The Incorporated Societies Act 1908 guides many New Zealanders who volunteer to run not-for-profit organisations and associations. The Act is now more than 100 years and the Government has agreed to implement modern legislation that will help guide the sector into the future.
According to recent information from MBIE, there are over 23,700 incorporated societies in New Zealand. Of these, 45% promote culture, sport and recreation. The remaining 55% promote a range of community activities including education, health, social services, environment, economic and social development, law and advocacy, philanthropy, religion, business and professional associations.
An incorporated society is a separate legal entity that operates not-for-profit. Incorporation means that a society can enter into contracts and hold assets in its own name. Members of the society are not personally responsible for any liability that the society incurs and the society can continue unaffected by changes in membership or office holders.
The Law Commission completed a review of the Act in 2013. They recommended it be replaced with a new Act and have proposed a number of changes.
The Principle of societies would be largely unchanged, they:
- Are organisations with members who have the primary responsibility for holding the society to account.
- Are private bodies that should be self-governing and free from unnecessary statutory interference.
- Should not distribute profits or financial benefits to their members.
The proposed changes to the Act primarily relate to:
- A lack of clarity about officers obligations (where officers are essentially defined as the Board members)
- No framework for the management of disputes
- A lack of guidance on:
- The consequences of the organisation acting outside of its capacities or powers
- The rights of members to access the societies records
- What happens to surplus assets in the event of the society winding up, and
- How any disputes are managed.