The timeline to reregistration

Transcript

Duration: 25:11

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Opening slide including logos for Ministry of Business, Innovation & Employment (MBIE) and the New Zealand government with the wording: Incorporated Societies Act 2022 Public consultation on regulations

Audio

The webinar begins with Robert Clarke, Acting Principal Policy Advisor in the Corporate Governance Policy Team at the Ministry of Business Innovation & Employment (MBIE) speaking to each of the slides in this presentation.

Okay, we'll get started. Welcome, everybody to this presentation. This is related to the Incorporated Societies Act of 2022, which you'll be familiar with, passed earlier this year. And, more specifically, today, we're going to be talking about the very recently launched public consultation on the regulations that will complement that Act.

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Slide 2 - Contents

• Project timeline
• Document structure
• Parts 2 and 3
• Part 4
• Next steps
• Questions

Your presenter today:
Robert Clarke – Principal Policy Advisor
(robert.clarke@mbie.govt.nz)

Audio

Robert Clarke continues speaking to the slides in this presentation.

“I'm going to talk you through the contents of today's presentation. Just to give you an overview, few signposts. But first, I'll just tell you who I am.

I'm Robert Clarke. I'm currently acting as the Principal Policy Advisor in the Corporate Governance Policy Team at MBIE. And I'll be the only voice you hear today from this point on. I am ably assisted though by Annie McGuinness, a Policy Advisor in my team who will be sorting through the Q&A. So that, when we come to the end of this presentation, she'll have chosen a few of the questions that I can attempt to answer today. Please type those in the Q&A section rather than the chat section, we won't be checking the chat section. If I'm unable to answer all the questions, which is very likely, then what we will do is try to circulate afterwards, along with the slides. We’ll, post to the Companies Office web page I mean, the slides from this presentation, a recording of this presentation, and a transcript, but also a document with your questions and some written answers.

So, the contents of today's presentation.

First, I'm going to talk to you about the project timeline. And by project what I mean is this work that we're doing on developing regulations to supplement the Incorporated Societies Act.

Then, I'm going to talk to you about the structure of the discussion document that we published recently, and some of you will have taken a look at it.

Then, the next 2 areas I'm going to look at in today's presentation, I've put them in red, because these are the only parts of the presentation that actually in which I'll actually be talking about the proposals in that discussion document. I will first talk to you about parts 2, and 3 of the discussion document. There are 4 parts in that discussion document. Parts 2 and 3 are really all about the rules that will apply once you've reregistered, so the new rules of the game. Part 4 is about the rules that will apply as you are preparing to reregister. So, just a reminder, we have the broad rules in the Act already. The broad rules on how you'll need to organise your society once you've reregistered. But in parts 2 and 3 of the discussion document, we'll look at filling in some of the details. Apologies for that. So, as I was saying in the Act, we've already got some high-level rules on how a society will need to be organised. But in part 2 and 3 of the discussion document, we're going to be looking at some proposals on some finer details that the regulations will have to supplement those broad provisions in the Act. And the same for part 4. We already have in the Act some provisions on how a society will go about reregistering, but there are a few details that need to be filled in.

After that, we'll take a look at next steps. That's really just a detailed, more detailed vision of the project timeline.

And then, we'll get to the questions which have been piling in, already got 47. Although some of those were about the microphone. Yes, please move the mic up. Looks like it's all going now. 

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Slide 3 – MBIE opening karakia

Tāwhia tō mana kia mau, kia māia

Ka huri taku aro ki te pae kahurangi, kei reira te oranga mōku

Mā mahi tahi, ka ora, ka puāwai

Ā mātau mahi katoa, ka pono, ka tika

TIHEI MAURI ORA

Audio

I'd like to start with the opening karakia from MBIE.

Tāwhia tō mana kia mau, kia māia

Ka huri taku aro ki te pae kahurangi, kei reira te oranga mōku

Mā mahi tahi, ka ora, ka puāwai

Ā mātau mahi katoa, ka pono, ka tika

TIHEI MAURI ORA

I won't translate it all for you just the last couple of lines. By working together, we will flourish and achieve greatness, taking responsibility to commit to do things right. So that's what we're here to do today. 

