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

Introduction

The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent, resulting in significant changes for the 23,000 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. It would be prudent to include in the society’s constitution the list the qualifications of officers along with the procedure for election or appointment of officers although it could 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: