THE NEW INCORPORATED SOCIETIES ACT 2022

Posted by Joseph Jang on June 30 2022 in News

For over a century, incorporated societies in New Zealand have been governed by the outdated Incorporated Societies Act 1908. Having identified numerous deficiencies in the Act, the Incorporated Societies Bill was introduced to Parliament last year and the new Act Incorporated Societies Act 2022 received Royal Assent on 5 April 2022.

Commerce and Consumer Affairs Minister, David Clark, said:

“New Zealand’s incorporated societies play a vital and often long-standing role in our communities - speaking up for workers, teaching our children sports, and raising money for good causes. It’s important that the law governing them reflects best practice”.

The objective of the new Act is to make the law of societies more accessible and to modernise the way incorporated societies are administered by updating their legal, governance, and accountability settings.

Although the new Act has been passed, many of its provisions will not take effect immediately. For example, any new society must be registered under the old Act until October 2023.

The situation for any society registered under the old Act (including those that register before the end of October 2023) is as follows:

• Until October 2023, they remain subject to the rules in the old Act.
• Sometime in the period from October 2023 to around April 2026 (a period of about 2½ years), they must re-register with the Companies Office or they will cease to exist.
• As soon as they re-register, they become subject to the rules in the new Act. This means each society will become subject to the new rules at the time of its own choosing.

Key changes under the new Act include:

• Membership – at least ten members are now required to register in an incorporated society.
• Committee (governing body) – a society must have a committee, which comprises three or more qualified officers. An officer must be a neutral person and not disqualified under the new Act from being elected or appointed an officer.
• Officers’ duties – each officer must:

- act in good faith and in the best interest of the society;
- exercise their powers for a proper purpose;
- comply with the new Act and the constitution;
- act with due care;
- not create a substantial risk of serious loss to creditors; and
- not agree to the society incurring obligations that it cannot perform.

• Constitution – a society must have a constitution that complies with section 26 of the new Act outlines, including dispute resolution procedures.
• Financial Reporting – section 102 of the new Act outlines the financial reporting standard. The society will need to prepare their financial statements in accordance with the standard that suits the size of their society and must file financial statements with the registrar within six months after the balance date of the society.
• Annual Return – an annual return is required in the manner prescribed by the regulations.
• Amalgamations – under subpart 2 of the new Act, two or more societies may amalgamate as one society and may continue as one of the amalgamating societies, or a new society.
• Offences – subpart 6 of the new Act sets out criminal offenses including:
  
  - false statements;
  - fraudulent use or destruction of property;
  - falsification of register, records, or documents;
  - operating fraudulently or dishonestly incurring debt;
  - improper use of “Incorporated”, “Inc”, or “Manatōpū”
  - banning order contravention; and
  - infringement offenses.

To ensure your society is compliant with the new law, it is important to understand the provisions of the new Act and how it may affect your society and its administration and where necessary, take steps to ensure compliance.

If you would like more information about the new Act or have any questions, please contact us.

Kellie Bright | Special Counsel |  kellie.bright@shieffangland.co.nz
Joseph Jang | Solicitor | joseph.jang@shieffangland.co.nz

This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.