Tags: Law

Understanding changes for incorporated societies

The Incorporated Societies Act 2022 (“new Act”) came into force on 5 October 2023 and replaces the Incorporated Societies Act 1908 (“old Act”). The new Act affects all incorporated societies in New Zealand and makes significant changes in the requirements surrounding governance, general meetings, dispute resolution, financial reporting and auditing. Also, to support the implementation of the new Act, the Incorporated Societies Regulations 2023 were issued on 4 September 2023.

A key requirement of the new statutory framework is for every incorporated society by the 5 April 2026 to reregister under the new Act unless they are in liquidation. If an incorporated society fails to reregister by the deadline, then it will become ineffective, cease to exist and the Registrar becomes the decision maker, not the members. Another important change is that an incorporated society must have a new constitution that complies with the new Act and adopt a dispute resolution process. If any of the constitution contravenes or is inconsistent with the new Act, then the constitution shall have no effect.
Should an incorporated society not reregister the consequence is that it will become an unincorporated society which may mean the loss of the ability to enter into new obligations such as leases, a reduced likelihood of receiving funding, and members exposed to personal liability. If the deadline is missed there is a mechanism for an incorporated society to be restored but this should not be relied on as members would have had since 5 October 2023 when the reregistration process began, to organise themselves. Also, purposefully not reregistering to defeat any creditors’ claim or hide from claims would not be successful as liquidators and creditors may restore an incorporated society.
As the reregistration process may take at least six months, incorporated societies should endeavour to reregister as soon as possible to avoid the consequences of failing to reregister within the prescribed timeframe. So, whether your incorporated society is a musical society, sports club, play group, toy library or cultural group now is the time to act and familiarise yourself with the new Act and hold a general meeting to present options, including whether to reregister or bring the incorporated society to an end or restructure to establish a charitable trust should the constitution allow for this.
As the law relating to incorporated societies has been majorly reformed you should reach out to your lawyer or accountant to seek advice on your rights and obligations under the new Act. If you are unsure of the next steps, the team at Schnauer & Co are happy to help.

Schnauer & Co,
1 Shea Terrace, Takapuna
09 486 0177