The way incorporated societies are run in New Zealand, as well as their duties and responsibilities, is changing under the new Incorporated Societies Act 2022 (Act).
Overview and Re-registration Requirement
This Act was passed into law on 5 April 2022 and has ushered in a new era for nonprofit organisations, drawing upon modernised governance and management best practices to enhance transparency, accountability, and overall efficiency in the sector.
There are currently 24,000 incorporated societies registered across New Zealand. All these societies will need to consider whether they wish to continue their operations, and if so, prepare to re-register under the Act. The timeframe for re-registration runs from October 2023 to April 2026. Any societies that do not re-register before April 2026 may be struck off from the register.
Societies planning to re-register under the Act will need to complete a review of the society's rules to ensure it aligns with the Act’s requirements. Once this is completed, the society can submit an application to the Register of Incorporated Societies to re-register under the Act.
Why have these changes been made?
The Incorporated Societies Act 1908 has been in operation for over 110 years and described as “uncomfortably old” with little amendments made over the decades. The purpose of the new legislation is to -
- improve the self-governance of societies;
- strengthen the responsibilities of financial compliance;
- introduce statutory duties for the officers of societies; and
- provide members with a constructive dispute resolution process.
Key changes under the new Incorporated Societies Act
The changes introduced by the Act are summarised below and inform each society’s review of their rules/constitution prior to re-registration. We encourage all societies and their officers to review the changes introduced by the Act to gain an understanding of what it means for them and how the society operates.
The society’s ‘rules’ document is referred to under the new Act as the ‘Constitution’ and must contain the following:
|Duties of Officers||
Officer duties in the Act are modelled on directors’ duties under the Companies Act 1993. Officer duties include:
The minimum number of members has been reduced from 15 members to 10 members
Societies are required to adopt a dispute resolution process. There is a dispute resolution process set out in the Act which Societies can adopt, if appropriate.
|Annual General Meeting||
AGM must be held within 6 months of the society’s balance date.
Surplus assets after winding up must be given to nominated not-for-profit organisations.
The process by which two or more societies may merge, amalgamating their members and assets (and even their names) now follows a simplified framework, set out in the Act.
Egregious management and administrative misconduct now recognised as a criminal offence
|Te reo Māori||
All documentation and records, including financials can be written in English or te reo Māori.
The detail provided above will have different implications for each incorporated society, and therefore we recommend that you seek further legal advice if you have any queries or would like to discuss these matters further.
Please contact our Incorporated Societies specialist Beatrice Chamberlain or come along to our 'Roadmap to Re-registering' Seminar Event happening on the 30 November, 2023.