding two reporting periods under paragraph 40 of NZ CS 3 for entities in their first reporting period are only required to provide one year comparative information in their second report period (see NZ CS 3 principles above);
Comparative metric trend analysis from previous reporting periods to the current reporting period where entities are in their first and second reporting periods (see NZ CS 3 principles above);

Entities who have previously prepared climate statements but not in the immediately preceding reporting period may use adoption provisions 6 and 7 above too.

This is a brief summary of the climate related standards and should not be relied on as legal advice, for further queries or questions please contact one of our lawyers at Parry Field Lawyers.

Kia ora,

A few updates on upcoming free events and resources for July …

Tomorrow is a free online session at noon where I will be having a chat and answering questions anyone has with a focus on governance and charities and anything else people want to talk about – you can sign up here

Later in the month on 23rd July Shamubeel Eaqub and I will be talking about the “Economic Pulse” where I quiz him on how things are going… free and online you can sign up here – Shamubeel is always great value and lots of fun to talk with! Last time we spoke about 280 people signed up about impact investing (it is here)

A post on LinkedIn that has gotten lots of comments and engagements is my suggestion that we raise the compulsory superannuation rate – you can read more here. Our rate is 3% whereas Australia next year will hit 12%.

Charities Act changes video is now up here from Community Governance Aotearoa

For those in Wellington will be sharing later in the month about Incorporated Societies at the NFP special interest group of CAANZ.

Recently sat down to talk with Simone Woodland about the Takaka Cohousing Project. My chat with Neil Ieremia on Black Grace is also now up at www.theseeds.nz – both are really amazing stories.

Since the last update received an honourable mention by Mindful Money at their awards for ethical reporting and the work on Seeds!

Just wrote an article on Street Art of Christchurch for The Press – why not have a look? CCC just announced a lot of funding for this area, I secretly hope the article helped! https://theseeds.nz/podcast/the-rise-of-street-art-in-otautahi-christchurch-identity-and-telling-new-stories/

Ngā mihi
Steven

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.

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 on judithbullin@parryfield.com or sophietremewan@parryfield.com at Parry Field Lawyers.

Most people have heard of incorporated societies, but what about unincorporated societies? In reality, there are thousands of unincorporated societies in New Zealand. They might be sporting groups, hobby groups, community groups, or a group set up for a particular purpose.

Incorporated societies are, as their name suggests, ‘incorporated’. A key benefit of incorporation is that society members are generally not personally responsible for any of the society’s obligations. They become incorporated by registering with the Companies Office and they need to follow the legal obligations set out in the Incorporated Societies Act 2022 and the Charitable Trusts Act 1957.

Unincorporated societies, on the other hand, are typically much less formal, and this comes with advantages and disadvantages. Let’s look at some examples.

Disadvantages relate to the fact that liability can attach to members and the inability to own property:

Limited Legal Status: Unincorporated societies (as opposed to incorporated societies) do not have a separate legal personality. This means they cannot enter into contracts, own property, or sue or be sued in their own name. Individual members may be personally liable for the society’s debts and obligations.
Limited Liability Protections: While members typically have limited liability, their personal assets may still be at risk in the event of legal disputes or financial problems within the society, depending on the circumstances.
Difficulty in Holding Assets: Unincorporated societies cannot own assets in their own right. Any assets are usually held in the names of individual members or office bearers, which can make asset management and ownership more complex.
Limited Funding Opportunities: Unincorporated societies may face challenges when seeking funding or applying for grants from certain organizations or government agencies, as some may prefer to work with registered legal entities for accountability and transparency reasons.
Less Credibility: Compared to incorporated entities, unincorporated societies may be perceived as less credible or less established, which could impact their ability to attract members, volunteers, or supporters.
Limited Access to Legal Remedies: Unincorporated societies may have limited access to legal remedies and dispute resolution mechanisms compared to registered legal entities.
Dissolution Challenges: If an unincorporated society decides to dissolve, distributing assets and resolving financial matters can be more complicated than for registered legal entities.