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Slide 4 – Project timeline

A graphic showing 3 main timeframes within the project timeline. Each timeframe is shown in a bubble graphic. Working from left to right they say:”

• April 2022
  New Act passed
• May 2022 – Sep 2023
  Regulations developed to support the new Act
• Oct 2023 – April 2026
  Re-registration period under the new Act (2.5 years)

Audio

So, here we are at the project timeline.

April 2022, that's when the new Act was passed. In that Act, as I said, some of the broader rules were set. For example, you'll only need 10 members in future, you won't need 15. You won't need to have a seal anymore, so you can throw out those rubber stamps. On the other hand, you will need to start putting into your constitutions procedures for settling internal disputes. So, it's a bit of a good news bad news story in terms of the amount of work you might have to do.

You'll see that from October 2023 to April 2026 there is a reregistration period open under the new Act. That's for 2½ years. So, at any time during that period, your society will be able to choose to reregister and at that point of reregistration, you'll switch from being governed by the 1908 Act to being governed by the 2022 Act.

What are we here for today? It's to discuss the bit in the middle. So, since about May, just after the Act was passed, and until September next year, we're working on regulations to support the new Act.  

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Slide 5 – Structure of the discussion document

Part 1: Introduction

Parts 2 and 3: Regulations that apply once a society has re-registered (the new regime)

Part 4: Regulations that apply to a society preparing its application for re-registration

Audio

Moving on to the structure of the discussion document, so it has 4 parts. Part 1 is just an introduction, sets out the context, talks about the Act, and how the Act is very good. But obviously Parliament can't decide every single little detail. And so, some of those details have to be consulted on with the public and set out in regulations. Then, as I mentioned, parts 2 and 3, those are about regulations that apply once your society has reregistered. So, it's the new regime. In case you're interested, part 2 focuses on the substantive rules that will apply, and part 3 is about the fees that might need to be charged associated with the functions of the Registrar or the Companies Office to run this new regime. Then, part 4 is about the regulations that apply to a society preparing its application for reregistration. For example, what sort of things do you need to put in your reregistration application?  

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Slide 6 – Parts 2 and 3

Regulations that apply once a society has re-registered (the new regime) These seek feedback on lots of procedural matters, including:

• The level of late fees;
• The level of fines;
• The information the Registrar has to put in a fine notice;
• How people can ‘serve’ documents on a society or an officer; and
• The precise definition of ‘current assets’.

Audio

We'll get cracking with parts 2 and 3. Just a reminder, regulations, these concern regulations that apply once a society has reregistered. First up, we've got a couple of slides on these parts.

But first up, these parts seek feedback on what I generously call “lots of procedural matters”, although “mundane” has been mentioned as well. Examples include the level of late fees. So, for example, if you are late providing your financial reports, which the Act says you have to send in within 6 months of your balance date or the end of your financial year, then the discussion document in part 3 proposes a fine of $25, if you are up to about 20 days late. After that, it's a fine of $100. Those are one-off fines, and they're called late fees because in fact, they're not designed to punish you. They're designed to help the Companies Office recoup the cost of sending you a reminder notice, that sort of thing.

Then, we get to the level of actual fines, these are not designed to, to recoup costs that the Companies Office might incur. These are designed to deter people from avoiding their obligations, and to punish them if they do avoid their obligations. So, an example of the fines proposed in the discussion document. If you fail to send in your financial statements, there is the possibility of a fine of $500. Now, I must stress that the Companies Office will be focusing on education early on. So, don't immediately think that you'll be slapped with a fine if you're if you're running a few days late. And they have what's called prosecutorial discretion, which means that they don't actually have to fine you for these things. And in the early years, I imagine though, they'll give quite a lot of flexibility. Just for comparison, under the 1908 Act, if you're late with your filing of annual financial statements, you're currently subject to a fine of a shilling a day, a shilling being about 10 cents. And I'm not sure if that has been enforced for quite some time.

More procedural matters, things like if the Registrar does decide to fine you what should be in the notice, the fine letter that they send you. So, it's going to say the nature of the offense you allegedly committed, the way you can pay your fine and how you can appeal.

