Incorporated Societies Act 2022: Changes Coming For All Incorporated Societies

27 July, 2022 | Bret Gower

The long overdue passing of the Incorporated Societies Act 2022 (“the new Act”) in April 2022 means that the law governing incorporated societies has finally been brought into the 21st century (replacing the Incorporated Societies Act 1908 “the old Act”).

It will involve changes for all organisations that are currently governed by the old Act including, for example, Returned Services Associations, animal clubs, sporting clubs and even special interest groups such as laneway associations. We set out below the top-level changes, the steps organisations will need to take, and the time frames involved.

Re-registration Required for All Incorporated Societies

The key change under the new Act is the requirement for all societies to re-register on the Incorporated Societies register (which is administered by the Ministry of Business, Innovation and Employment “MBIE”).

Re-registration needs to occur between October 2023 and April 2026 and until re-registered existing societies will continue to be governed by the old Act and their existing constitution (often referred to as their “rules”). Societies that fail to re-register during this timeframe will cease to exist — potentially leaving members individually liable for the former society’s obligations.

New regulations still being developed

Between May 2022 and September 2023 new regulations are being developed by MBIE to flesh out the legislation (for example what information needs to be provided in order to re-register under the new Act). There will be opportunities to provide input on the proposed regulations and Smith and Partners are signed up to receive the updates as they are announced — so we can keep you informed and provide input if necessary.

What does re-registration mean for societies?

The biggest impact of re-registration will be the requirement for all existing societies to update their constitution to comply with the new Act prior to re-registration. The key differences between the new Act and the old Act include:

• the recognition of te reo Māori by allowing the use of “Manatōpū” or “Incorporated” as the last word of the society’s name (previously societies were limited to ending their name with “Incorporated” which then required some gymnastics if they wished to use a te reo version of their name);
• the reduction of the minimum number of members from 15 to 10;
• the requirement for a governing body, e.g. a committee, of at least three members;
• the concept of an “officer”, including who qualifies to be an officer, plus the six broadly expressed officers’ duties which are modelled on directors’ duties under the Companies Act 1993;
• prescribed timing of the Annual General Meeting and filing of financial statements;
• the requirement to file an annual return (the detail of what will be required in a society’s annual return will be included in the to-be-developed regulations);
• introduction of accounting standards requirements (with some “small society” exemptions);
• introduction of a framework to amalgamate two or more societies;
• the requirement that members give consent to become a member (for example via the application form);
• the requirement to provide a contact person whom the Registrar of Incorporated Societies can contact if necessary;
• the requirement for a dispute resolution procedure to be documented in the society’s constitution (Schedule 2 of the new Act sets out procedures that societies can choose to adopt which are compliant with the new Act);
• the requirement for one or more not-for-profit recipients of surplus assets on the winding up of the society to be documented in the society’s constitution.

Learn More

You can read more about the changes set out on the MBIE Incorporated Societies website, where you can also register to be kept up-to-date on the regulations being developed and the new financial reporting standards.

What you need to do

Smith and Partners’ commercial team deal with governance issues on a daily basis, and we are used to dealing with complex organisations such as incorporated societies that are made up of individuals with differing points of view and that come with their own unique issues. We understand the timeframes for these sorts of changes may not be quick due to the consultation process likely to be required in most instances, and we suggest societies start planning for re-registration ahead of the October 2023 commencement date.

We are here to assist societies with the re-registration process, including advising on the implications of the new Act such as the new officers’ duties, and particularly in assisting with redrafting of rules and constitutions to comply with the new Act. In the first instance please contact Senior Associate, Bret Gower on 09 839 6893 or email him at bret.gower@smithpartners.co.nz.