A client recently asked about the 2022 Incorporated Societies Act and any potential implications for for-purpose organisations applying for grants. To make a long story short, we are still determining the implications of the new Act and future funding requirements, but we will keep a close eye on this.

There is no question that the Act needed review. The Act was established in 1908, over 100 years ago, and therefore required considerable change. The new Societies Act structures and processes are more robust and will give the organisations and members more options when things go wrong.

Parry Field Lawyers provide a great webinar about the changes to the Act, and the top 10 changes are listed on their website here, and I have provided a concise list below:

  1. The Committee requires three or more qualified officers (consent in writing must be received from the Committee members, and certification that Committee members have not been disqualified must also be obtained)
  2. Officers’ duties (Officers must act in good faith and not create substantial risk)
  3. The membership minimum has been reduced (to at least ten members)
  4. Consent (a person must consent to become a member)
  5. Dispute Resolution (a societies constitution must include procedures for resolving disputes)
  6. Reregistration (A society must reregister under the new Act by 1st December 2025)
  7. Financial Reporting (The Society will need to prepare its financial statements in accordance with the new standard set out in the Act that suits the size of the Society)
  8. Amalgamation (allows Societies to join together, either into one of the Societies or a New Society)
  9. Enforcement (civil law enforcement provisions that explicitly state the order a court may make and who may apply for a court order).
  10. Offences (sets out criminal offences, infringement offices, and serious offences)

Nearly all Societies will need to rewrite their Constitution or Rules. The Companies Office has provided a great Constitution Builder tool here: https://is-register.companiesoffice.govt.nz/help-centre/keeping-society-details-up-to-date/constitution-builder-tool/

All Incorporated societies will need to reregister from October 2023 to April 2026. Once reregistered, they will come under the new Act. Financial reporting standards will also apply to larger Incorporated Societies and must be implemented.

Do funders require registration under the Act?

One funder we know of does request registration as an Incorporated Society and as a Charities Trust. Therefore, there could be funding implications for those organisations that decide not to reincorporate under the new Incorporated Societies Act. Organisations registered as a Charitable Trust and not a Society will also have potential funding implications from these funders. It is important to note that most Funders will accept Incorporation under the Societies Act or the Charitable Trust Act.

New Zealand has approximately 24,000 registered Incorporated Societies of which, 7,000 are registered Charities. It is, therefore, crucial to consider the following potential impacts for for-purpose Societies re-registering under the Incorporated Societies Act 2022:

What happens when you re-register?

  • You must create a new Constitution and have financial reporting standards in line with the Incorporated Societies Act 2022, to register your Society as an Incorporated Society.
  • You must register from October 2023 to April 2026.
  • With registration under the new Act, you will meet more funding eligibility requirements.
  • Financial reporting requirements will be stricter under the new Act, ensuring more transparency and accountability. Societies may need to invest in appropriate accounting systems and expertise to meet these new reporting obligations.
  • Fundraising regulations: The Act may include provisions related to fundraising activities undertaken by incorporated societies. Societies may need to comply with specific rules and regulations when soliciting funds from the public or engaging in fundraising events.
  • Membership fees and subscriptions: Incorporated societies often collect membership fees or subscriptions from their members. The Act may provide guidelines on how organisations can set these fees, collect them, and manage the funds received.
  • Dissolution and distribution of assets: The Act may outline procedures for dissolving incorporated societies and distributing their assets. This may impact how the Society’s remaining funds or assets are distributed among members or other charitable causes.

The specific funding implications will depend on the Incorporated Societies Act 2022 provisions. To obtain accurate and up-to-date information about the funding implications, consult the Act, seek legal advice, or contact the relevant government agency responsible for incorporated societies in New Zealand. The New Zealand Companies Office also has a great article about the Key Changes of the Act and comparisons between the two Acts: https://is-register.companiesoffice.govt.nz/law-changes-for-societies/key-changes/

Strategic Grants can help

Do not hesitate to contact us if you would like to know more about how to apply for grants or seek grant opportunities for Societies and Charitable Trusts. We have a detailed Grants Expertise Management System (GEMS) database, which has over 1,000 funding rounds for New Zealand for-purpose organisations. The GEMS database is easy to search and is tailored to your organisation’s specific purpose and projects.

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