Key changes

The key changes the new Act will bring

The Incorporated Societies Act 2022 (the new Act) was passed on 5 April 2022 but your society doesn’t need to do anything just yet. There is a transition period of several years that gives you time to become familiar with, and prepare for, the new regime. Until your society reregisters under the new Act, sometime from October 2023, it continues to operate under the Incorporated Societies Act 1908 (the existing Act).

Below is a summary of the key changes you should know about.

On this page:

Comparisons between 1908 Act and 2022 Act

Topic 1908 Act 2022 Act
Minimum number of members 15 10
Internal disputes No requirement to have internal dispute resolution procedures A society must have adequate dispute resolution procedures, and these must be specified in its constitution
Committee requirement Committee not required Must have a committee of at least 3 members
Independent members of committee N/A Unless regulations1 prescribe otherwise, majority of committee must be society members
Concept of an officer Not explicitly defined Includes all committee members, as well as others, for example, treasurer, CEO
Officers’ duties Duties are not clearly articulated Six broadly expressed duties modelled on directors’ duties in the Companies Act 1993 to:
  1. Act in good faith and in the best interests of the society
  2. Exercise powers for proper purposes only
  3. Comply with the Act and the constitution
  4. Exercise reasonable care and diligence
  5. Not create a substantial risk of serious loss to creditors
  6. Not incur an obligation the officer doesn’t reasonably believe the society can perform
Annual General Meeting (AGM) No guidance Must be held within 6 months of the society’s financial year end
Financial statements filed with Registrar Must be filed annually Must be filed within 6 months of the society’s financial year end
Annual return No requirement to file an annual return Must be filed annually as outlined in section 109
Manner of preparing financial statements A society is not required to apply XRB accounting standards, unless it’s also a registered charity  Only a 'small society' not registered as a charity is exempt from using XRB accounting standards 
Distribution of surplus assets2 after winding up Surplus assets can be given to any party  Surplus assets must be given to a not-for-profit organisation
Amalgamations No legislative framework for amalgamations of 2 or more societies Amalgamations can take place as outlined in the Companies Act 1993, but follow a more simplified process
Criminal offences Generic offences set out in the Crimes Act 1961 Six offences that target egregious conduct including:
  1. Making false statements
  2. Fraudulent use or destruction of property
  3. Falsification of documents
  4. Defrauding of creditors
  5. Improper use of ‘incorporated’ or its Te Reo version ‘manatōpu’
  6. Breaching of a banning order
Review of draft constitutions (rules documents) The regulations permit the Registrar of Incorporated Societies to review any proposed rules or alteration of rules where such rules or alterations have not yet been enacted by a society. This regulation has not been included in the regulations that are proposed to go with the 2022 Act.
Constitution (rule) amendments Every amendment approved by society members must be signed by at least 3 members (but note that amendments approved with a view to reregistering the society need only be signed by 2 members). Amendments approved by society members will no longer need to be signed by any members.

Comparison notes

  1. Consultation on the proposed regulations closed on 22 November 2022 and MBIE is now considering the feedback received. From there, draft regulations will be prepared.
  2. Surplus assets are all assets remaining after the society’s outstanding debts are paid.

Members’ consent

Members will need to give consent to become a member of a society under the new Act. For example, you can’t specify in your constitution that, say, everybody who lives within your suburb is deemed to be a member of your society.

Don’t panic too much about the requirement for consent – for example, filling in an application form will generally be considered to amount to consent. And there is no financial penalty for failing to obtain someone’s consent – the only consequence is that you won’t be able to enforce the society’s rules against them or count them as members when you for example, describe your society in a grant application.

How a society obtains, and records consent is a matter for the society to decide on. Some may want a formal process to obtain and record consents, while others may find it’s enough for members to simply complete the membership application form or pay annual dues.

Existing members (those who joined before a society reregisters under the new Act) will not be required to confirm their consent.

