Source: Radio New Zealand
Consumer Affairs Minister Scott Simpson Facebook / PACER Plus
Consumer Affairs Minister Scott Simpson is urging the nearly half of incorporated societies that have not done so yet to re-register.
Incorporated societies include clubs, charities, unions and political parties, and they have until 5 April to meet the requirements or be dissolved.
That could potentially lead to the groups’ bank accounts being frozen, and put funding and lease arrangements because banks and funders may not want to deal with a group that does not have legal status.
With just a few months left before the deadline, one club says the process is difficult and can take months.
It all stems from a law change passed by Labour in 2022 to modernise the old 1908 law following recommendations from the Law Commission in 2013.
The new law contains additional requirements for Incorporated Societies, including a bank account, and a new constitution with rules for distributing assets and resolving disputes. They would then need to meet to approve the changes and submit the paperwork to the companies office.
Societies could also decide not to re-register, but in that case must go through the separate process of winding up or becoming a different kind of entity, which can be complicated in itself.
Figures supplied by the Minister’s office showed that of the 23,684 total incorporated societies, some 11,020 were still operating under the 1908 Act.
Simpson told RNZ the changes – supported across Parliament – aimed to ensure a modern governance framework that would ensure the groups had the tools to achieve what they wanted.
“Now’s a really good time to rattle your dags and get on with it,” he said.
“It’s a relatively easy process. There’s plenty of help and assistance, and if they need any help or direction, simply go to the company’s office website and have a look, and they’ll be able to step their way through that process.”
Labour Party planning to re-register
Another group yet to submit is the Labour Party, which passed the new law.
A spokesperson told RNZ its redrafted constitution was voted on by members in November, but the party had intentionally delayed filing to the Companies Office until 2026, to simplify the process.
The spokesperson said the paperwork would be submitted by the deadline.
‘There are legal consequences’
Sport NZ’s governance and planning lead Julie Hood said societies that missed the deadline would miss out on protection from personal liability, and avoid other legal complications.
“This is a hard deadline. So if they don’t re register, they no longer exist,” she said.
“Banks, funders, contract holders have to consider whether or not they can continue to work with the entity when they’re no longer … a legal entity, and there are concerns that the banks may have to freeze bank accounts until they’ve sorted that issue out.”
Arrangements for clubrooms leased from local councils could also need to be renegotiated, and money left in the kitty would need to be distributed.
“It gets quite complicated and they may decide that they won’t or can’t renegotiate the contract. I don’t know how this is all going to play out, but there are legal consequences that come with this.”
Wellington-based Club Latino’s outgoing president Fiona Mackenzie said they had found the process could take months, and was quite challenging.
“We’re a small society, we have maybe 30 members, and we do this voluntarily. It’s not a full time thing, and so having to take the time to look through what’s required, how to go about it, how to get that through our membership has been quite time consuming.
“We’ve gone from having a set of rules of society which was about 11 pages long to now our current draft which is 35, so it’s a lot. It feels like a little bit of overkill for a society of our size.
“We’re not lawyers, we’re not policy experts, we’re not tax experts – so it’s hard to keep your club going when you’re being asked to do all this type of overhead.”
She said the club still had work to do to meet the requirements, and had sent out the draft constitution for members to read over the summer holidays ahead of a special meeting in February.
Clubs like hers wanted to do what was required of them – but “the most important thing is that they want to be spending time giving back and engaging with the community,” she said.
“It feels like it’s not necessarily designed for the type of club or society that we are. Feels like a bit of overkill.”
The Ministry of Business, Innovation and Employment confirmed that as long as the constitution complied with the rules and was filed before the deadline, the societies would continue operating.
Hood said there was no shortage of help, with the Companies Office and Sport NZ both offering templates and resources for clubs to use and convert to a new constitution, along with governance clauses specific to different sporting codes for those who wished to use them.
“They are that are not necessarily a requirement for the for the incorporated societies act, but are good to have … that will allow particularly sports and federated structures to line up constitutions within national, regional and club entities, particularly around disputes resolution, so removing duplication of effort and making it really clear who’s responsible for what at each layer.”
She said Sport NZ would also be providing a new template in February which would offer a very simple constitution for very small clubs that may be simpler to use.
Leeway for some residents’ associations
Minister Simpson also said a problem had been discovered with some Residents’ Associations that owned property.
“This is groups that have property in common – maybe a pathway or a grassed area or something – in their Residents’ Association area,” he said.
The problem was that some of these currently had clauses that – if the group was dissolved – would distribute the property to members, contravening the 2022 law that prevents distribution to members.
Simpson said those groups would still need to submit a constitution by the 5 April deadline, but they could retain the clause permitting distribution until 5 October 2028.
“We’ve decided to give them an extension of time to sort that out. That was a matter that wasn’t raised during the select committee process back in 2022, it’s only recently come to light,” he said.
“They will need to reformat themselves into an entity that is going to meet the criteria of either an Incorporated Society or indeed, some other entity. They might, for instance, decide to form themselves into a body corporate.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand