New Incorporated Societies Bill
A collective sigh of relief could be heard from the more than 23,000 incorporated societies around New Zealand as the long-awaited and much anticipated Incorporated Societies Bill was finally granted royal assent on 5 April 2022 becoming law. The new Incorporated Societies Act 2022 has been a work in progress since 2015 and replaces the outdated and inadequate previous 114-year-old act. The new Act codifies principles established in case law and modernises and strengthens general governance framework of societies and for those who run them. It aims to make societies stronger and more prosperous, by allowing them to better self-govern as well as providing both societies and their members with useful options for when things go wrong.
What do you need to know?
With any new legislation comes a lot of new requirements and obligations. While most of these are administrative in nature, they will still require considerable time to understand and implement. Although your current society’s rules will continue to apply there are a few things that you will need to consider and get ready. Some of the main changes to be aware of include:
- All existing incorporated societies will have to re-register to continue as an incorporated society.
- To re-register, each society will need to review its current rules and confirm they are compliant with the new Act.
- Failure to re-register within the given timeframe will result in removal from the Register. The final date for reregistration (Transition Date) is 1 December 2025.
- Accurate membership records and the requirement to obtain consent from new members before joining will be necessary.
- All societies will need a management committee to run the society made up of at least 3 officers.
- Officers will be subject to new officer duties like those of directors of companies, such as the duty to act in good faith and in the best interests of the society and to exercise reasonable care and diligence. Some legal experts have voiced concern regarding the perceived overly onerous nature of some of the duties and believe it would be better for officers to be governed by their own society’s rules (which would undoubtedly include the need for officers to act in good faith). It is unlikely at this stage that the duties will be amended, but with some major court cases still yet to be determined, it is an area to watch.
- Officers (both current and former) will also be liable for any breach of those duties.
- Like limited liability companies, officers will also need to disclose all conflicts of interest, particularly where they or a family member may be obtaining a benefit from the matter (either financial or otherwise). Societies will also be able to avoid transactions where it is determined an officer was interested and failed to disclose it.
How can we help?
The first and foremost task for any society is to ensure they are ready for reregistration prior to the Transition Date. As mentioned above, if a society is not registered under the new Act by then it will cease to exist. That said, it may be restored, but for any society holding land, deregistration is something to avoid. If a society is not restored, its surplus assets must be distributed in accordance with the new Act.
We have prepared a short questionnaire that can be used to assess the status of your society’s rules and processes:
We can also help by:
- Creating a specific action plan for your society of what needs to be done.
- Leading workshops for the officers/members to better understand the changes and what they mean.
- Drafting any changes required to be compliant.
- Helping with all stages of registration (pre-registration, registration and post-registration).