What Are Incorporated Societies in New Zealand?

Incorporated societies are the most common form of non-profit organisations in the Aotearoa New Zealand not-for-profit sector. The category represents groups working in industries such as culture and recreation, education and research, health, social services, environmental services, development and housing, legal and political advocacy, religion, international development, grant making and voluntarism, and business and professional associations and unions¹.

Non-profits with an incorporated society’s structure are membership-based organisations, which means their members have control over the direction of the organisation and are often involved in its operation. To become incorporated, societies must register with New Zealand Companies Register (the Registrar). Incorporation means a society becomes a body corporate, an entity that has its own legal rights and responsibilities, mainly the privilege to enter into contracts and legal agreements. The major benefit to incorporation is that is offers reduced liability to the members of the organisation and protects them against financial losses and legal action.

Incorporated Societies Register

An incorporated society must register under the Incorporated Societies Act to receive its own legal identity, separate from that of its members. Groups or associations that plan to operate long term and for a purpose other than making a profit may consider becoming an incorporate society. This includes cultural and religious groups, social and sports clubs, special interest groups and organisations that conduct activism.

A registered society has the capacity to carry on or undertake any activity, do any act, or enter into any transaction related to its charitable purposes and constitution. It also has the right to:

• Buy, sell, exchange, develop, and mortgage properties.

• Borrow money from financial institutions.-

• Enter into contracts or leases.

• Receive and make charitable gifts.

• Issue negotiable instruments.

• Become members of other societies and associations.

The Incorporated Societies Register is in charge of regulating registered entities through the Incorporated Societies Act 2022. The Act outlines the responsibilities of incorporated societies and the risks associated with governing them.

Incorporated Societies Act 2022 Changes

In 2022, the New Zealand government proposed changes to the Incorporated Societies Act (1908). The NZ Companies Office reports that incorporated societies will now be expected to re-register by April 2026 and penalties will be imposed if the new obligations are not met. There are several changes non-profit organisations must consider as they work to meet these new legal obligations.

The new Incorporated Societies Act 2022 requires organisations with an incorporated society’s legal structure to register a new constitution by 2025. The constitution must be updated to include their current legal name, organisational purposes (objectives), membership procedures, roles, functions, and powers, and election procedures. A registered incorporated society must also outline how it manages the finances of the organisation, deals with changes to its constitution, resolves disputes, conducts general meetings, and re-distributes assets when the society stops operating².

At the time of writing, regulations are still under development and the amended Act will come into force in October 2023. Changes to the Incorporate Societies Act are likely to lead to better accounting standards in the non-profit industry such as preparing financial statements, filing an annual return, and conducting an annual audit. The new rules also define the duties of committee members, which are now similar to those of board directors in companies. Other changes include a lowering of the 15-member minimum to 10, and societies will be required to have at least three committee officers. Amendments to the constitution will no longer need the signature of society members. These new rules should both increase oversight in non-profits and make it easier for smaller organisations to continue to operate.

Incorporated Societies Rules

Incorporated societies rules are regulated by the Incorporated Societies Act and managed by a committee of officers appointed by the members. They must meet several legal obligations. The Registry sets several conditions for becoming an incorporated society and maintaining that legal status. Activities conducted by non-profits with this type of legal structure must not be for the financial gain of the members.

The society must establish a set of rules that align with the Incorporated Societies Act and its activities must fall within the scope of its objects of incorporation. The incorporated society’s rules must make clear the objects (aims) of the organisation, how a person can become or stop being a member, how general meetings are called, how officers are appointed, what voting procedures are in place, and under what circumstances the rules can be amended.

As a registered society, the rules of your organisation will include detailed policies and procedures related to administrative and governance responsibilities. For example, they may describe how meetings are run, decisions are made, agendas are set, quorum is achieved, committee positions are assigned, and meeting minutes are recorded. After incorporation, societies still need to follow other laws that apply to the activities they conduct, such as obtaining a liquor license through local authorities or complying with federal tax laws.

Te Reo Māori

The Incorporated Societies Act 2022 specifically mentions that records and documents can be recorded in te reo Māori, one of three official languages in New Zealand Aotearoa. This includes the society’s constitution, its bylaws, and other documents used to keep records. The Māori language is spoken by many Indigenous people in New Zealand Aotearoa and can be used during committee or board meetings by incorporations.

Resources

For more information on how to dissolve an incorporated society, visit the New Zealand Companies Office webpage.

If you’re still deciding on which legal structure to adopt, view the a Table of Legal Structures.

To find out more about how to register your non-profit, visit the Incorporated Societies Register.

References