Incorporated Societies Act 2022 – frequently asked questions

Wednesday, July 13, 2022

When does the Incorporated Societies Act 2022 (2022 Act) come into force?

The 2022 Act received royal assent on 5 April 2022 and came into force on 6 April 2022. However, some regulations under the Act need to be developed before societies can reregister under the new regime.

It is anticipated that regulations will mainly relate to the financial reporting obligations and the disclosure of officer’s interest requirements under the Act.

The Registrar of Incorporated Societies anticipates draft regulations will be available before the end of 2022. Societies and the general public will then have the opportunity to comment and make submissions on the draft regulations. These regulations will be finalised by October 2023.

Societies will be able to reregister under the new Act from October 2023. Until then, societies will continue to be incorporated and operate under the 1908 Act. Societies who wish to update their rules or be incorporated prior to October 2023 should ensure their rules are consistent with the 2022 Act. This will ensure a smooth transition to the new regime once it comes into force.

What is the earliest date that existing societies can reregister under the new regime?

Existing societies cannot reregister under the 2022 Act straight away.

The earliest that societies currently registered under the Incorporated Societies Act 1908 (1908 Act) will be able to reregister is the date elected by Order in Council as the commencement date of the reregistration provisions, or if no date is elected by 5 October 2023, on and from 6 October 2023. 

What is the latest date that existing societies must register by?

All existing societies must reregister under the 2022 Act by no later than 1 December 2025 or 2 and a half years after clause 4 of Schedule 1 of the 2022 Act comes into force, whichever is later. 

If clause 4 is brought into force on 6 October 2023, then the last date for reregistration will be 6 April 2026. Any societies that do not reregister by this date will cease to exist.

When do the rules in the 2022 Act apply to existing societies?

The society will continue to be subject to the rules in the 1908 Act until such time as it has reregistered under the 2022 Act.  As soon as a society reregisters under the 2022 Act it will be subject to the rules in that Act.

I want to set up a new incorporated society now. What Act do I register under?

Any groups wanting to set up an incorporated society before the reregistration provisions in the 2022 Act have come into force (i.e., on 6 October 2023 unless brought into force earlier by Order in Council) will need to register a society under the 1908 Act.

After the date that the reregistration provisions come into force any groups wanting to establish a new society must register under the 2022 Act.

What will a reregistration application need to include?

An application for reregistration will need to be in a form prescribed by regulations and will need to include:

  1. any information prescribed by regulations (yet to be made);
  2. the name and contact details of at least 1 contact person;
  3. the proposed constitution that complies with the 2022 Act; and
  4. the fee (to be set by regulations).

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:

  1. continue to be incorporated as a board under the CTA as if that Act had not been amended; or
  2. apply to be reregistered 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 there a fee to reregister under the 2022 Act?

Yes, the regulations will prescribe a fee for reregistration applications.

Do all societies need to amend or replace their constitutions to reregister under the Act?

Yes, it is likely that all societies will need to either amend their existing constitutions or adopt new constitutions to meet the reregistration requirements.

The 2022 Act contains additional mandatory provisions that must be contained in every constitution, and we expect that most constitutions will not currently include some of these additional provisions.

The additional provisions that need to be included under the 2022 Act include:

  • that a member must consent to becoming a member;
  • provisions relating to the election or appointment of the contact person(s);
  • dispute resolution provisions;
  • provisions relating to the roles, functions, powers and procedures of the governing body;
  • depending on the society’s current constitution, some additional provisions relating to general meetings may also need to be included.

Is a common seal still required?

Under the 1908 Act, yes.

However, as soon as an existing entity reregisters under the 2022, it will no longer be a requirement for it to have a common seal. New societies that register under the 2022 Act (once registrations can be made under that Act) will not be required to have a common seal.

A society can 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.

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:

  1. at least 18 years of age; and
  2. 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 child members 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.

What are the new conflict of interest requirements?

Officers of a society who are interested in a matter must now 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. These regulations are yet to be released in draft to the public.

Please do not hesitate to reach out to one of our specialist not-for-profit lawyers in the meantime if you have any queries.

 

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.

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