Incorporated Societies – considerations when making the decision to re-register under the Incorporated Societies Act 2022 or not

July 27, 2022

in Charities,Corporate & Business,Incorporated Societies,Property

After more than one hundred years with the old one, a new Incorporated Societies Act 2022 has been enacted. The Act will fully come into force when the Government issues an Order in Council.

If a society does not re-register under the new act by the later of 1 December 2025 or 2 years and 6 months after particular transitional provisions have come into force by Order of Council (which hasn’t happened yet), it will cease to exist as an incorporated society.  Although this may feel like a lot of time, it is a good idea to start thinking about what to do now.

When the time comes, in order to re-register the society under the new Incorporated Societies Act 2022, the society will need to make sure that its constitution complies with the new Act. The amendments required will depend on the society’s current constitution, as some or all of the changes may already have been covered.  In other cases, it may be more sensible for the society vote to re-register with a brand-new constitution.

When making the decision to re-register or not, it is important to factor into your decision that an unincorporated society will not have a separate legal identity to its members, which means that the society will not be able to own property in its name. Some resident’s societies currently own access lots or common areas within developments and sports clubs may own sport and recreational clubs. It is important to check if the society currently owns any land (whether freehold, unit title, leasehold etc) because the unincorporated society will not be able to own the land in its name anymore.

If the society is not re-registered, it would need to dispose of the assets to another not for profit entity in accordance with the Act and the society’s constitution and to be clear – if not re-registering, the members cannot hang on to those assets themselves.

Accordingly, if the society owns land, whether re-registering under the new Act or not, plenty of decisions need to be made.

Some of the other factors that the society needs to consider when deciding whether to re-register under the new Act or not are that some of the consequences of not re-registering are:

  • Members can be held personally liable for debts of the society.
  • Members will need to enter into contracts, as the society will not be able to.
  • The society cannot sue or be sued. This means that members can be sued individually if action was to be taken against the unincorporated society.
  • Entering into a lease for a premises could be problematic as an unincorporated society won’t be able to enter into a Lease in its name. You will also need to factor in existing leases and how those will continue after the society is no longer incorporated.

Currently there are more than 24,000 Incorporated Societies, so it would be prudent to not leave the update to the constitution and the re-registration process till the last minute. Even if the society is thinking of not re-registering, there are matters that need to be considered and actioned before dissolution such as disposing of property or dealing with contracts already entered into with other parties.

If you require any advice or further information on the matters dealt with in this publication, please contact the lawyer at Farry Law who normally advises you, or alternatively contact:

Sonia Dhaliwal
sdhaliwal@farry.co.nz
09 222 0235

The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry Law does not accept liability for any errors it may contain. 

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