The rewrite of the Incorporated Societies Act has introduced a range of new considerations that officers of incorporated societies across New Zealand must be aware of. With the transition to a more regulated environment, many are now re-evaluating whether the benefits of being an incorporated society outweigh the compliance requirements.
For those who decide to remain within the incorporated society framework, it's critical to understand the updated regulations to ensure compliance and retain your society's status as an incorporated society.
The key obligation for incorporated societies registered before October 5, 2023, is to reregister with the registrar of incorporated societies by April 5, 2026. This is a deadline set two and a half years after the new law comes into effect, and failure to meet it will result in your society losing its incorporated status.
Until the society reregisters, it will continue to operate under the Incorporated Societies Act 1908. That is, the situation remains unchanged until April 5, 2026.
Before submitting a reregistration application, a society must adopt a new constitution that is compliant with the Incorporated Societies Act 2022 and put together some processes to comply with the 2022 Act, including:
Governing committee: The society must have a governing committee with a minimum of three members. These members will be considered officers of the society, akin to company directors, and will be required to carry out duties set out in the Incorporated Societies Act, such as acting in good faith and in the best interests of the society.
Dispute resolution procedures: The new constitution must outline appropriate dispute resolution procedures to manage any internal disagreements.
Committee responsibilities: The committee is responsible for managing the affairs of the society, including financial management and ensuring compliance with regulatory requirements.
Minimum membership: The society must have at least 10 members to remain an incorporated society.
Contact information: The society must have at least one contact person’s details readily available.
Annual general meeting (AGM): The society must hold an AGM to ensure transparency and accountability to its members.
Annual return filing: The society must file an annual return with the registrar, updating key details, such as committee members and financials.
Financial reporting standards: Unless exempted as a “small society,” the society must comply with financial reporting standards. A small society is defined as one that:
Has less than $50,000 in operating expenses over the past two years,
Holds less than $50,000 in assets over the past two years, and
Is not a registered charity or donee organisation.
In true Kiwi fashion, we may be accustomed to taking a more relaxed approach to regulatory deadlines. However, in this case, the regulator is quite serious, and failure to reregister by April 5, 2026 will have significant implications for your society:
Loss of incorporated status: The society will become an unincorporated society, exposing its members to personal liability for the society’s debts or obligations.
Loss of name protection: The society will no longer be entitled to the exclusive use of its name, meaning another society could register under the same name.
Loss of decision-making power: The officers responsible for the society’s affairs may lose formal decision-making power over its assets and income.
Inability to enter contracts: As an unincorporated entity, the society will no longer be able to enter into formal contracts.
If a society decides not to reregister but keeps on operating, IRD advise that a new IRD number must be obtained. Historically, when societies were struck off the register, they could often re-register if desired. However, under the new law, it is explicit that an existing society that fails to reregister ceases to exist from 5 April 2026. Thus, to continue as an unincorporated society a new IRD profile will be required. Furthermore, if the society is registered for GST or as an employer, those obligations will need to be transferred to the new IRD number to avoid any compliance issues.
As an officer of an incorporated society, it’s vital to understand the changes outlined in the Incorporated Societies Act 2022 and act now, as you have a 12-month window to prepare. This time will allow for the adoption of a new or amended constitution and the implementation of any necessary internal processes.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex.
This document contains general information and does not constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.
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25 March 2025
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