Advantages relate to their simplicity and flexibility:

Simplicity and Low Cost: Forming and maintaining an unincorporated society is generally straightforward and cost-effective compared to setting up and operating a registered legal entity like a company or charitable trust. There are minimal legal formalities and registration requirements.
Flexibility: Unincorporated societies enjoy a high degree of flexibility in terms of governance, decision-making processes, and organisational structure. They can adapt their rules and operations to suit the needs of their members.
Minimal Reporting Requirements: Unincorporated societies have fewer reporting and compliance obligations compared to incorporated entities. They are not generally required to file annual financial statements with government agencies.
No Shareholders: Unlike companies, unincorporated societies do not have shareholders, which means there are no ownership interests or equity shares to manage. Members usually have equal rights.
Tax Benefits: Depending on their purpose and activities, unincorporated societies may be eligible for tax-exempt status, which can result in cost savings for the organization and its members.

Groups may start out as unincorporated and go on to become incorporated as a way of dealing with the disadvantages. Choosing whether to incorporate or not depends on the group’s goals, size, and activities. Another legal structure such as a charitable trust might be a better option. In this article we compare the two structures.

If you are part of an incorporated society, there are important changes required that you need to be aware of. To help people understand the requirements we have put together an extensive Incorporated Societies Information Hub full of free resources.

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.

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 at Parry Field Lawyers.

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Charities form a fundamental part of our society, supporting and providing for those in need and the community. However, many charities have rules which really need a refresh as they have been in place for a long time.

One common question we get is where those rules contain a clause in their founding documents stipulating that consent from Inland Revenue Department (“IRD”) is required before making changes to particular clauses. This article will address what a founding document is, what these clauses look like, whether they are still necessary and whether they can be changed.

What are the founding documents of Charities and what clauses require IRD approval?

As charities can be created in various ways, founding documents vary depending on what kind of organisation or structure a charity adopted when it was created. In general, a founding document is a set of rules detailing how the charity is to operate, what the purpose of the charity is, and what exactly the charity does. The three main ways a charity can be structured according to a founding document are:

A Charitable Trust, via a Trust Deed;
A Charitable Company, via a Constitution; and
An Incorporated Society, via a set of Rules, also known as a Constitution.

Within the founding documents of older charities, there is often a clause that states:

“No addition to or alteration of the charitable objects, the personal benefit clause or the winding up clause shall be approved without the IRD’s approval”.

These clauses are usually included within the “Amendment” section of a charity’s founding document. Older formed charities have this clause within their founding documents as it was recommended by past IRD commissioners. The idea behind this clause was to ensure that key clauses could not be easily changed or amended.

Is this clause still necessary? If not, can it be removed and replaced?

Within both Operational Statements 06/02 and 22/04 issued by the IRD, it clearly states that the Commissioner of the IRD no longer gives prior approval to clause changes. Instead, the IRD strongly recommends that charities remove any clauses like this from their founding documents. From these statements, it is evident that IRD approval clauses are no longer relevant and have no effect or use for charities.

Operational Statement 22/04 suggests these clauses be replaced with a new clause that will not permit an alteration, addition, or removal of clauses within a founding document if it does not align with the charitable nature of your charity or provide a pecuniary benefit to any individual. This demonstrates that these clauses can be replaced with another clause that still ensures the founding document cannot be changed too easily.

We frequently help charities amend their founding documents. If you are aware of particular changes you need assistance with or would like us to update your charity’s founding document, please feel free to contact one of our charity specialists Steven Moe, Michael Belay, Sophie Tremewan or Yang Su at Parry Field Lawyers.

This article 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 new Charities Amendment Act 2023 (the Act) amends the Charities Act 2005. Some of its changes are already in force, having been introduced in July and October this year, while other changes come into force from 5 July 2024. In this two part update we outline the latest changes that apply as of 5 October 2023.

Changes to The Definition, Age and Role of Officers

A key amendment is the expansion of the definition of “officer” under section 4 of the Act to include any persons who has significant influence over the entities substantial decisions, including management or administration. So, an officer can be a trustee, members of board or governing body (if it has one) or persons that occupy other positions (such as a chief executive or treasure) if that position allows them to exercise substantial influence. Officers, according to the new Act, will also include so called “deemed directors”, being persons with whose direction or instruction the entity is accustomed or required to act. As the definition of officer has been expanded, existing and new charities should take care to have clear distinctions between those in governance and management, as well being cautious about the influence of those in management positions.

Furthermore, s 13(1)(e) introduces a new requirement that charities must at any time have at least one officer 18 years of age of older. Also, section 36A outlines the role of an officer of a charity is to “delivery its charitable purpose” and “comply with its obligations” under the Charities Act or other Acts. This is clearly in addition to other fiduciary duties that are already required of officers.

