The New Composition Requirements
As discussed in a previous article, the legal regime governing incorporated societies in New Zealand has undergone a major overhaul, and all societies will need to re-register under the new rules from October 2023. One way in which your society may need to bring itself up to code is in reviewing its composition, including its membership, governance structure and officer roles and responsibilities.
The most fundamental changes to the composition requirements of the incorporated societies regime are those affecting membership. The minimum membership requirement will drop from 15 to 10 members, and all members will have to have given their consent. For most societies, the requirement for consent need not be a cause for change – simply filing an application form will generally be considered sufficient evidence of consent. There is also no penalty for failing to obtain consent – you just won’t be able to enforce the society’s rules against someone who has not consented to becoming a member or count them as a member for any other purpose, like making a grant application.
Another major change is that societies will now need to have a committee to serve as a formal governing body. Officers alone will no longer be enough. A committee must have at least 3 members, the majority of whom are either members of the society or representatives of a body corporate that is a member of the society.
There are also new definitions, rules and requirements for society officers. Officers are explicitly defined in the Act as including all committee members as well as others, such as the Treasurer and CEO. The Act sets out who may qualify to be an officer. An officer must:
- Consent in writing and certify that they are not disqualified;
- Be 16 years of age or older;
- Not be:
- An undischarged bankrupt;
- Prohibited from being a director or promoter of a company
- Disqualified from being an officer of a charitable entity;
- Convicted and sentenced of certain offenses within the last 7 years (e.g. dishonesty crimes);
- Subject to particular orders (e.g. a banning order);
- Unable to comply with any qualifications for officers contained in the society’s constitution.
The Act also formally prescribes a set of officers’ duties (similar to directors’ duties), such as to act in good faith and exercise care and diligence.
All incorporated societies will need to review their compositions and constitutions to ensure that they are compliant with the new regime. At Freebairn and Hehir, we’ve made it our business to become expert guides to incorporated societies compliance. So if you would like any advice on how to get your society ready and re-registered, please get in touch.