Incorporated Societies

Contents

Introduction

With the passing of the 2022 Incorporated Societies Act, organizations registered, or wishing to register, as an Incorporated Society now have a list of requirements and procedures in order to maintain their legal entity status. This page provides a general overview of these requirements, acting as a first start in your journey to compliance.

To check out the whole legislation, please see the link below:

Incorporated Societies Act 2022

What is an Incorporated Society?

Incorporated Societies are a membership based legal structure, a separate legal entity from its initial membership. While the membership may change, the society’s identity does not. Being incorporated also means the members are not personally liable for the society’s debts or other obligations and cannot have a personal interest in any property or assets owned by the society.

An Incorporated Society must register with the companies office.

What can an incorporated society do?

The society maintains its own separate legal identity, even as its members change.
It can lease, rent, and sell property, borrow money and sign contracts under its own legal name instead of the name of that year’s executives.
An incorporated society’s property (premises, money, trophies etc) is held by the society rather than by its members. No individual member can have a personal interest in any of the society’s assets.
Members aren’t usually personally responsible for the society’s debts or other obligations. But there are exceptions. Every member involved could be held personally liable, if:
- they have undertaken activities to obtain money for profit that personally benefits those members.
- They have undertaken unlawful activities.
An incorporated society may be entitled to an income tax exemption.
Contact Inland Revenue on 0800 377 774 or visit their website at www.ird.govt.nz for more information.

What are the New Requirements?

Before the Incorporated Societies Act 2022 received Royal Assent on 5 April 2022, the last major piece of legislation which addressed incorporated societies was passed in 1908, 104 years previously!

This section will highlight ten key requirements for clubs and societies to consider from the new act. However, one fundamental requirement, which impacts the following ten, is the need for a constitution and what that constitution should include. For more details around your organization’s constitution please see this article HERE.

Committee Required
The old Act does not require a society to have a committee, only officers. The committee is responsible for managing the operation or affairs of the society and is defined in the Act as “the governing body of the society, however described (for example, a board)”.
The Duties of an officer
The new act outlines the duties an officer has to the society, not owed to individual members. These include:
- duty to act in good faith and in the society’s best interests;
- duty to exercise powers for a proper purpose;
- duty to comply with the new Act and the society’s constitution.
- duty of care.
- duty not to create substantial risk of serious loss to creditors; and
- duty not to agree to the society incurring obligations that it cannot perform.
- Duty to disclose a conflict of interest to the Committee and in the interests register kept by the Committee. Disclosure must be made as soon as practicable.
Minimum Membership
The Society must have a minimum membership of 10 consenting people, a change from the Old act which specified that a society needed 15. For UCSA affiliation however, you are required to have a minimum of 20, minimum half of whom need to be current UC students.
Consent and Membership detail
Under the New Act, consent to join has been given new emphasis where the Old Act didn’t require it. To comply with legislation, clubs should amend their constitution to explicitly state that consent is required upon signup.

Additionally, a society must keep a register of its members which contains the following details:
- First Name, Last Name
- Last known contact details
- The date on which they became a member
- The name of members of the previous seven years
- The date in which each person ceased to be a member
Dispute Resolution
The New Act, a society’s constitution must include procedures for resolving disputes. The society can develop its own procedures, so long as those procedures are consistent with natural justice. Clauses 2 to 8 of schedule 2 set out procedures a society may decide to include. Should a society include the schedule 2 procedures, its dispute resolution procedures will be presumed to be consistent with natural justice according to section 41 of the New Act.
Reregistration – Updating your Constitution
Until societies register under the New Act, which organizations must do so by 31st March 2026, Incorporated Societies are subject to the Old Act requirements. In order to successfully re-register, clubs’ constitutions must meet all the requirements outlined in the legislation, Section 26.
Financial Reporting
All incorporated societies must prepare their financial statements in accordance with the new legislation. All societies must have a balance date or define their financial year. All societies must then complete and file their financial statements within 6 months of their balance date.

If you are a small society your financial statement must contain the below information. (You are a small society if, within the relevant financial period, the operating costs of the society is less than $50,000; and at the end of the financial year the total assets of the society is less than $50,000. If your society is larger than this, please see the advice on the Companies website, for further information on reporting.):
- Income and expenditure, or receipts and payment, of the society during the financial year; and
- the assets and liabilities of the society at the close of the financial year; and
- all mortgages, charges, and other security interests of any description affecting any of the property of the society at the close of the financial period.
Amalgamation
Under the New Act, societies are allowed to join together, either combining under one of the names of the societies or forming a completely new entity. Under the Old Act, societies had limited abilities to restructure with no provision to amalgamate. The Amalgamation process can be seen here.
Enforcement
Part 4 of the new Act sets out civil law enforcement provisions that explicitly state the order a court may make and who may apply for a court order. This could help, for example, a member of a society to apply to the court where they believe the society’s constitution has been breached.
Offences
Subpart 6 of part 4 of the new Act sets out criminal offences. Infringement offences are less serious and include matters such as failing to notify the Registrar of amendments to the constitution. A society that commits an infringement procedure may be liable to a fine not exceeding $3,000.

The new Act also sets out several serious offences, such as: making false statements; fraudulent use or destruction of property; falsification of register, records, or documents; operating fraudulently or dishonestly incurring debt; improperly using “Incorporated”, “Inc”, or Manatōpū. These provisions supplement the dishonesty provisions in the Crimes Act 1961 and some of the offences could result in a fine of up to $200,000 and/or a term of imprisonment of up to 5 years.

Additional Resources

In 2024, Parryfield Lawyers offered to assist UCSA with providing clubs vital information to navigate the changes of the incorporated societies act. As such they not only provided additional resources, but they also facilitated a seminar in April 2024. Please see the video below:

Incorporated Societies Seminar

Please also see below a selection of materials provided by Parryfield Lawyers, free for use:

Please also see other additional free resources for your benefit and consultation