Disqualifying Officers

Section 36C gives the Charities Registration Board the ability to disqualify a person, for not more than five years, from being an officer of a charity by notice. The notice can be by email and the Board must publish notice on their website as soon as practicable. Prior to this new Act, the Charities Registration Board, did not have the ability to directly remove an officer and instead would need to deregister the entity. An officer can be disqualified if they have:

Engaged in serious wrongdoing in connection with the entity; or
Failed significantly or persistently to meet their obligations under the Charities Act or other enactments.

This gives the Charities Board considerable power to ban officers of charities and the circumstances in which these powers will be used is uncertain. Further, the new provision does not yet require the Board to provide the Registrar of Incorporated Societies a copy of a banning order which was previously required.

Consult on Significant Guidelines

Section 12A of the Act has been introduced a new process which requires the chief executive of the Department of Internal Affairs to consult with persons or representatives they consider “reasonable to consult before issuing significant guidelines or recommendations on the best practice to be observed by charities, officers, and persons concerned with the management or administration of charities.” [1] This appears to provide accountability for decision making but it may mean that non-significant guidelines or recommendations need no consultation. Further, it is only a requirement to consult.

Charities Obligations

The new section 13A provides all charities must remain qualified for registration. To remain qualified, charities must maintain income for charitable purposes, have qualified officers and have and maintain rules. This restates some of the key requirements already set out in s 13 but includes the requirement to have and maintain rules.

Extended Timeframes for Providing Information

Section 18 of the Act was amended to increase the time frame in which charities can make submissions when the chief executive is considering whether they qualify for registration. This was increased from 20 working days to 2 months and also includes the time frame that an application will be treated as withdrawn if there is no response to the notice. If the Charities Board declines an application for registration or deregisters of a charity, they must now publish their decision and their reasons for it as soon as practicable on their website.

Requirement to Review Governance Procedures

Charities are now required to review their governance procedures every three years under the s 42G of the Act. In this review charities must consider whether their procedures, within or beyond its rules, are fit for purpose and help the charity achieve its charitable purpose and comply with the Charities Acts’ requirements. How this new duty works in practice is unclear as these terms are neither defined nor explained. However, frequently reviewing and updating rules and procedures is good practice for charities to adopt to ensure safe, smooth and efficient management and operation.

To read part II to this article, click here

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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.

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

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[1] Charities Amendment Act 2023, s 12A.

We continue our two part update covering the changed brough on by the Charities Amendment Act 2023 (the Act). In part one we covered the changes that came into effect in October 2023. In this part two, we cover the changes that are coming into force from 5 July 2024.

Objections

New sections 55A to 55E outline a new process for objecting to decisions made by Charities Services or the Charities Registration Board (the Board). The Act refers to the “chief executive” of the Department of Internal Affairs, but in practice these decisions are made by Charities Services.[1]

What Can Be Objected To?

Charities are now able object to a wider range of decisions. Previously, only proposals to deregister a charity or decline an application could be objected against. Section 55A outlines a list of several decisions made by Charities Services objections can be raised against. These include decisions to remove from the register any document or information related to the entity, a decision to give a warning notice and any decision made by the Board under the Act. Objections can also be raised against any decision made by the registrar.

Deadline For Objections

Before a decision is made, the decision makers must give the charity or person concerned notice regarding the intended decision, the grounds for the decision and the date by which an objection to the intended decision must be received (section 55B). This date will be no later than two months after the date of the notice. This is an increase from 20 working days. Unlike appeals (examined below), objections are therefore made before the decision is made.

Opportunity To Be Heard

Section 55D allows the objector the opportunity to be heard. This can be either in person or by electronic means. Previously, despite the rules of natural justice normally requiring an oral hearing, there was no right to a hearing.

Appeals

Decisions can also be appealed after they are made. There is a new process for this. While not explicitly stated in the Act, it appears that appeals can be made even if an objection was not made against a decision.

What can be appealed?

Section 58A outlines a list of decisions that can be appealed against. These grounds mirror those decisions that can be objected to under 55A. Previously, charities had wider rights of appeal as the grounds were not limited.

Who appeals are made to?

Appeals are now made in the first instance to the Taxation and Charities Review Authority (“TCRA”). Previously, appeals were made to the High Court. The intention behind this is to simplify the process for charities, with the TCRA offering a less formal process.[2] Subsequent appeals to the High Court and Court of Appeal can still be made. An unintended effect could be that charities lose their right of appeal to the Supreme Court, as generally only two appeals are allowed in New Zealand courts.

