All existing Incorporated Societies must re-register under the new Incorporated Societies Act 2022 (Act) by 5 April 2026, otherwise the society will be removed from Incorporated Societies Register and will cease to exist.
This could have serious implications for your society and its members such as:
- distribution of any surplus assets of the society to one or more not-for-profit entities;
- the society will no longer be a separate legal entity distinct from its members, so could not enter into any contractual obligations in its name; and
- members could be held personally liable for debts or obligations (such as leases) owed by the society.
Time is running out as there are a number of steps that need to be taken prior to re-registration:
- Determine whether the incorporated society legal framework is the best fit for your organization
- Review and update your Rules or Constitution
- Hold Member meetings to approve decision to re-register and new Constitution
- Appointment or election of Officers and Committee members
- Review Financial Reporting Requirements
The new Act has introduced significant changes to the governance and operation of incorporated societies. It aims to modernize the legal framework for incorporated societies and ensure they operate in a transparent and accountable manner. Key changes under the Act include:
- Mandatory Constitution Updates: Societies are required to review and update their constitutions to meet the new minimum requirements outlined in the Act. This includes provisions for dispute resolution, member rights and obligations, and governance structures.
- Committee: Every society is required to have a committee of at least 3 officers, the majority of which must be members of the society. The committee is “the governing body” of the society that must manage the operation and affairs of the society.
- Officer Definition and Duties: The Act introduces new definition of officer and clear duties for officers of societies, similar to those imposed on company directors. Officers must act in good faith, in the best interests of the society, and with reasonable care and diligence. Officers must consent to being an officer and certify that they are not disqualified from holding such office.
- Financial Reporting: Societies will now need to comply with new financial reporting standards, which vary depending on the size and nature of the society. Larger societies may be required to have their financial statements audited.
- Changes to Membership: minimum membership reduced from 15 to 10 members, continuously not just at registration. All members must consent to being a member of the society. The society must keep a register of its members.
- Conflict of Interest: The Act requires Officers to disclose when they are “interested” (usually financially) in a matter and sets out rules and procedures for doing so. The Act also provides for a society’s constitution to negate, limit or modify the conflict of interest requirements in the Act.
- Dispute Resolution: The Act requires societies to include a clear process for resolving disputes in their constitutions. A society can create a bespoke dispute resolution procedure, provided that it complies with natural justice, or it can use the procedure set out in Schedule 2 of the Act.
If you require any assistance, advice or further information regarding the new Act or the re-registration process please contact the lawyer at Farry Law who normally advises you, or alternatively contact:
Fahra Manning
fmanning@farry.co.nz
09 353 6678