The recent introduction of the new Incorporated Societies Act will have an impact on sector organisations. This resource is designed to assist sector boards on navigating these changes.
The new Incorporated Societies Act was passed into law on 6 April 2022. The new Act intends to make incorporated societies’ governance functions more robust by aligning director duties more closely with those in the Companies Act. Examples of this include introducing officers’ duties and requirements for dispute resolution processes.
There is a transition period during which incorporated societies will continue to be subject to the 1908 Act until they decide whether they wish to re-register under the 2022 Act or consider alternative options.
Societies that fail to re-register between October 2023 and April 2026 will cease to be incorporated and will be removed from the Register.
Re-registration will involve filing a constitution that is compliant with the new Act.
There is no need to rush into the re-registration process as you have until April 2026. Societies continue to operate under the current 1908 Act until they are ready to re-register under the 2022 Act. This provides time for societies who may wish to consider broader governance changes as well as alternative options to re-registering such as merging with other societies or alternative legal structures e.g., charitable trust.
- Minimum number of members required for an incorporated society is reduced from 15 to 10.
- Consent of each member of the society will need to be collected, for example, by ticking a box when renewing their annual membership.
- Each society must appoint at least one contact person to be contactable by the Registrar.
- Officers have new duties, which include acting in good faith and in the best interests of the society, complying with the 2022 Act and the constitution, and exercising the care and diligence that a reasonable person would exercise in the circumstances.
- The majority of officers on the society’s board or committee must be members of the society and all officers must not be disqualified from being an officer.
- Dispute resolution processes must be included in the society’s constitution and the processes must be consistent with the rules of natural justice.
- New rules define when an officer has a conflict of interest and a duty to disclose conflicts.
- Societies can provide insurance and indemnify officers and employees.
- Simplified financial reporting for small societies. Regulations (not yet been released) will provide further details on the requirements for different sized societies.
- Societies that are not registered charities and have annual expenditure over $3,000,000 for the two preceding financial periods are required to be audited.
- There are minimal financial changes for Incorporated Societies that are also registered Charities as they will continue to prepare financial statements as before under the Charities Act 2005.
What it means for you
- All incorporated societies will need to re-register with the Registrar by April 2026 with a constitution that is compliant.
- Societies must review their constitution and make any necessary modifications. Societies needing few changes may decide to update, while others may see this as a good opportunity to start afresh.
Sport NZ is recommending a coordinated approach to the updating of constitutions, focusing on national societies first before rolling out changes and support to Regional Sporting Organisations (RSOs) and Clubs for those who are federated.
This approach will better use our collective insights and efforts with an aim to minimise the duplication of effort and costs for societies.
To help you move forward and begin to plan how your organisation will bring a new constitution into effect, Sport NZ will soon share:
- Constitution templates
- guidance notes
The National Constitution template with guidance and checklist is now ready for use below. Regional and club templates will be released before Christmas.
Previous webinars explaining what these changes mean for your organisation can be viewed on Sporttutor.
We can target our advice and support where needed so please let us know what approach you are considering and any questions you have by emailing firstname.lastname@example.org.