New Incorporated Societies Act – Short Guide

1. The Incorporated Societies Act 2022 is the result of a reform process that started in 2011, and it reflects the principles of modern good governance, and many of its provisions echo those relating to companies.
2. The 1908 Act is still in force, and section 256 of the 2022 Act provides for the making of Orders-in-Council to bring the balance of the 2022 Act into force and to facilitate the orderly implementation of 2022 Act. In simple terms, there is no immediate change affecting existing and newly formed incorporated societies, but the Boy Scouts motto to “Be Prepared” should be borne in mind. It appears probable that existing societies will have a period from around October 2023 to April 2026 to re-register with constitutions complying with the 2022 Act. Every currently incorporated society is required, by 1 December 2025 to re-register under the new Incorporated Societies Act if the society wants to continue to have the rights and protections of being an incorporated society, and when re-registering it must have a constitution that complies with the new Act. Societies incorporated under the Charitable Trusts Act 1957 have slightly different options.
3. Some of the following key features of the 2022 Act (in brief) will be relevant to most incorporated societies:

• With minor exceptions, societies are still prohibited from operating for the financial gain of their members, but a society is permitted to “trade” (run a business), reimburse members for reasonable expenses related to society, pay members for services on a normal “arm’s length” basis, and provide benefits and incidental prizes and discounts to the public including members or their families.
• Minimum society membership is now 10 (with corporate members still being equal to 3 individuals). The Act now expressly provides that a person must consent to become a member of a society (I recommend that this consent be in writing), with the consent retained with membership records).
• A register with details of all members must be kept by every incorporated society.
• A society member may make a written request to a society for information held by the society, but a society may decline to provide information in circumstances specified in the new Act.
• Every incorporated society must have a written constitution that complies with the new Act, and will need to be far more detailed than previously. The constitution is binding on the society and each member, and must not give members any rights or interests in society’s property, may empower the society to make bylaws, and may “express its tikanga, kawa, culture, or practice.”
• Every incorporated society is required to have a registered office in New Zealand.
• Societies are deemed to have full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction.
• Every society must have a committee of at least three “natural persons,” and they must at all times be appropriately qualified to hold office, consent in writing to hold office, and not be disqualified from holding office, and they have duties specified in the new Act, and must disclose and not vote where they have a conflict of interest (which will be recorded in a conflicts of interest register).
• Every incorporated society must now have a statutory “contact person” at all times with whom the Registrar may communicate.
• There are new requirements relating to financial records and annual reporting.
• Every society constitution is now required to include detailed procedures to deal with internal disputes (complaints concerning misconduct of or discipline of members, and grievances brought by members concerning their rights or interests as members).
• Relationships between “parent” and branch societies will now be defined by the “parent” society and branch societies.
• The Registrar now has powers of inspection relating to compliance with the Act.
• The new Act provides that a society, a member, a society officer or the Registrar may apply to a Court for orders to enforce the constitution.
• The new Act provides for applications to a Court for orders for redress for officers’ breaches of duties, for infringement offences, and a range of new offences with meaningful penalties.
• During a transitional period (to 1 December 2025) every existing incorporated society will need to check that its constitution complies with the new requirements and re-register with the Registrar.
• The new requirements placed on incorporated societies will be onerous for some and may prompt some fundamental reconsideration by some societies about whether to remain incorporated (and losing the benefits of incorporation).
• Immediate recommendations:
• Societies being formed now should comply with the provisions in the Incorporated Societies Act 2022,
• All existing societies should consider the issues set out above, and should then commence reviewing their constitutions now.

Mark von Dadelszen writes regular articles on issues relating to societies and charities (see https://nfplaw.co.nz/articles/). For specific advice relating to the issues discussed in this Guide, please contact Mark at mark@nfplaw.co.nz.