What do these changes mean?
What is the Incorporated Societies Act (2022 Act)?
The 2022 Act is new legislation that replaces the current Incorporated Societies Act which has been around since 1908 (1908 Act). The 2022 Act came into force on 6 April 2022.
When will the 2022 Act start to apply to incorporated societies?
- The 1908 Act continues to apply to all incorporated societies until they register under the 2022 Act.
- Societies can reregister under the new Act from 5 October 2023.
- From 5 October 2023, societies have 2.5 years until April 2026 to reregister.
What does reregister mean?
Reregistering under the 2022 Act means a society must update their rules to comply with the requirements of the 2022 Act and then apply to the Registrar of Incorporated Societies for reregistration.
What happens if existing societies do not reregister by April 2026?
Any society that does not reregister by the end of the registration period in April 2026 will cease to exist as an incorporated society. That means that the society’s committee or board will become a group of individuals who are personally liable for the commitments of the society before it ceased to exist (e.g. debts, liabilities).
This will be a particularly difficult situation for incorporated societies which have contractual commitments such as loans, property and asset ownership and employees. Societies must do everything they can to make sure they are reregistered within the reregistration period.
What do I need to do and by when?
When do the rules in the 2022 Act apply to existing societies?
A society will continue to be subject to the rules in the 1908 Act until such time as it has reregistered under the 2022 Act (between October 2023 and April 2026). As soon as a society reregisters under the 2022 Act it will be subject to the rules in the 2022 Act.
What is the earliest date that existing societies can reregister under the new regime?
Existing societies can reregister from 5 October 2023.
What is the latest date that existing societies must register by?
From 5 October 2023, any groups wanting to establish a new incorporated society must register under the 2022 Act.
All existing societies must reregister under the 2022 Act within 2.5 years (until April 2026).
How do I prepare for the changes?
What should existing societies be doing now?
Societies who wish to update their rules should ensure they are consistent with the 2022 Act. This will mean a smooth transition to the new regime.
What will a reregistration application need to include?
An application for reregistration will need to be in a form prescribed by the new regulations and will need to include:
- the name and contact details of at least 1 contact person;
- information about every person named as an officer;
- the proposed constitution that complies with the 2022 Act;
- payment of the application fee; and
- other information prescribed by regulations.
Is there a fee to reregister under the 2022 Act?
There is no fee for an application to reregister under the 2022 Act.
However, the fee for new societies to be incorporated will be $88.89. The fee for any society applying to be restored back onto the register (after having being removed) will be $177.78.
Do all pre-existing societies need to amend or replace their constitutions to reregister under the 2022 Act?
Yes, it is likely that all societies registered under the 1908 Act will need to either amend their existing constitutions or adopt new constitutions to meet the reregistration requirements and comply with the 2022 Act.
The 2022 Act contains additional mandatory provisions that must be contained in every constitution, and we expect that most constitutions made under the 1908 Act will not include some of these additional provisions.
The additional provisions that need to be in a constitution include:
- that a member must consent to becoming a member;
- requirements relating to the election or appointment of the contact person(s);
- dispute resolution provisions;
- requirements relating to the roles, functions, powers and procedures of the governing body; and
- the composition, roles, functions, powers, and procedures of the society’s committee.
What things should I be thinking about when reviewing my constitution?
Primarily, does your constitution comply with the 2022 Act. It is also a good opportunity to think about whether your constitution works with the way your society operates, or if there is anything else that needs to be updated at the same time (e.g., voting procedure, quorum, objects, and purposes).
What else do I need to know?
What do societies registered under the Charitable Trusts Act 1957 need to do?
Societies will no longer be able to register as a board under the Charitable Trusts Act 1957 (CTA). Existing societies that are incorporated as boards under the CTA may choose to:
- continue to be incorporated as a board under the CTA as if that Act had not been amended; or
- apply to be reregistered as a society under the 2022 Act (which will require the society to review and amend its existing constitution to ensure it is compliant with the 2022 Act).
Is a common seal still required?
Under the 2022 Act, a common seal is no longer required.
An incorporated society will still be able to choose to have a common seal and if it does, the constitution must have a common seal clause setting out what documents need to be signed under common seal and how the common seal is to be used.
What is the minimum number of members that a society must have?
Once existing societies have reregistered under the 2022 Act, the minimum number of members will reduce from 15 to 10.
New societies registering under the 2022 Act will be required to have at least 10 members. Under the 2022 Act, all societies will need to ensure they maintain at least 10 members at all times.
Who should the contact person be?
The purpose of the contact person is to have a person that the Registrar can contact when needed.
This could be the secretary or anyone else that the society wishes to appoint. The contact person does not need to be a board/committee member, but it can be if the society prefers a board/committee member to hold that role. The contact person must be:
- at least 18 years of age; and
- ordinarily resident in New Zealand.
Why do members now need to consent to becoming members?
The 2022 Act requires that a society’s constitution provide for how a person becomes a member of a society, including a requirement that a person must consent to becoming a member. This is a point of concern for many societies who may not actively ask for a member’s consent. Societies with members who are minors may have difficulty obtaining the required consent from a minor.
While the 2022 Act does not state whether consent must be express or can be implied, New Zealand case law provides that there must be an act of specific agreement to indicate the joining of a society as a member. This may be the act of applying for membership or some other intentional act on the part of the individual. It would be advisable for incorporated societies to consider their practices as part of reviewing their constitutions ahead of registration. Some processes may need to change to ensure member consent is appropriately obtained.
What are the new conflict of interest requirements?
Under the 2022 Act, officers of a society who are interested in a matter must disclose their interest to the society in a register of interests. Officers who are interested in a matter must not participate in decisions, discussions or activities relating to that matter unless the conflict of interest provisions are modified by the society’s constitution.
Note that a society can only modify these provisions in its rules if the conditions in the regulations under the Act are satisfied.
How do I know what the best structure is for our organisation?
Now is a great time to review your organisation and determine whether an incorporated society is still the best structure for you. We can talk you through the possible structures that you may wish to consider.
What is the difference between a board and a committee in the new Act?
Committee is defined in the 2022 Act and means three or more officers who are qualified to be elected/appointed in accordance with the 2022 Act and which is responsible for the management of the society. Every society must have a committee.
‘Board’ refers to an existing society that is incorporated as a board under the Charitable Trusts Act 1957. That terminology will not be applicable to new societies registered under the 2022 Act, and only applies to existing societies that choose to remain as boards under the 2022 Act.
Can we change our name as part of the reregistering process?
Yes, and at reregistration is a good time to update your society’s rules more generally.
Are there templates available that we can use?
There may be templates available online and a template may work for some organisations, but it is worth preparing an updated constitution that works for your particular society because each organisation is so different. When you follow a template you risk implementing rules that are not the right fit, which can lead to disputes and extra costs later on.
I think I need some help – what can Duncan Cotterill assist me with?
- Review your existing constitution and update it to comply with the 2022 Act;
- Helping you to socialise proposed changes with your members;
- Helping you to adopt a new constitution and register the changes under the existing regime;
- Incorporating a new society under the 2022 Act;
- Help you with reregistration under the 2022 Act;
- Advising you about the general running of your incorporated society – for example member disputes, governance concerns, election procedure, information requests.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.