Key Takeaways:
- Nearly half of incorporated societies in New Zealand have yet to re-register under the new Incorporated Societies Act, with a deadline of 5 April to meet the requirements or face dissolution.
- The new law requires incorporated societies to have a bank account, a new constitution with rules for distributing assets and resolving disputes, and to meet to approve the changes and submit the paperwork to the Companies Office.
- Societies that miss the deadline will no longer be considered legal entities, which could lead to frozen bank accounts, loss of funding, and difficulties with lease arrangements.
- Help and assistance are available for societies to navigate the re-registration process, including templates and resources from the Companies Office and Sport NZ.
- Some Residents’ Associations that own property have been given an extension until 5 October 2028 to resolve issues with their constitutions.
Introduction to the Issue
Consumer Affairs Minister Scott Simpson is urging the nearly half of incorporated societies that have not done so yet to re-register under the new Incorporated Societies Act. Incorporated societies include clubs, charities, unions, and political parties, and they have until 5 April to meet the requirements or be dissolved. This could potentially lead to the groups’ bank accounts being frozen, and put funding and lease arrangements at risk because banks and funders may not want to deal with a group that does not have legal status.
The Re-Registration Process
The re-registration process is a result of a law change passed by Labour in 2022 to modernise the old 1908 law following recommendations from the Law Commission in 2013. The new law contains additional requirements for Incorporated Societies, including a bank account, and a new constitution with rules for distributing assets and resolving disputes. They would then need to meet to approve the changes and submit the paperwork to the Companies Office. Societies could also decide not to re-register, but in that case, must go through the separate process of winding up or becoming a different kind of entity, which can be complicated in itself.
Consequences of Missing the Deadline
Figures supplied by the Minister’s office showed that of the 23,684 total incorporated societies, some 11,020 were still operating under the 1908 Act. If these societies miss the deadline, they will no longer be considered legal entities, which could lead to serious consequences. Sport NZ’s governance and planning lead Julie Hood said societies that missed the deadline would miss out on protection from personal liability, and avoid other legal complications. Banks, funders, and contract holders may also be reluctant to work with the entity, and arrangements for clubrooms leased from local councils could need to be renegotiated.
Challenges Faced by Small Societies
One club, Wellington-based Club Latino, has found the re-registration process to be difficult and time-consuming. The club’s outgoing president, Fiona Mackenzie, said that the process could take months, and was quite challenging for a small society with limited resources. The club has had to draft a new constitution, which has grown from 11 pages to 35, and is struggling to navigate the complex requirements. Mackenzie said that the club wants to do what is required of them, but feels that the process is not designed for small societies like theirs.
Help and Assistance Available
Despite the challenges, help and assistance are available for societies to navigate the re-registration process. The Companies Office and Sport NZ are offering templates and resources for clubs to use and convert to a new constitution, along with governance clauses specific to different sporting codes. Sport NZ will also be providing a new template in February which will offer a very simple constitution for very small clubs that may be simpler to use. The Ministry of Business, Innovation and Employment has confirmed that as long as the constitution complies with the rules and is filed before the deadline, the societies will continue operating.
Leeway for Residents’ Associations
Minister Simpson has also announced that some Residents’ Associations that own property have been given an extension until 5 October 2028 to resolve issues with their constitutions. This is because some of these associations have clauses that, if the group was dissolved, would distribute the property to members, contravening the 2022 law that prevents distribution to members. These groups will still need to submit a constitution by the 5 April deadline, but they can retain the clause permitting distribution until the extended deadline. They will need to reformat themselves into an entity that meets the criteria of either an Incorporated Society or another entity, such as a body corporate.