And then how people can serve documents on a society or an officer. So, pretty fascinating stuff. This is about if, for example, if you have a legal document, and you want it to be served on an incorporated society like you, should they have to bring it to you physically? Or can they send it by email to your contact officer, or contact person, things like that.

And if you're still awake, another procedural matter. There is this term current assets, which is used in the Act. And it is essentially accountant speak for liquid assets, which is basically what you've got in your bank account. It's important in the Act, because it's used to help define which societies are small societies. And small societies are lucky because when they prepare their financial statements, they won't have to use the fancy standards laid down by the External Reporting Board. So, it's good to be a small society. But the Act doesn't say precisely, or define precisely what current assets means. So, there's a discussion in the consultation document about that. And we'd be interested in your feedback.  

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Slide 7 – Parts 2 and 3 (continued)

Regulations that apply once a society has re-registered (the new regime) They also seek feedback on some more meaty issues, including:

• Should any categories of person be excluded from the definition of ‘officer’?
• Should some societies be able to have a committee on which the majority are independent officers?
• Which societies should have to have their financial statements audited?
• If a person is banned in an overseas jurisdiction, should that mean they are ineligible to be an officer in New Zealand?

Audio

Now, that's the procedural stuff. There's also a few meaty issues, which you might want to focus on if they were important to you, as a society.

One of the issues is about the definition of officer. So, the people who are officers under the Act they have certain duties, for example, to act in the best interests of the society. And the interesting thing is the definition of officer in section 5 of the Act, says it's anyone on the committee. It's anyone with a position, basically, of authority, such as a treasurer, or the CEO if you are a big society. But it also is anyone specifically included by regulations or anyone, or excludes anyone specifically excluded by regulation. So, if you think there is a category of persons who should be expressly excluded from being officers, even though, for example, they may happen to sit on the committee or be the treasurer or the CEO, then that's something you might want to submit on. There's a rule in section 45 of the Act, which says that on your committee, the majority of members have to be members of the society, which is a new rule. But it is possible under regulations to create exceptions to that. And in our discussion document, we put forward some ideas on possible exceptions. Notably, some of the national sporting bodies where past reports have really indicated that for the wellbeing of sports people, there needs to be a fully independent committee. You may have other ideas for other types of societies.

This next one is quite a topic of conversation sometimes. If you're an incorporated society, that's a registered charity, you will already know that you have to have your financial statements audited if you spend more than $1.1 million per year. And so we had to decide, well, if you're an incorporated society, which is not a registered charity, what should the threshold be for when you need to have your financial statements audited. And you'll see that after a lot of analysis required by the Act, we came to the conclusion that should be if you spend more than $3 million per year. So, those are getting to pretty big incorporated societies at that stage.

Finally, there's a discussion about eligibility to be an officer. So, the Act provides for the possibility of regulation saying that if someone is banned in an overseas jurisdiction, they should be ineligible to be an officer in New Zealand. That is to say, if they're banned from being on a committee abroad. In the discussion document, we say yes, that's correct, if they are banned in Australia, but we haven't suggested that bans in other jurisdictions, other countries should disqualify you. You may think that's, that's not going far enough. Or, alternatively, you may think that it's going too far. And that overseas bans shouldn't be relevant. So, let us know. Perhaps, you think that somebody who's banned in the UK, for example, should also be banned from being an officer in New Zealand.  

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Slide 8 – Part 4

Regulations that apply to a society preparing its application for re-registration This part seeks feedback on:

• What information should be included in a re-registration application;
• Whether there should be a fee for re-registration; and
• How an application for restoration should be made (if a society misses the re-registration deadline).

Audio

So part 4, just a reminder, that's about regulations that apply to a society preparing its application for reregistration. So, this is before you reregister.

This part of the discussion document seeks feedback on things like what information should be included in a reregistration application. So, not particularly exciting. But, you know, we say things like, well, you've got to provide the name of your society, copy of your fresh constitution, if it needs refreshing to meet the requirements of the new Act, your NZBN number, maybe you balanced date, things like that.

