Constitution-Builder for Society Constitutions
Background
The Law Commission’s 2013 Report, A New Act for Incorporated Societies, noted at paragraph 7.58 that:
During our consultation we were constantly told of the need for education and guidance for societies in drafting their constitutions and in running societies in general. An internet-based constitution builder tool would provide that guidance and would greatly enhance the quality of constitutions for incorporated societies. Not only would it offer the rules from the model constitution, but it could offer guidance for societies to help them consider whether those rules are suitable for their situation. It could offer additional rules to those included in the model constitution, and alternative rules in various subject areas to suit various types of society.
In October 2019 the Ministry of Business, Innovation & Employment and the Registrar of Incorporated Societies made a society constitution-builder available for public use – see https://isb.companiesoffice.govt.nz/constitutionbuilder/startscreen/. The first page of the website introduces the society constitution-builder with helpful background information:
Every incorporated society is required to have a constitution or set of rules, stating clearly how it intends to be run. These rules must cover certain basic functions and responsibilities, such as why the society exists, the conditions of membership, and how the society will hold meetings, make decisions and elect officers.
To help you draft your constitution, we’ve designed the Constitution Builder, a ‘do-it-yourself’ online tool for writing or revising your society’s rules.
This tool is able to produce a draft document that contains most of the content required in a constitution; however, it should not be considered a substitute for expert legal advice. You should consult a professional before finalising your constitution.
Any constitution prepared using the Constitution Builder will also need to be reviewed once the proposed new Incorporated Societies Act has been enacted by Parliament.
Importantly, the last two paragraphs of the background information contain two cautionary notes; first, that societies should still seek “expert legal advice” if they create their own constitutions using the constitution-builder, and also that once the proposed new Incorporated Societies Act is enacted any constitution created using the constitution-builder will require further review (and the first page includes a link to information about the proposed new Act).
The author of this article was sceptical about whether it was possible to provide an internet-based society constitution-builder, but having been involved in the process of designing the society constitution-builder for the Ministry and having seen the end result he confesses that his scepticism was not justified. However, bigger societies and those with significant assets or a high income and expenditure turn-over are likely to find it easier, and in the end more economical, to seek “expert legal advice” to draft their new constitutions.
Constitution-Builder content
The first page introduces the constitution-builder, and also explains that there are three categories of rules (“mandatory” to ensure that the constitution can be easily understood, “recommended” so the constitution is comprehensive, and “optional” being common provisions in society constitutions). The first page also notes that commentaries are provided for each rule to help users to make their selections.
The constitution-builder is set out in a logical way:
- Introductory rules – this set of rules provide for the name of the society, whether or not the society is charitable, the society’s purposes (including rules about what the society must not do and may do), any adopted tikanga and culture (relevant to interpreting the rules), make it clear that the constitution does not authorise anything contrary to the Act and Regulations, provide for a society’s registered office, state whether or not the society has power to borrow, and provide for any other powers.
- Members – including how people become members, members’ rights and obligations, members’ subscriptions and fees, how a member ceases to be a member, obligations on resignation, and re-joining,
- General meetings – annual general meetings, special general meetings, procedure at general meetings, and minutes of general meetings,
- Committee – qualifications to be a committee member, how elected or appointed, term of office, removal from committee, cessation of committee membership, functions and duties of committee members, committee powers, sub-committees, conflicts of interest, and other general issues,
- Committee meetings – how and when the committee should meet,
- Records – what the register of members must record, members’ rights to access the register of members, a register of conflicts of interest, and members’ rights to access other information,
- Finances – how society finances are to be controlled and managed, and its financial year,
- Dispute resolution – how grievances and complaints should be handled in compliance with the “principles of natural justice,”
- Alterations to the Rules – the processes to be followed to amend the society’s constitution,
- Winding up – the process to be followed, and what happens to the society’s surplus assets, and
- Other – society common seal, society “contact person” (expected to be required under the new Incorporated Societies Act), and providing for bylaws, policies or codes of conduct.
The last screen should enable users to identify any omissions in the constitution drafted using the constitution-builder, and also includes a feedback panel where users can rate the website and add comments.
Concluding comments
The society constitution-builder should be a useful tool for many societies, but:
- Careful attention will need to be given to including all the “mandatory” content and much of the “recommended” content to provide a comprehensive set of rules,
- Drafts should be reviewed before adoption to ensure that the rules are clear and internally consistent,
- Any draft rules produced using the constitution-builder should still be referred to a lawyer for “expert legal advice,” and
- Once the new Incorporated Societies Act has been enacted (in 2021?) every incorporated society’s constitution will need to be reviewed to ensure that it complies with the new statute.
For specific advice about any of those issues, please contact Mark at mark@nfplaw.co.nz.