Incorporated Societies Reform

There are over 23,500 incorporated societies in New Zealand dedicated to various community pursuits. This diverse range of community organisations is currently governed by the Incorporated Societies Act 1908. The 1908 Act is deficient in a number of key respects - it doesn’t provide clear direction on the rights, duties and obligations of those running societies, and lacks procedures for dealing with conflicts of interests and disputes within societies.

The Ministry of Business, Innovation and Employment has issued an exposure draft for a new bill to replace the 1908 Act. Amongst other things, the exposure draft:

  • prohibits societies being carried on for the financial gain of members;
  • requires societies to maintain a minimum of ten members;
  • provides greater clarity around the governance of societies by:
    • requiring them to have committees with at least three members and a statutory “contact officer”;
    • imposing duties on committee members/officers (similar to company directors’ duties);
    • including provisions for dealing with conflicts of interest;
    • requiring societies to prepare and lodge annual financial statements in accordance with prescribed accounting standards;
  • sets minimum requirements for constitutions, requires dispute resolution procedures to be included in constitutions, and provides standard constitutional provisions for use by societies;
  • provides for charitable societies to be incorporated under the new statute only (rather than under the Charitable Trusts Act 1957); and
  • gives the Court with new enforcement powers.

If you are involved with an incorporated society, further information is available here. If you’d like to make a submission on these proposed changes, the deadline is 30 June 2016. If you’d like any guidance with your submission, please be in touch.

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