2022 Incorporated Societies Act can be seen HERE
PNZ will be reviewing new constitution advice it issues to clubs looking to make updates to their constitutions. Updates will be communicated to clubs.
The 2022 Act has a number of key changes to the current governance framework, as follows:
Codifying officer duties by prescribing that all officers must:
- act in good faith and in what the officer believes to be in the best interests of the incorporated society
- exercise their powers for proper purposes
- exercise the care and diligence that a reasonable person with the same responsibilities would in the same circumstances
- not agree to, cause or allow for, the activities of the incorporated society to be carried on in a manner that is likely to create a substantial risk of serious loss to creditors
- not agree to the incorporated society incurring an obligation unless the officer believes on reasonable grounds that the incorporated society will be able to perform the obligation when required to do so
- not act, or agree to the incorporated society acting, in a manner that contravenes the 2022 Act or constitution of the incorporated society, resulting in officers having duties akin to those of company directors (which has attracted some negative comments that the duties may be disproportionately burdensome for officers of incorporated societies operating in the not-for-profit sector, particularly in today’s challenging economic climate)
- Requiring certain incorporated societies (to be prescribed in regulations) to have their financial statements audited (This will be clarified in the 2023 Regulations)
- Requiring all incorporated societies to have a procedure contained in their constitutions to resolve disputes which must be consistent with the rules of natural justice
- Specifying certain factors that will disqualify a person from being an officer of an incorporated society
- Requiring an ongoing minimum number of members – 10
- Introducing an amalgamation regime, which is a simplified version of what is provided for in the Companies Act 1993
- Allowing a mechanism for members to obtain information from officers to allow for improved accountability of officers
- Providing for certain criminal offenses, such as officers dishonestly using their official position, providing false or misleading statements (knowing them to be so), fraudulently using incorporated society property and falsifying records, documents, or the Incorporated Societies Register.
What does a Club need to do NOW?
All existing incorporated societies will be required to re-register with the Registrar of Incorporated Societies by April 2026. Club are advised to review their constitutions via the Incorporated Societies website.
This date is two years and six months after the commencement of certain transitional provisions contained in the 2022 Act and after the finished regulations in 2023. An application for re-registration must be accompanied by a copy of the incorporated society’s constitution, such constitution must be compliant with the requirements set out in the 2022 Act.
