As most people involved with incorporated societies will be aware, the new Incorporated Societies Act 2022 (Act) came into force on 6 April 2022 and with it has come many significant changes to the way incorporated societies operate. The Act itself is designed to maintain the principles of the Incorporated Societies Act 1908 while also providing further clarity to the operation of incorporated societies.
Along with the changes that the Act brings into force the Act provides for a number of extra regulations that have not yet been released. These regulations should be finalised and released in September of this year and we recommend that any incorporated society waits for these regulations to be released before getting too far ahead of themselves.
The most important thing to understand going forward is that incorporated societies will have to re-register their society under the new Act. There is plenty of opportunity to do this as the registration period for the new Act gives societies a two and a half year window from 5 October 2023 to 5 April 2026 to register. If a society does not re-register under the new Act they will no longer be incorporated and any person operating under a title with the words “Incorporated”, “Inc” or “Manatōpū” at the end of it, while not registered under the Act or the previous Act will earn themselves a hefty fine of up to $10,000.00. Of course the benefits of re-registering your society early are that your society has much clearer mechanisms under the Act to operate, however, the downside is that your society will be subject to the new financial reporting provisions from registration which may affect how your society’s annual financial reports are prepared.
Each society is going to need to review their constitution to ensure that it complies with the new Act and the changes brought about by the new Act. Once registered under the new Act societies will need to maintain appropriate accounting records for seven years. Annual returns will need to be filed within 6 months of the balance date and an annual general meeting will need to take place within 6 months of the balance date as well. Some larger societies will need to be audited, but we are not yet sure what the thresholds for audit are going to be. We are waiting on the above mentioned regulations to be released to provide clarity on this.
Incorporated societies are looking at some big changes coming their way. We recommend that incorporated societies start turning their minds to the fact that they will need to make a number of changes and undergo a number of reviews relating to how they operate day to day and how their governing documents line up with the new Act. However, thanks to the two and a half year timeframe for registration there is still plenty of time to allow your society members to up skill their knowledge on the new Act before making too many big decisions. When the new regulations are released some societies will seriously need to consider whether an incorporated society is the right ‘vehicle’ for achieving the society’s goals. Of course, we are here to help and recommend that your society gets appropriate legal advice to ensure it is in the best position to deal with the new changes brought about by the new Act.