The Incorporated Societies Act 2022 came into force on 5 April 2022.

It has been more than 110 years since the original Act (the Incorporated Societies Act 1908) was enacted, so the changes have been long anticipated, as the law needed to be updated to meet with the current times.

There are some key things for existing societies to be aware of to ensure they comply with the new law going forward.

What will be required of Incorporated Societies? 

Importantly, existing societies will need to re-register under the new regime.  This is not an automatic process – every society will need to do this if it wants to remain registered. 

If you haven’t met the requirements by the date below, your society will cease to exist and a restoration application will be required. 

There are two key things that existing societies will need to do to comply with the new regime, in order to re-register:

  1. Meet new requirements in their constitutions to comply with the Act;
  2. Ensure their officers comply with the requirements to be qualified;

Existing incorporated societies have a transition period to meet the above criteria.  This transition period will expire on 1 December 2025 (or at least two and a half years after the discontinuing of new applications for incorporation under the old Act comes into force by Order in Council from the Governor-General, whichever date is later).

Constitutions 

A Constitution is a governing document of a society, previously called “rules”.

A key change under the new Act is that it defines what must be included in a constitution. This includes:

  • The name of the society, which must end in “Incorporated”, “Inc” or “Manatōpū”
  • The purposes of the society
  • How the society will keep the register of members up to date
  • Rules regarding how someone becomes a member, including that a person must consent to be a member, and how a member ceases to be a member.
  • The composition, powers and roles of the committee.
  • How the society’s contact person or persons will be elected or appointed
  • How the society will control and manage its finances
  • Dispute resolution and complaints processes which comply with the Act
  • Information about general meetings
  • Nomination of a not for profit entity or class of entities to which the assets of the society are to go if the society is wound up
  • It must not confer on any member the right or interest in any of the society’s assets;
  • How the constitution can be amended.

A society may also add reference to expressing tikanga or the ability to make bylaws.

The Registrar is able to refuse registration if the society’s purposes or constitution do not comply with the Act.

Any part of a constitution that does not comply with the Act has no effect, so you cannot try to contract out of the Act.

If you want to make changes to your constitution, the following will apply:

  1. Any changes need to be in accordance with your current rules/constitution. 
  2. The Act also says that changes must be in writing, signed by at least 3 members of the society and delivered to the Registrar accompanied by a certificate by an officer of the society or a solicitor certifying that the alteration has been made in accordance with the society’s rules.
  3. If you are a registered charity, Charities Services will need to check the amendments before the new constitution is adopted as they will need to check the effect of removing or varying any clauses on the charitable status, as there are certain things that need to be in an entity’s governing documents to remain registered as a charity

Financial Gain 

As currently, a member of a society may not gain financially from membership. This is one of the core attributes of a society and this remains.  This was previously referred to as pecuniary gain, but is now called financial gain, which is more plain English.

The new Act creates an offence for an officer of the society in relation to financial gain.  There is a fine of up to $50,000 against an officer of a society where a society allows itself to operate for financial gain, and where that gain took place with the officers’ authority, permission or consent. 

The society may recover the gain from the member (or former member) in Court.

Officers of Societies

The requirements in relation to the role and duties of societies have been expanded on, including:

  • An officer must consent in writing to be being an officer, must certify that they are not disqualified from being elected or appointed or otherwise holding office as an officer of the society, and must be over 16, not an undischarged bankrupt and must meet various other criteria including not having been charged with dishonesty offences or prohibited from being an officer of a charity.
  • A society must also nominate a contact person for MBIE. The contact person has no extra duties or subject to any offence provisions and is just a contact person for the Ministry.  They do not need to be an officer of the society.
  • Officer’s duties have been expanded to be more akin to that of company directors, including reckless trading (ie: agreeing to activities which are likely to create substantial risk of serious loss to the society’s creditors are a breach of their duties).  A Court may impose a banning order on an officer who fails to comply with their duties under the new Act.

Number of Members

The Act reduces the minimum number of members of a society to 10 members rather than 15.  A Body Corporate (e.g. a company) still counts as 3 members. 

If a society drops below 10 members the Registrar can give notice requiring it to increase its membership.  It can continue to operate while seeking new members and has 6 months to get back to at least 10 members.

Information

The Registrar will be able to share information with Charities Services and vice versa.

Members are able to request information about the society (other than information that the society can’t give such as under the Privacy Act – e.g. if it is about another person rather than themselves).  The member must provide specific detail about the information sought to enable the information to be identified.

The society is required to provide the requested information or, if refusing to do so, explain the reasons for the refusal.

Conclusion 

The above is a summary of the key changes, however there are various other changes to be aware of.  Societies will not be able to adopt a ‘do nothing’ approach, as they will be required to re-register as above.

If you are unsure about your obligations, or need to update your constitution to meet the requirements above, we recommend you take legal advice tailored to your specific society.