The Incorporated Societies Act 2022 (ISA 2022) modernises and restates New Zealand’s incorporated societies law, and will eventually fully repeal and replace the Incorporated Societies Act 1908 (ISA 1908).  

The ISA 2022 was enacted on 5 April 2022. However, ISA 2022 regulations which deal with important details of the new regime were only issued in September 2023 and incorporated society registrations under the ISA 2022 (including the first re-registrations of existing incorporated societies) only commenced from 5 October 2023. 

All of New Zealand’s estimated 23,000 existing incorporated societies need to consider their response to the new legislation. To continue as an incorporated society under the ISA 2022 beyond 5 April 2026, ISA 2022 compliance and re-registration will be required by that date.

All new incorporated societies now need to be incorporated under the ISA 2022, not the ISA 1908.

Further ISA 2022 details are available in our articles regarding transitioning to the new legislation and incorporated society constitutions under the ISA 2022.

ISA 2022 much more extensive than the ISA 1908

The modernised and restated law of incorporated societies set out in the 270 sections and the schedules of the ISA 2022 is much more extensive than the current 50 or so sections of the ISA 1908 and amendment legislation treated as part of the ISA 1908. 

The ISA 2022 provisions include a number of significant changes compared with the ISA 1908, and existing incorporated societies considering re-registration under the ISA 2022 and group’s considering incorporation under the ISA 2022 need to be aware of these changes. 

What follows is a brief, high level overview of key provisions of the ISA 2022, highlighting how they differ from the provisions of the ISA 1908. 

Importantly, the ISA 2022 provisions only apply to societies registered or re-registered under the new legislation. They do not apply to an existing incorporated society registered under the ISA 1908 unless and until the society is re-registered.    

Key provisions of the ISA 2022

1.    Incorporation of societies for any lawful purpose but not the financial gain of members

The ISA 2022 maintains the position that the incorporated society structure is available for societies that are carried on for any lawful purpose, but not the financial gain of any of their members. 

The ISA 2022 includes more extensive provisions than the ISA 1908 clarifying and tightening the ‘no financial gain’ requirement, and the provisions preclude the distribution of a society’s property to its members upon winding up (whereas this may be permitted under the ISA 1908, subject to a society’s constitution). 

The latter change may be an important consideration for some existing societies, eg property co-ownership societies with constitutions that currently contemplate the distribution of property to members upon winding up, which is not permitted under the ISA 2022. 

2.    Recognition of the private, self-governing nature of societies

The provisions of the ISA 2022 regarding the purpose of the new legislation expressly recognise, amongst other things, the important principles that:

  • societies are organisations with members who have the primary responsibly for holding the society to account; and
  • societies are private bodies that should be self-governing in accordance with their constitutions, any bylaws, and their own tikanga, kawa, culture and practice, and should be free from inappropriate Government interference. 

The provisions of the ISA 2022 should be interpreted and applied accordingly. 

3.    Minimum membership of 10 must be maintained

The ISA 2022 requires an incorporated society to have and maintain a membership of at least 10 (whereas the ISA 1908 only requires a membership of at least 15 upon incorporation, with no express requirement to maintain that level of membership). 

For the purpose of the membership count, any body corporate member (eg, a company, incorporated society, incorporated trust board, or statutory body corporate) counts as three members.

Other important membership-related provisions under the ISA 2022 and related regulations include an express requirement for all members to consent to membership, prescriptive membership register requirements, provisions relating to members’ access to society information, and provisions relating to members’ meetings and resolutions.

4.    Societies’ capacity/powers and validity of actions clarified

The ISA 2022 confers on incorporated societies a power of general competence. That is, subject to the ISA 2022, any other law, and any restrictions on a society’s capacity under its constitution (eg, relating to its purpose or purposes or, if applicable, its charitable or tax-exempt status), an incorporated society has:

  • full capacity to carry on or undertake any activity, do any act or enter into any transaction; and 
  • full rights, powers and privileges for that purpose. 

The ISA 2022 also includes provisions regarding the validity of a society’s actions outside of its capacity/powers and qualified protection of third parties in relation to their dealings with societies. 

In contrast, the ISA 1908 does not include such provisions, with the scope of a society’s powers being dependent upon its constitution, and this can lead to issues regarding the permissibility and validity of a society’s actions and the position of third parties. 

5.    Constitutions must meet detailed mandatory content requirements

The mandatory content requirements for incorporated societies’ constitutions under the ISA 2022 are much more prescriptive and detailed than the requirements under the ISA 1908.

