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Incorporated societies: Key changes and compliance

Monday, November 20, 2023

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With approximately 24,000 incorporated societies in New Zealand, ranging from large business-like entities to modest sporting clubs, the new Incorporated Societies Act 2022 ("New Act") has far-reaching implications for all. It is crucial to understand what the New Act means for your incorporated society, and to make required changes to avoid potential consequences for non-compliance.

Implications of the Act‍

The New Act introduces several substantial changes that align the administration of incorporated societies more closely with the framework outlined in the Companies Act 1993. These changes include:

Incorporated societies must adopt a new constitution that is compliant with the New Act;
Incorporated societies must have their own dispute-resolution procedures;
Officers' duties are clearly set out in the New Act (refer to sections 54-61), e.g. to act in good faith and in the best interests of the society;
There are specific requirements in relation to financial reporting, e.g. filing annual financial statements and filing annual returns (refer to sections 102-109); and
Financial gain of members and conflict of interests are prohibited (refer to section 22 and sections 62-73);

If you choose to keep your incorporated society operational instead of dissolving it, the critical step is to ensure that a new constitution (compliant with the New Act) is established, and then re-register under the New Act.

Timing

From 5 October 2023 to 5 April 2026 (the "Transition Period"), incorporated societies can undergo re-registration on the Incorporated Societies Register under the New Act.

Consequences of not taking action

Non-compliance with the New Act carries significant repercussions. Incorporated societies that fail to amend their constitution in accordance with the New Act and re-register during the Transition Period risk dissolution. The only recourse would be to apply for restoration to the Incorporated Societies Register through the Registrar or by means of an application to the Court. This process can be protracted and financially burdensome, making it advisable to take proactive steps to comply.

Additionally, officers found in breach of their duties under the New Act may face fines and criminal charges. Subpart 4 of the New Act outlines offences of misconduct, which could lead to fines of up to $200,000.00 and/or terms of imprisonment of up to five years upon conviction.

How can we assist?‍

Whether you need help identifying key changes, reviewing your society's rules, drafting a new constitution, advice on re-registration, or organisational structure, we offer guidance to ensure compliance for your incorporated society. Please contact:

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