There are more than 24,000 Incorporated Societies in New Zealand and the law that governs them is changing. If you are the secretary of the local rugby club, you’re actually an officer of an Incorporated Society.

The previous law had been in place since 1908 and was well overdue for an upgrade. The new law, which was passed into law this year, and whose requirements will be phased in over the coming years makes a number of important changes that all societies will need to be aware of. We outline some of the key ones to look out for below:

1. A committee – a society now needs a group of officers to manage its affairs. Those officers will be responsible for the operation and affairs of the society. The officers will all have to be members.
2. Officers– Officers (like a secretary or a treasurer) will have had to consent in writing to becoming an officer and will need to certify that they don’t meet certain criteria that would disqualify them from holding that role.
3. Constitution – all societies, in order to register under the Act will be required to have a constitution that complies with the requirements set out in the Act.
4. Officers duties – Perhaps the biggest change the new law brings is the duties imposed upon officers. Those duties, defined by the Act include:

• • Acting in good faith and in the best interests of the society
  • Exercising their powers for a proper purpose
  • Complying with the Act and the constitution
  • Acting with due care
  • Not creating substantial risk of serious loss to creditors; and
  • Not agreeing to the society incurring obligations that it cannot perform

The duties above are similar to the duties of company directors. Obviously, most officer roles in an incorporated society are volunteer roles while company directors get paid. Any individual taking on the role of an officer should be clear on the obligations imposed upon them.

There are still a number of requirements included in the Act which require further clarification through regulation. These include the size of society that will be required to have their accounts independently audited.

If you have any questions or concerns, please do not hesitate to contact one of the team at Sharp Tudhope.