Consultation sought on draft Incorporated Societies Regulations

  • Legal update

    13 July 2023

Consultation sought on draft Incorporated Societies Regulations  Desktop Image Consultation sought on draft Incorporated Societies Regulations  Mobile Image

The new Incorporated Societies Act 2022 (2022 Act) was passed in April 2022. The 2022 Act will be fully in force on 5 October 2023 and replaces the existing Incorporated Societies Act 1908 (1908 Act). Existing societies registered under the 1908 Act will have two and a half years (until April 2026) to re-register under the 2022 Act.

A number of the more administrative and procedural matters contemplated by the 2022 Act have been left to be prescribed by regulation. The Ministry of Business Innovation and Employment (MBIE) has been tasked with determining these regulations and, after public consultation on content late last year, has now released a draft set of regulations (Regulations).

MBIE is seeking feedback on the Regulations. The timeline is tight, with written submissions required to be submitted by 5pm, 24 July 2023.

Who do the Regulations affect?

The Regulations are relevant to all existing societies who wish to maintain registration by re-registering under the 2022 Act and any societies who propose to seek incorporation in the future.

What do the Regulations do?

The Regulations set out the administrative and procedural requirements to enable the effective functioning of the 2022 Act. They largely cover matters that the Registrar of Incorporated Societies requires to effectively administer and enforce requirements under the 2022 Act. Matters covered by the Regulations include:

  • Additional information required to be provided on an application for registration, changes in society details, annual returns, amalgamation and liquidation.
  • The exclusion of certain persons from being “Officers”, namely liquidators, receivers and statutory managers.
  • Additional information required to be contained in a society’s register of members.
  • The definition for “total current assets” (used in the 2022 Act to determine whether a society is a “small society” and therefore where a lower standard of financial reporting is required).
  • The threshold for a society being required to have its financial statements independently audited ($3 million total operating expenditure for the two preceding financial years).
  • Infringement fees.
  • Transitional matters – most notable being a five year period for societies who will not meet the requirement for officers to comprise of a majority of members.
Our thoughts

The Regulations are the final step in the implementation of the 2022 Act and hopefully answer some practical questions for societies, such as:

  • what information needs to be provided to seek re-registration;
  • whether a society will be required to have its financial statements audited; and
  • what is required if a society doesn’t meet the requirement to have a majority of its officers comprised of members.

A number of the Regulations fill in administrative or procedural gaps in the 1908 Act and many societies’ rules. The use of regulations to determine certain matters also allows some flexibility to the regulator to update these as societies and their environment change over time, for example, thresholds relating to financial reporting.

What next?

Submissions on the Regulations close 5pm, 24 July 2023. 

We welcome any requests to assist societies with making submissions on the Regulations or for assistance with complying with, and seeking re-registration under, the 2022 Act.

With regard to re-registration, there is a two and a half year re-registration period commencing 5 October 2023. This should give societies ample time to update their rules (now referred to as a constitution in the 2022 Act) and seek re-registration. However, we encourage societies to get started on a review of their rules now to allow sufficient time to achieve approval of the proposed amendments, particularly where this must be done at an annual general meeting.

Importantly, we note that failure to re-register will result in a society ceasing to be exist.