Incorporated Societies Bill passes third reading - what societies will need to do, and by when
The Incorporated Societies Bill 2021 has passed its third reading and received royal assent (on 5 April 2022).
Our earlier summary of the ten key changes introduced by the Bill can be found here and a summary of the recommendations made by the Select Committee can be found here. A Supplementary Order Paper was released on 2 March 2022 making minor and technical changes to improve the workability of the Bill and to clarify certain drafting matters.
The Bill stems from a review of the Incorporated Societies Act 1908 by the Law Commission in 2013. It retains the underlying principles of the current law but codifies it and fills gaps where there is no case law, such as in relation to conflicts of interest.
When will the new Act come into force?
The regulation-making powers in the Bill come into force on the day after the date of royal assent.
Most of the provisions of the Bill will then come into force on a date yet to be elected by Order in Council (and if not brought into force by Order Council earlier, on the expiry of the 18-month period from the date of royal assent). The reason for the deferred commencement is to allow time for regulations to be made to give effect to some parts of the Bill. It also allows societies time to prepare for the new regime.
The provisions which repeal the Incorporated Societies Act 1908 come into force no later than 4 years after the date of royal assent.
What do societies need to do, and by when?
All societies will need to do the following:
- Review their constitutions and update them to ensure that they comply with the new requirements. We expect that most societies will need to amend their constitutions and some societies may take the opportunity to review their constitutions to ensure they are still fit for purpose at the same time.
- Appoint or elect at least one (and no more than three) contact person(s) being the person(s) that the Registrar can contact when needed. The contact person does not need to be an officer of the society but must be at least 18 years old and ordinarily resident in New Zealand.
- Ensure that they have a governing body of three or more officers who each meet the qualification requirements set out in clause 42 of the Bill.
- Reregister under the new Act which will involve providing certain information (yet to be prescribed by regulations) and a copy of the society’s constitution that is compliant with the new Act.
Once the new Act has come into force, societies will need to reregister under the new Act by the later of 1 December 2025 or the date that is 2 years and 6 months after the date that Schedule 1 of the Bill comes into force (the Transition Date).
If a society fails to file an application for reregistration by the Transition Date, it will cease to exist on that date.
What are the ongoing obligations of societies once they have transitioned to the new regime?
The key ongoing obligations of societies under the new Act include:
- Societies that are not registered charities will need to file annual returns (registered charities are already required to file an annual return with Charities Services under the Charities Act 2005). The information required to be included in the annual return is not yet known as it will be set by regulations.
- Societies will need to prepare and file financial statements that comply with certain financial reporting standards depending on the society’s size. The threshold triggering an audit will be set by regulations.
- Societies will need to maintain a register of members including the name, last known contact information and the date they became a member. A register of members is already required to be held and maintained by societies under the 1908 Act.
What do societies registered as boards under the Charitable Trusts Act 1957 need to do?
The Bill will amend the Charitable Trusts Act 1957 as follows:
- Societies will no longer be able to register as a board under the Charitable Trusts Act; and
- Existing societies incorporated as boards under the Charitable Trusts Act may choose to:
- Continue to be incorporated as a board under the Charitable Trusts Act as if that Act had not been amended by the new Incorporated Societies Act; or
- Apply to be reregistered as a society under the new Incorporated Societies Act (which will require it to review and amend its existing constitution to ensure it is compliant with the new Incorporated Societies Act).
We will provide further updates and guidance for societies to assist with the transition to the new Act. 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.