A new age of incorporated societies

The Incorporated Societies Act 2022 was recently passed by Parliament and received Royal Assent on 5 April 2022. This significant development follows a long gestation period, with the first Law Commission issues papers published in mid-2011.

It’s been a long time coming, but not as long as the previous Incorporated Societies Act 1908 was in place.

The new law is strongly focused on improving incorporated society governance, retaining the best of the tried and tested 1908 Act and codifying the case law into the Act.

The primary aspects of the new law are:

• Constitutions: Incorporated Societies will need to ensure their constitutions are compliant with the Act. Constitutions must contain specific content (eg the composition, roles, powers, functions and procedures of the committee (governing body), which is significantly more than what was required under the 1908 Act.
• Clearer governance arrangements: Committees are now required and there are duties for “officers” on those committees that are similar to the Companies Act 1993.
• Qualification of officers: Every officer must be a natural person and provisions similar to other legislation prevent undischarged bankrupts and those convicted of prescribed dishonesty offences or other disqualifications from being appointed as officers.
• Conflicts of interest: Officers have to disclose conflicts of interest with a clear process for managing these.
• Disputes resolution: Incorporated societies must have a dispute resolution procedure to deal with both member grievances and complaints. The new legislation sets out minimum procedural requirements, including natural justice requirements.
• Transparency and accountability: Information about an incorporated society can be sought by members.  There are also financial reporting and annual return filing requirements.

These new requirements can extend to trusts incorporated as boards under the Charitable Trusts Act 1957 and a range of entities incorporated under other statutes, for example Girl Guides and the Scout Association of New Zealand.

As a result of the time taken to pass this legislation, existing incorporated societies may have lost track of the changes that are coming and the actions that boards / committees need to understand and take. 

The good news is that key provisions of the new legislation won’t come into force for 18 months, with implementation beyond that date.   

To help that process and support incorporated society governance, we will be ensuring that more material and guidance is available over this transition period.