New rules for incorporated societies?

The Law Commission is seeking the public’s views on the legal structure and rules which govern the many thousands of community organisations in this country.

Currently much of the not-for-profit sector in New Zealand is governed by the century old Incorporated Societies Act 1908 – an Act which the Law Commission argues is in need of major reform.

Commissioner Geoff McLay said incorporated societies comprised a very diverse and important sector of society and it was critical the legal framework under which they operated offered the right balance of autonomy, flexibility and accountability.

“This is a law that affects tens of thousands of New Zealanders who belong to the 23,052 incorporated societies currently registered in New Zealand.

“Organisations as diverse as the New Zealand Rugby Union, swimming and ski clubs to stamp collecting societies are operating under this 1908 Act.”

Professor McLay said preliminary consultation and research suggested there were a number of problems with the old Act including the lack of adequate processes for dealing with conflicts of interests and resolving internal disputes.

“Getting basic governance structures right, understanding what is appropriate conduct for those who govern societies, and providing for suitable mechanisms for resolving disputes is critical for all organisations, especially those which seek government or other sponsorship.

“The 1908 Act, in our view, does not require societies to ask the appropriate questions when they are being set up. Nor does it provide incentives for already existing societies to improve.”

The Commission is seeking feedback on a range of issues and options for reform raised in the paper including:

* Whether all societies should, as a condition of incorporation, be subject to certain minimum governance rules that they cannot vary;

* Whether a new Act ought to provide a code that makes the obligations of committee members clearer;

* How the Act should provide for the resolution of disputes between members and their societies;

* What rules societies ought to be required to have in their constitution, and the nature of those rules.The Commission also considers whether a new Incorporated Societies Act should also replace the ability to incorporate under the Charitable Trusts Act.

Incorporated Societies Issues Paper (pdf)

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