Law Commission releases report on review of the Incorporated Societies Act 1908

The Law Commission has published its final report on the review of the Incorporated Societies Act 1908. The report, A New Act for Incorporated Societies (R129, 2013), recommends that Parliament enact a modern statute for incorporated societies to replace the current statute, which is more than 100 years old.

The Incorporated Societies Act 1908 has played a critical role in community life by enabling organisations to incorporate. There are over 23,000 incorporated societies, covering a huge range of purposes, and these societies play a vital role in the social fabric and economic success of New Zealand. Because of that, it is important that societies are supported by clear, modern legislation that assists them and their members to attain their goals.

Modern incorporated societies can be complex, often have substantial assets and may run significant businesses. Societies need to know what the minimum standards are for running and governing societies. Committee members need to know what they can, must and must not do. They need to know whether they may have a conflict of interest – and what to do if they do. Members need to know what information they can expect from their committee, and what happens if they are involved in a dispute with the society or another member. None of these topics are covered in the current Act.

To meet these gaps the Commission is recommending that a new Act should provide needed guidance to societies and members by:

  • setting out a set of basic duties for committee members and any other officers of societies. For example, they will be expected to act in good faith, in the best interests of the society and to only use powers for a proper purpose;
  • providing a procedure for dealing with financial conflicts of interest, so that a committee member must, as soon as is practical, disclose any financial interest they have in a matter under consideration or affecting the society, and step aside from decisions on that matter;
  • requiring every society to include disputes procedures in their constitution. Societies can develop their own procedures, so long as they satisfy the minimum standards for natural justice, which will be defined in the new Act;
  • providing for a model constitution in regulations made under the Act, which a society may adopt instead of drafting its own constitution.

The Government will now consider the recommendations in the Law Commission’s Report, and will respond to them in due course.