Incorporated Societies

If you are involved with an Incorporated Society, it may be worth knowing that the Government is in the process of updating the legislation which will apply to all Incorporated Societies operating in NZ.  We are currently working with legislation that dates back to 1908.  The aim of implementing a more modern version will make societies more robust, will help societies govern themselves and a mechanism to provide societies and their members with constructive options when things go wrong.  The bill is currently at the 3rd reading before Royal Assent is given.

The key changes include:

· Reregistration - Every society will need to reregister under the Bill within a specified transition period, which may require some societies to amend their current Constitution to comply with the new legislation prior to the date they reregister.

· Consent - Every person will need to consent to become a member of a society, which may require a review of the current membership application processes Societies have in place now.

· Membership Minimum - This will require a minimum of 10 members to either start a society or remain a society; a change from 15 members.

· Officer duties - This introduces duties that officers owe to a society (and not the members) which include duties such as acting in good faith, acting in the best interests of the society and the duty of care and diligence to name a few.

· Financial Reporting - Specific reporting standards will be required with a minimum standard applying to all societies along with the requirement to file the statements.  Those that are considered large will also need to have the statements audited.

· Dispute Resolution - The requirement to have procedures for resolving disputes and other grievances in the Constitution, which must align to the legislation.

· Amalgamation - This provides a simplified amalgamation regime which should empower societies to join without the implications of the transition of members or the transfer of assets etc.

· Enforcement - This introduces new civil law enforcement provisions for when there is a breach of a Constitution or officer duties.

· Offences - This introduces 7 criminal offences which supplement the Crime Act covering for events such as dishonesty, false or misleading statements, fraudulent behaviour, improper use of “Incorporated” or “Manatopu” as well as lessor serious matters.  Some of these offences attract a fine of up to $200,000 and imprisonment of up to 5 years.

Our suggestion is that once legislated, you need to understand the changes to determine how it affects your current Society Constitution.  It will likely result in all Constitutions being reviewed and most likely modified, which is not necessarily a bad thing, especially as some current Constitutions are extremely old and have not been maintained for changes in general practice and governance.