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Incorporated Societies Act 2022 Law Changes: What you need to know

22 November 2022
by Canterbury Legal

Do you help manage an incorporated society? If so, you’ll need to make a few changes to it in the coming years, thanks to the new Incorporated Societies Act 2022. Those changes include re-registering your society, with a constitution and processes compliant with the new Act.

The good news: you have some time. The re-registration deadline is likely to be April 2026, with the option to re-register starting in October 2023.

But that doesn’t mean you should wait until 2026 to act. It’s important that you leave yourself enough time to make the required changes, and make sure the Companies Office is satisfied that you’ve done what you need to do.

Timeline for Incorporated Societies Act 2022 changes

  • 5 April 2022: Act receives Royal assent.
  • October/November 2022: MBIE consults on regulations.
  • May—September 2023: Regulations released.
  • October 2023: Registration under the new Act likely to begin.
  • April 2026: Likely deadline for registration under the new Act.

What changes are in the Incorporated Societies Act 2022

Until now, the law applying to the 24,000+ incorporated societies in New Zealand was found in the Incorporated Societies Act 1908. These societies include sports clubs, religious groups, hobby groups, philanthropic organisations, residents’ associations and more.

While that Act was innovative back in 1908, a law passed before the Titanic sank just didn’t fit the needs of these groups 114 years later.

So the changes introduce stronger, more appropriate governance frameworks for incorporated societies, with clear duties, standards and requirements for the people that run them.

The Companies Office has a good summary of these. Below are some of the more significant.

Incorporated societies will need new, compliant constitutions

The Act sets out what is needed in a constitution, which is more than the rules required in the 1908 Act. Each society will need to have this ready when applying to re-register.

Incorporated societies will need at least 10 consenting members

The Act requires incorporated societies to have at least 10 members. That’s five less than the 15 required under the 1908 Act.

However, it’s not enough to just have 10 members at registration: if you ever drop below 10, you run the risk of liquidation or deregistration.

All those members need to consent to being members, too. So no sneaking anyone in without their knowledge.

Officers and committees will have certain duties and obligations

One of the Act’s four principles is that “societies should operate in a manner that promotes the trust and confidence of their members”. So there are more rules governing the people that operate them.

Every society will need a committee of three members to manage the society. Restrictions on who can be an officer are similar to those applying to company directors. Officers can’t be undischarged bankrupts, prohibited from being a director or promoter of a company, or convicted and sentenced for offending such as crimes involving dishonesty.

These officers will also need to operate with a fiduciary duty to the society—another similarity with company directors. The duties of officers include things like exercising powers for proper purposes, acting in good faith and in the best interests of the society, and not acting in such a way that there will be a risk of serious loss to creditors.

Officers will also need to identify if they have any conflicts of interest, such as a personal interest in a matter relating to the society.

Incorporated societies’ members will have greater rights

Another of the new Act’s principles is that “members of a society have the primary responsibility for holding the society to account”. Accordingly, members are given certain rights and powers.

  • Members can request information from the society. The society must provide it to them, unless it falls under one the grounds for refusing the request (such as if it would violate an individual’s privacy).
  • There are clearer rules around amending a society’s constitution, and the need for members to approve it.
  • There are guidelines for resolving disputes within a society. Courts may also intervene in some cases, such as if there has been a breach of the rules of natural justice.

Incorporated societies will have greater financial reporting obligations

All societies will need to prepare and register annual financial statements. The old act also required this, but the requirements are now a little bigger—particularly for larger societies.

  • The minimum requirements for “small societies” are set out in the Act. A small society is one with total operating payments less than $50,000 in each of the two preceding financial years, and total current assets less than $50,000 at the end of those two preceding financial years.
  • Other societies will need to meet standards set out by the External Reporting Board.
  • Some societies, whose annual operating payments exceed a certain threshold, will need their accounts audited. This threshold will be defined in regulations being developed by MBIE.

Incorporated societies will require a contact person

Every incorporated society will need to have at least one person (and up to three) the Registrar can contact if needed. They’ll need to be at least 18 years old, and ordinarily resident in New Zealand. For most societies it’ll probably make sense for this to be a committee member/officer, though they won’t need to be.

What incorporated societies need to do now

Right now: technically nothing! Because there are so many incorporated societies, and the changes are to law that has been in place a long time, there’s a long transition period. It’s unlikely to be earlier than April 2026 before you can no longer operate under the existing Act.

But it’s a good idea to start aligning your arrangements and practices with those in the new Act. For example:

  • Ensure you have officers that fit the new criteria.
  • Develop or update dispute resolution processes.
  • Start updating your constitution.

But some requirements aren’t defined yet. These will come in regulations being developed by MBIE. Expect to see those between May and September 2023. So while you can start getting ready, you can’t be fully ready until those are released.

Let us help you understand what’s ahead for your incorporated society

April 2026 seems a long way off, but it’ll be here sooner than you think. (Does mid-2019 feel so long ago? It’s the same amount of time in the other direction.)

Our team can help you understand what you might need to do to meet the new Act’s requirements, and start a plan to get there. Contact us for advice.

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