A society is already required to keep a register of its members. The register must contain a member’s name, last known contact details, and the date their membership started. This requirement remains in the new Act; and a society should be able to identify its members before it reregisters.

See some examples of what may or may not constitute consent

Example 1: Consent on behalf of a family

If a person claims to represent a family, and you have no reason to doubt them (for example, they have not indicated that their family members do not want to join the society), then you can rely on that person’s declaration that the family consents to joining a society.

Example 2: Organisations as members

Under the new Act, a society is not required to obtain consent from the affiliated or associate members of a particular organisation.

Example 3: Paying fees could indicate consent

An annual fee or subscription are not required to indicate consent to joining a society. What constitutes consent depends on what a particular society considers acceptable. It may be sufficient to simply complete a membership application form.

There may be some people who are considered members if they pay fees. Others, however, may not because they are life members. Someone is deemed to have consented to membership if their behaviour indicates that consent. For example, if a person attends annual general meetings, they are likely to be considered a member of the society. You can provide consent forms if you want, but it is not required.

Example 4: Making donations doesn't necessarily indicate consent

A society for the preservation of fax machines has a constitution that states that anyone who donates is considered a member of the society. Mr X donates to the society, but it is not made clear to him that doing so would make him a member of the society. Mr A cannot be considered a member of the society because the rule requiring consent was not followed.

Example 5: Interest in joining doesn't necessarily indicate consent

Ms B emails a society for the abolition of social media, asking how she can join. The society does not respond, but simply adds her name to the membership list, and Ms Y soon begins receiving society emails and membership fee demands. It is unlikely that Ms Y’s email enquiry would be sufficient to indicate her consent to joining, and so Ms Y cannot be considered a member of the society. As a result, she is not required to pay the membership fees.

Example 6: Application to join to indicate consent

On the website of an Oxford comma society, there is a 'Join our society' section where the terms of membership (for example, fees) are clearly stated. Mr C goes to the society's website and fills out the 'Join our society' section. Mr C has clearly indicated his willingness to join the society and can therefore be considered a member.

Committee and officers

  • Each society will need to have a governing body (for example, a committee) — it won’t be enough just to have officers.
  • Committees will need to have at least 3 members. As a general rule, the majority of the committee members must be members of the society or representatives of a body corporate that is a member of the society.
    • For example, Y Soccer Club is an incorporated society whose members are all individuals and whose committee has 5 positions. 3 of the people on that committee are members of Y Soccer Club, and 2 are not. The composition of the committee meets the requirement that a majority of committee members must be members of the society.
    • As another example, the Z National Federation is an incorporated society whose members are all incorporated societies. The committee of the Z National Federation has 5 positions. 4 member societies each have one representative on the committee, and the 5th position on the committee is filled by a lawyer who is not a member of the Federation. The composition of the committee meets the requirement that a majority of committee members must be members of the society.
  • The new law sets out who qualifies to be an officer of a society.
    • A person must consent in writing and certify that they are not disqualified.
    • They must be 16 years of age or older.
    • A person cannot be:
      • an undischarged bankrupt
      • prohibited from being a director or promoter of a company
      • disqualified from being an officer of a charitable entity
      • convicted and sentenced for certain offending within the last 7 years (for example, a crime involving dishonesty)
      • subject to particular orders (for example, a banning order)
      • unable to comply with any qualifications for officers contained in the society’s constitution.
  • The officers will also have defined duties similar to those of company directors including, such things as acting in good faith and in the best interests of the society or club. These duties have always existed – they have been set out clearly in legislation for the first time.

Contact person for the society

Each society will be required to have at least one contact person whom the Registrar of Incorporated Societies can contact when necessary. The contact person won't need to be an officer of the society.

New financial reporting standards

The new law will introduce changes for how some societies prepare their financial statements. New thresholds will determine which societies will also need to have their financial statements audited.

From October 2023, once a society reregisters, it will have to start using External Reporting Board (XRB) accounting standards in its financial statements, unless it qualifies as a ‘small society’.

