What your NZ society needs to know about the Incorporated Societies Act 2022
The Incorporated Societies Act 2022 represents the biggest overhaul of NZ society regulations in over a century. This comprehensive update is replacing legislation from 1908, introducing fundamental changes to how societies operate, from governance structures to financial reporting requirements. Let’s explore the key changes introduced by the Act and their potential impact on your society, as well as the implications of failing to reregister before the April 2026 deadline.
Key changes introduced by the Act
Governance and management requirements for NZ societies
One of the major changes under the Incorporated Societies Act 2022 is the emphasis on stronger governance practices. The Act requires societies to have a clear governance structure, including defined roles and responsibilities for committee members. This aims to ensure that your society is managed effectively and transparently.
New constitutional requirements for incorporated societies
The Act introduces mandatory elements that must be included in the constitutions of incorporated societies. These elements include your society’s purpose, membership criteria, dispute resolution processes, and procedures for general meetings and decision-making. This change aims to provide greater clarity and consistency in how your society operates.
Financial reporting for incorporated societies
Enhanced financial reporting requirements are another significant feature of the new Act. Your society must prepare annual financial statements that comply with generally accepted accounting practices (GAAP), and these statements must be audited if your society meets certain thresholds. This requirement is intended to improve transparency and accountability in the financial management of your society.
Dispute resolution procedures for society members
The Act requires societies to have a clear process for resolving disputes among members. This includes provisions for mediation and arbitration, ensuring that conflicts can be managed in a fair and orderly manner. This change is expected to reduce the potential for prolonged and damaging disputes within your society.
Officer duties and liabilities under the 2022 Act
Under the new Act, officers of incorporated societies have defined duties similar to those of company directors. These duties include acting in good faith and in the best interests of the society, exercising reasonable care and avoiding conflicts of interest. The Act also outlines the liabilities of officers, providing greater protection for your society’s members and assets.
Membership rights and obligations for incorporated societies
The Act specifies the rights and obligations of members, including the right to access certain information about the society and the obligation to comply with the society’s rules. These provisions aim to enhance member engagement and ensure that all members are aware of their responsibilities.
Potential impact on incorporated societies in New Zealand
Improved governance and accountability
The emphasis on governance and accountability is likely to lead to more professional and transparent management of your society. By clearly defining the roles and responsibilities of officers and requiring regular financial reporting, the Act aims to foster a culture of accountability within incorporated societies across New Zealand.
Enhanced transparency and member engagement
The new constitutional requirements and provisions for member rights and obligations are expected to improve transparency and member engagement. Your society will be required to operate more openly, with members having greater access to information and a clearer understanding of how the society is managed.
Streamlined dispute resolution for NZ societies
The introduction of mandatory dispute resolution processes is likely to lead to more efficient and amicable resolution of conflicts within your society. This change has the potential to reduce the time and resources spent on disputes, allowing your society to focus more on achieving its objectives.
Increased compliance costs for incorporated societies
While the new Act brings many benefits, it also introduces additional compliance requirements. Your society may face increased costs associated with auditing financial statements, updating constitutions and implementing dispute resolution processes. Smaller societies, in particular, may need to invest significant resources to comply with the new legislation.
Opportunities for professional development
The Act presents an opportunity for your society to invest in professional development for its officers and members. By improving their understanding of governance, financial management and dispute resolution, your society can enhance its effectiveness and sustainability.
Deadline for reregistration under the Incorporated Societies Act 2022
The new Act requires all existing incorporated societies to reregister under the new legislation. To comply with this mandate, your society must complete its reregistration by 5 April 2026.
Your society should begin the reregistration process well in advance of the deadline to ensure that all necessary updates to its constitution, financial statements and dispute resolution processes are completed in a timely manner. You should also consider seeking professional advice and support to navigate the compliance requirements effectively.
IGS offers a cost-effective fixed fee service to review your constitutional documents, including proposing any changes necessary to assist with compliance with the Act, as well as other governance support for incorporated societies in New Zealand. Find out more