The ISA 2022 mandatory content requirements are set out in our article regarding incorporated society constitutions under the ISA 2022. It is critical that a society’s constitution meets the requirements of the new legislation, as the constitution will be checked by the Registrar and rejected if it is non-compliant.  

The ISA 2022 also includes provisions:

  • clarifying that a constitution must not purport to give members any rights or interests in a society’s property;
  • recognising that a constitution may provide for matters such as bylaws and expression of a society’s tikanga, kawa, culture or practice; and 
  • clarifying that a constitution is overridden by the ISA 2022 and any other enactment but is otherwise binding, in accordance with its terms, for the society, its members and its officers. 

Subject to meeting mandatory content requirements, the provisions of the ISA 2022 relating to the amendment of constitutions are also more flexible, eg in relation to permitting minor/technical amendments. 

6.    Governing body (committee) of three or more individuals required

Under the ISA 2022, incorporated societies must have a governing body comprising three or more individuals. The ISA 2022 refers to this governing body as a “committee”, but it might be referred to by some other name in a society’s constitution (eg, a “board”, “council” or “executive”). 

The operation and affairs of a society must be managed by or under the direction or supervision of the society’s committee and the committee has all necessary powers for that purpose, subject to any modifications, exceptions or limitations under the ISA 2022 or the society’s constitution. 

Importantly, the ISA 2022 also requires that, unless the ISA 2022 regulations permit otherwise, a majority of a society’s committee must be members of the society and/or representatives of body corporate members of the society, ie all or a majority of the committee cannot be ‘independent’ of the membership (even if such independent committee members are elected or appointed by the membership). 

The relevant regulations currently include a limited 5-year transitional exemption from that requirement, to allow time for the merits of a permanent exemption to be considered (eg, for any larger, more sophisticated society whose membership has approved all or a majority of the society’s committee being skills-based, independent appointees). 

The exemption can only be used, however, if a society’s constitution expressly provides for all or a majority of the committee to be ‘independent’ of the membership. 

7.    All ‘officers’ must not be disqualified and must comply with prescribed duties

The ISA 1908 says very little about the officers of an incorporated society, whereas the ISA 2022 includes detailed provisions, including disqualification criteria, duties and other provisions, which will apply to all ‘officers’ of an incorporated society. 

Importantly, the ‘officer’ definition in the ISA 2022 currently covers not just a society’s committee members but also any other person occupying a position in the society that allows them to exercise significant influence over the management or administration of the society. Two examples given in the ISA 2022 are a chief executive or treasurer. 

The officer disqualification criteria under the ISA 2022 are broadly similar to Charities Act 2005 (Charities Act) ‘officer’ disqualification criteria and Companies Act 1993 (Companies Act) ‘director’ disqualification criteria. 

The prescribed duties for officers under the ISA 2022 are largely adapted from Companies Act ‘director’ duties. In short, an officer’s prescribed duties under the ISA 2022, all of which are owed to the society, are: 

  • to act in good faith and in what the officer believes to be the best interests of the society;
  • to exercise any power as an officer for a proper purpose;
  • not to act, or agree to the society acting, in contravention of either the ISA 2022 or the society’s constitution;
  • to exercise reasonable care and diligence when exercising powers or performing duties as an officer;
  • not to permit, cause or allow the society’s activities to be carried on in a manner likely to create a substantial risk of serious loss to the society’s creditors; and
  • not to agree to the society incurring any obligation unless the officer reasonably believes the society will be able to perform the obligation. 

Further officer-related provisions in the ISA 2022 deal with reasonable reliance upon external information and advice, conflict of interest disclosures and consequences, and restrictions relating to officer indemnification and insurance.

8.    General meetings to ensure societies/committees can be held to account

The ISA 2022 recognises the importance of general meetings, and especially annual general meetings (AGMs), for ensuring that societies’ members are able to hold societies to account, and prescribes minimum requirements that must be met in relation to such meetings. 

In particular, the ISA 2022 requires AGMs to be held within 6 months of a society's balance date and no more than 15 months apart, and each AGM’s business must include presentation of an annual report on the society’s operations and affairs, the society’s financial statements, and prescribed conflict disclosures. 

Importantly, the ISA 2022 also provides that only unions and any other societies prescribed by regulations may provide for AGMs to be attended by delegates or other representatives of members. The requirement for all other societies is that all members must have the right to attend AGMs. 

The relevant regulations currently include a limited 5-year transitional exemption from the latter requirement, but only for existing societies whose pre-5 October 2023 constitutions restricted attendance at AGMs to delegates or other representatives of members. 

