The Government has recently introduced the Incorporated Societies Bill into Parliament. The Bill has been long-awaited, having been out for public consultation since 2015. It updates the Incorporated Societies Act which was first enacted in 1908.
We know that New Zealand's 23,000+ incorporated societies will be viewing the Bill's progress with much interest, to ensure that their organisation remains compliant with the new rules. We will be providing regular updates as it makes its way through Parliament.
For now, we set out below the steps the Bill must go through before it becomes law (including your opportunity to have a say), and some of the key changes being proposed at present.
Where to from here?
The Bill has already gone through its first reading in Parliament. It will now go through a select committee process, which is where anyone will have the opportunity to provide submissions on the Bill, and how it may impact them. The select committee will then report to Parliament, where it may suggest changes to be made to the Bill in light of the feedback it has received from the public. This is an important process, and we encourage organisations to get involved. Submissions close on 28 May 2021.
The Bill will then be voted on at its second and third readings, and Parliament may make even more changes to the Bill as it gets debated through those stages. If it passes its third reading, the Bill will then get royal assent and become law.
Importantly, the Bill will provide existing incorporated societies with a significant transitional period to reregister under the new law and become compliant. At present, it is proposed that the final date will be the later of 1 December 2025 or the date that is 2½ years after applications to be registered under the 1908 Act are discontinued.
That means, unless you wish to make submissions to the select committee on the Bill as it is drafted, there is nothing your organisation will need to do for some time (apart from keeping up to date with how it is progressing through Parliament, which is where we will help).
What are the key changes being proposed?
Some of the key changes currently proposed are:
- The rules preventing a society from operating for financial gain are strengthened in the Bill.
- The Bill prescribes qualification criteria for board/committee
members, and duties which those officers owe to the society,
- to act in good faith and in the best interests of the society
- to exercise their powers for a proper purpose
- to comply with the legislation and the society's constitution
- to exercise reasonable care and diligence
- not to create substantial risk of serious loss to the society's creditors
- not to agree to the society incurring obligations that it cannot perform
- The duties of officers are akin to those of a director of a company.
- Societies will be required to have procedures for dealing with member's complaints. The procedures must accord with natural justice, and a suggested procedure is included which, if adopted, will be presumed to accord with natural justice.
- There is a procedure for the amalgamation of more than one society.
- The Bill introduces new provisions governing a members' entitlement to society information.
As outlined above, the Bill is subject to change as it progresses through Parliament. We will be with you every step of the way. If you want to discuss how the Bill may impact your organisation, or the process in making submissions to the select committee, get in touch with one of our experts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.