This is a bit more interesting. We're asking your view on whether there should be a fee for reregistration. So, obviously, reregistering 24,000 incorporated societies will generate some costs. People have to be paid to process these reregistration applications. We don't say in the discussion document, whether we think incorporated society should chip in. If you were asked to, it would probably be about $50, including GST. So, we just ask for your views. And some of you may know that, even if you miss the deadline of April 2026 to reregister, there is a process for restoration. Unlike reregistration, we do know that there will be a restoration fee and be higher than $50. So, you do want to try and reregister by April 2026. But in the discussion document, we ask about what an application for restoration should look like.  

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Slide 9 – Making a submission

• A template is available
• Use real-world examples from your society
• Try to be balanced
• If you want to, focus on just a few of the questions

Audio

Making a submission — consultation is open from 11th of October to 22nd of November.

We do know that you may be very busy because you're out there doing God's work, teaching people to play sport and looking after our national monuments. So, don't despair if that timeframe is difficult for you. We do understand and we will be looking at submissions that come in late. It's just that the best way to have your say, I think is to get in early. It's just human nature that we will be forming our views as we read. So it may be best, the earlier you can get in.

A few points on making a submission.

• A template is available, just a Word document with a few boxes in it. And you can type your answers into each box. Each box relates to a specific question. You don't have to use a template.
• It'd be good if you can think of real-world examples from your society when you're arguing for a point. So, you might say, well, our society had a chap start as a director, and we found out that he was banned in the USA. And he ended up causing all sorts of trouble and would have been a good thing if bans from the USA had meant he was ineligible in the first place. So, those sorts of real-world examples can be quite helpful for us here in Wellington, just to understand your position better, and to convince our Minister of the merits of any particular argument.
• Do try to be balanced. It's often good to try to anticipate how somebody might try to counter your argument and then to think about why their arguments, in turn, might not stack up.
• And if you want to just focus on a few of the questions, no need to answer all the questions, we know there are quite a lot.  

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Slide 10 – Next steps

A graphic showing timeframes for the next steps.

• 11 October – 22 November 2022
  High-level consultation on what should be in the regulations
• April – May 2023
  Draft version of the regulations published
• September 2023
  Final version of the regulations published
• October 2023
  Societies can start applying to re-register

Audio

Okay, next steps. Got a few dates here, 11th of October to the 22nd of November 2022. So, this is the period, of course, where we're doing our consultation on what should be in the regulations.

And we call that high level because in April and May, we'll be doing a much more detailed consultation. We'll actually publish a draft version of the regulations. Now, that might not be everybody's cup of tea, because it'll be written in a legalistic way. But it'll give you a second bite at the cherry if you don't like where we've landed.

Then, in September 2023 we will be publishing, well, the Minister or the Governor General actually will be making the regulations final. And 28 days later in October 2023, societies can start applying to reregister.  

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Slide 11 – Contact us

• Questions about regulations can be sent to: societies@mbie.govt.nz
• Specific questions for the Registrar of Incorporated Societies can be sent to: engage@societies.govt.nz

Audio

If you've got some specific questions about the regulations, or the proposed regulations in our discussion document, you can send those to societies@mbie.govt.nz. And either Robert or Annie will respond to you promptly. Now, if you have specific questions for the Companies Office, otherwise known as the Registrar of Incorporated Societies, they can be sent to engage@societies.govt.nz. So, that includes anything about education campaigns.  

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Slide 12 – Where to find more information

A image of the ‘Law changes for societies’ section of the Incorporated Societies Register website - https://is-register.companiesoffice.govt.nz/law-changes-for-societies .

Audio

Where can you find some more information? This web page is pretty useful.

I usually find it by typing Companies Office Incorporated Societies into Google, and this is the first result you get. And on that page, you'll see there's a section called ‘Law changes for societies’ and that has lots of useful information put together by the Companies Office team. All about what's going on in terms of the Act. A lot of your questions that you've asked will be answered there. Also talks about the discussion document that's come out just recently.

Derek, has come up with a question - where do we find the discussion document? Well, that's interesting. We emailed out a link to the discussion document to a lot of people. Perhaps, some people haven't been on those distribution lists. I think the best thing to do, Derek, if you want a copy, just email us at societies@mbie.govt.nz and we can send you a link to it. Otherwise, there is a link to the consultation on this page here that the Companies Office has listed law changes for society, so you can go there.