Deadline for appeals

As with objections, there is a two month time frame for filing an appeal. This was previously 20 working days. However, if it can be demonstrated that there were exceptional grounds that prevented an appeal from being lodged in time, additional time may be allowed.

Costs

Internal Affairs estimated in an impact statement that the cost for an appeal to the TCRA will be $410. This is significantly cheaper than the cost of appealing to the High Court.[3]

Additional change coming: Accumulated Funds

There is an additional change coming regarding charities’ accumulated funds. This is not found in the legislation but in an upcoming change the to the annual return form. Charities with annual expenditure over $140,000 will need to provide reasons in their annual returns for holding the accumulated funds. Charities Services is consulting on the annual return forms and other changes may be coming, likely to happen in 2024. In the meantime, charities are advised to consider the reasons for holding accumulated funds, ensuring it is being done in the best interests of their charitable purposes.

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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.

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

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[1] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[2] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[3] Department of Internal Affairs “Regulatory Impact Statement: Modernising the Charities Act” (Report, 19 October 2021) at 106 and 107, https://www.treasury.govt.nz/publications/risa/regulatory-impact-statement-modernising-charities-act

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.
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.

In September 2023, the regulations for the Incorporated Societies Act 2022 (the “new Act”) were released. So what do you need to know?

Alternative method of filing documents may be allowed by the registrar where it is not practicable for the society to use the Incorporated Societies website (although this is preferred).

Infringement fees listed in the draft regulations have been kept the same (table below). There is no cap for the amount of fees a society can receive if multiple offences occur at the same time. The infringement process has also been released.

Nature of Infringement Offence	Fee
Failure to notify the Registrar of amendments to the constitution	$100
Failure to notify the Registrar of elections or appointments and other changes relating to officers	$100
Failure to maintain a register of members	$100
Failure to call annual general meeting	$500
Failure to properly hold, and keep minutes of, annual general meetings	$500
Failure to send copy of passed resolution in lieu of meeting to certain members	$200
Failure to register financial statements	$500
Failure to register an annual return	$100
Failure to have a registered office	$100
Failure to give the Registrar notice of change of contact person	$200

Transitional period until 5 October 2028 allows for a) societies to continue to restrict AGM attendance, if their constitution allowed it prior to 5 October 2023; and b) have more than 50% independent officers on their committee, if their constitution allows.

Members’ register must include past members, but only those who ceased to be a member within the last seven years.

Application for re-registration will include the prescribed information set out in the Regulations, which we have explained in our article here.

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.

From 5 October 2023 until 5 April 2026, all 24,000 incorporated societies in New Zealand must re-register under the Incorporated Societies Act 2022 (the “new Act”).

So what does this mean for you and your society? In this article we’ll set out what you need to know ahead of the re-registration period.

What will re-registration involve?

Companies Office wants to make the re-registration process as simple as possible with no fees. There will be an online form to complete with a few key pieces of information for your society:

New Zealand Business Number and registration number;
the physical address of your proposed registered office;
your balance date;
who your contact person is;
the names of the proposed officers and for each officer:
- their physical address (note this won’t be publicly available);
- their written consent to being an officer; and
- a certificate confirming they are not disqualified from holding office as an officer – Companies Office have made a template for this available here;
confirmation your society has 10 members; and
confirmation that an officer considers the proposed constitution complies with the Act.

Your society will also need to upload a constitution that complies with the new Act. We have done a series of six articles on this topic which you can find on our Information Hub. We are helping many incorporated societies review and update their constitutions in preparation for the new Act – if this is something you would like assistance with, please feel free to get in touch.

What can you do to prepare?

Now is a great time to take a look at your constitution and practices to make sure they are fit for purpose under the new Act. Do you have a disputes resolution procedure? How do you deal with conflicts of interest? We have lots of information on how the new Act will affect your society available on our Information Hub and are happy to help your society to prepare. You can contact us anytime by email or phone.

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

Kia ora,

Ngā mihi
Steven

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Christchurch CBD

Christchurch

Rolleston

Hokitika

Kia ora,

Ngā mihi Steven

Want to get in touch? Fill out the form below.

Christchurch CBD

Christchurch

Rolleston

Hokitika

Ngā mihi
Steven