Read more on the new financial reporting requirements

New requirement to file an annual return

Under the new Act, if your society is not a registered charity it will have to file annual returns with the Registrar of Incorporated Societies. If your society is a registered charity you will continue to file your annual returns with Charities Services. The annual return will help to confirm that your society is still operating. If you don't file your annual return, the Registrar could remove your society from the Incorporated Societies Register.

Regulations that are being developed now will determine a number of finer details about annual returns. The regulations will determine such matters as:

  • When you'll need to file your annual return.
  • What information you'll need to provide in each annual return, such as:
    • addresses and contact details
    • details of officers
    • membership numbers
  • How much the filing fee will be.
  • How much the fine could be if you don't file an annual return.

Documented dispute resolution procedures

All societies will need to have procedures for resolving disputes and other grievances between members as well as between members and the society.

A dispute can result from:

  • a claim of misbehaviour, or
  • member’s rights or interests having been disregarded, or
  • breaching a duty under your society’s constitution, bylaws or the Incorporated Societies Act 2022 (this could be breaches by members, officers, or the society).

These procedures must then be set out in their constitutions (rules).

Schedule 2 of the new Act contains a set of dispute resolution procedures societies may choose to adopt. If your society includes these procedures in your rules, they will be guaranteed to comply with the new Act.

Schedule 2, Incorporated Societies Act 2022 New Zealand Legislation website

The Government Centre for Dispute Resolution - a part of the Ministry of Business, Innovation and Employment - provides additional guidance on what good dispute resolution looks like that some societies may find useful:

Guidance on dispute resolution clauses Ministry of Business, Innovation and Employment

Documented recipient for surplus assets

When a society is wound up, after all debts have been settled, there can be assets that remain. For example, there might be money in the society’s account or land or buildings in its name. These are known as ‘surplus assets’.

Under the new Act, surplus assets must be given to one or more not-for-profit organisations. In your constitution (rules) your society must specify either:

  • a specific not-for-profit organisation
    For example, The ABC Scottish Dancing Society Incorporated, or
  • a class of not-for-profit organisations
    For example, not-for-profit organisations which are tennis clubs, or
  • a description of not-for-profit organisations
    For example, not-for-profit organisations which care for animals.

Societies will need to reregister

Your society will have some time to transition and complete your reregistration. The reregistration period will run for 2½ years — from October 2023 to April 2026.

The reregistration process will involve reregistering on the Incorporated Societies Register and providing us with an up-to-date constitution (rules document). Until then, your society will continue to operate under the existing legislation (Incorporated Societies Act 1908).

The regulations being developed now will provide more information about what societies will need to do to reregister. Consultation on the proposed regulations closed on 22 November 2022 and MBIE is now considering the feedback received. From there, draft regulations will be prepared.

Before the start of the reregistration period, we will provide your society with detailed information on what's involved in reregistering.

Some of the things you can't do until your society reregisters

Your society won't be able to:

  • reduce its membership to 10 (there have to be at least 15 members, for now)
  • stop using its common seal
  • take appeals against decisions by the Registrar to the District Court (you’ll have to take them to the High Court, for now).

Some of the things you can't do once your society has reregistered

Once your society has reregistered, it won't be able to:

  • ignore complaints from members (you will have to run a dispute resolution process that meets minimum natural justice standards)
  • appoint as an officer a member who:
    • is an undischarged bankrupt
    • has been prohibited from being a company director or
    • has been convicted of certain offences.
  • present its financial statements to its members later than 6 months after the end of your financial year
  • after winding up, divide any surplus assets between the members (you will have to give them to a not-for-profit entity named in your rules).

How you can stay up to date

We will update the information here on our website throughout the transition period. You can also choose to receive updates from us directly to your inbox. Alternatively, you can follow us on Facebook.

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If you have any questions or comments about these law changes, you can email us at engage@societies.govt.nz.

Published 18 May 2022, last updated 19 January 2023