9.    Tiered financial reporting and assurance requirements

The ISA 1908 requires societies (other than charitable societies registered under the Charities Act) to file their annual financial statements, but without prescribing any reporting standards or assurance (review or audit) requirements. 

In contrast, the ISA 2022 introduces tiered (size-based) reporting and assurance requirements. The requirements do not apply to a society if it is already subject to such requirements under the Charities Act or the Financial Markets Conduct Act 2013. 

The ISA 2022 imposes minimal requirements on small societies, and such societies can prepare their financial statements on a cash accounting basis. Small societies are societies with total annual operating payments less than $50,000 and total current assets less than $50,000, provided that the society does not also qualify as a ‘donee organisation’ for donation tax incentive purposes. 

Other societies are generally required to prepare their annual financial statements in accordance with generally accepted accounting practice, and larger societies (total annual operating expenditure of $3 million or more for the society and any controlled entities) are required to have their financial statements audited. 

10.    At least one ‘contact person’ required for all societies

For contact and administration purposes, the ISA 2022 requires all incorporated societies to have at least one and up to three individuals appointed as contact persons. A contact person must be at least 18 years of age and ordinarily resident in New Zealand.

11.    Common seal no longer required

Whereas the ISA 1908 provides for incorporated societies to have a common seal (even though a seal is generally no longer required to execute documents, including deeds), the ISA 2022 makes no reference to seals and includes updated, more flexible default provisions regarding societies’ entry into deeds and other contracts. 

12.    Extensive new enforcement and offence provisions

The ISA 2022 includes extensive new enforcement provisions relating to:

  • court orders that may be sought to enforce a society’s constitution or bylaws, to enforce officers’ duties, and to address situations where the operations or affairs of a society are oppressive, unfairly discriminatory, or unfairly prejudicial to a member;
  • societies’ recovery of proscribed financial gain from members; and 
  • the prosecution of various offences. 

13.    Expanded provisions dealing with winding up processes and amalgamations

The ISA 2022 also includes extensive new provisions relating to the removal of incorporated societies from the register, the amalgamation of two or more societies as one society (being either one of the existing societies or a new society), compromises with creditors, liquidation proceedings, and the distribution of surplus assets. 

The amalgamation provisions are of particular note, as there has not been any equivalent statutory regime to date to facilitate the efficient amalgamation of societies (with amalgamations instead being effected by winding up a society and transferring its operations to another existing or new society). 

The ISA 2022 provisions relating to the distribution of surplus assets are also important, as they are more restrictive than the ISA 1908. In all winding up scenarios (removal from the register, liquidation, voluntary winding up), any surplus assets must be distributed to one or more not-for-profit entities. The ISA 2022 also requires a society’s constitution to nominate a not-for-profit entity or a class or description of not-for-profit entities to receive the society’s surplus assets upon winding up. 

In this context, a ‘not-for-profit entity’ must be: 

  • an incorporated society under the ISA 2022;
  • a charity registered under the Charities Act; or
  • some other not-for-profit entity or trust that applies its funds entirely or mainly for benevolent, philanthropic, cultural, charitable, sporting or public purposes in New Zealand and is subject to equivalent constitutional restrictions in relation to the distribution of its surplus assets upon winding up. 

14.    Updated incorporated societies register provisions

The ISA 2022 updates and expands provisions relating to the purpose, content and administration of the register of incorporated societies and the functions and powers of the Registrar of Incorporated Societies appointed under the legislation. 

The Registrar’s powers include expanded powers of inspection, to monitor society and officer compliance with the ISA 2022 and contraventions of the ISA 2022 and to determine whether to exercise the Registrar’s rights or powers under the ISA 2022. The Registrar may now inspect, copy and take possession of society documents, as well as initiate enforcement proceedings if doing so is in the public interest. 

The Registrar can also share charitable entity information with Charities Services. 

Get in touch

As noted, the summary above is intended as a brief, high-level overview only. For further details, the specific provisions of the ISA 2022 and related regulations should be referred to and expert advice or assistance should be sought if required. 

We have experts who are highly experienced in New Zealand incorporated societies law, regularly dealing with and resolving issues relating to the ISA 1908/2022 transition, incorporated society establishment and compliance, constitutional drafting, governance, charitable and tax-exempt status and other tax matters, and other aspects of incorporated societies’ operations. 

We advise and assist a wide range of incorporated societies, large and small, including industry/professional/trade associations, sports organisations at national, regional and local level, organisations representing iwi and hapu, residents’ associations, healthcare organisations, business/mainstreet associations, and educational organisations. 

Contact one of our incorporated societies law experts (below) if you have any questions about the ISA 2022 and its implications for you and your organisation. 


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