New Rules For Incorporated Societies
New Rules for Incorporated Societies in New Zealand: What You Need to Know
The new Incorporated Societies Act 2022 introduces several key changes for New Zealand’s incorporated societies, and societies will need to take action before April 5, 2026.
Here’s a simplified breakdown of what this means and why it’s important.
Key Changes and Deadlines
Although the deadline may seem far away, societies are encouraged to start now, as they may need member approval through an AGM (Annual General Meeting). For most societies, it is likely there are only two AGMs left before the deadline, so time is crucial.
Re-Registration Process: Key Points for Societies
Review Structure and Purpose:
Constitution Updates:
Evaluate the Entity Type:
Why the Changes Matter: Benefits of Incorporation vs. Responsibilities
Incorporated societies benefit from being separate legal entities, which allows them to own property, enter contracts, and protect members from personal liability. However, incorporation also requires transparency and accountability to members and stakeholders.
Role of Accountants in the Transition
As your Accountant we play an essential role in helping societies understand these changes, especially those considering transitioning to charitable trusts.
Key areas where accountants can assist include:
Many accountants, particularly those already supporting the not-for-profit sector, are well-positioned to guide societies through these changes.
Getting Started
Incorporated societies should start assessing their structure and constitution now, so they have ample time for any necessary AGMs and member votes. Starting early will ensure a smooth transition and compliance with the new Incorporated Societies Act by April 5, 2026.
Get in contact with us today, should you wish to discuss how the new Act will affect you and how we can assist with you to stay compliant and have a smooth transition.
The new Incorporated Societies Act 2022 introduces several key changes for New Zealand’s incorporated societies, and societies will need to take action before April 5, 2026.
Here’s a simplified breakdown of what this means and why it’s important.
Key Changes and Deadlines
- Re-registration Deadline: Incorporated societies must update their constitutions and re-register by April 5, 2026. Societies that don’t re-register by this date will effectively cease to exist.
- New Requirements: The updated Act expands from just three pages to over 130, covering essential elements like structure, accountability, and member rights.
Although the deadline may seem far away, societies are encouraged to start now, as they may need member approval through an AGM (Annual General Meeting). For most societies, it is likely there are only two AGMs left before the deadline, so time is crucial.
Re-Registration Process: Key Points for Societies
Review Structure and Purpose:
- The new Act presents an opportunity for societies to rethink their purpose and evaluate if the incorporated society structure is still the right fit.
- Some groups may choose to convert to charitable trusts, which focus more on purpose than on a traditional membership model.
Constitution Updates:
- Constitutions must be revised to align with the new Act’s requirements. This includes defining dispute resolution processes and how assets will be handled if the society winds up.
- Consider streamlining your constitution, removing unnecessary items, and ensuring that audit requirements are up-to-date with legal standards. (A Constitution Builder tool is available on the Companies Office website to assist with this.)
Evaluate the Entity Type:
- Societies may choose to re-register as they are, transition to a charitable trust, or merge into a larger entity. The decision should be based on factors like size, growth potential, funding, and liability.
- For some societies, especially those with dwindling memberships or changing goals, transitioning to a different structure could better serve their mission and goals.
Why the Changes Matter: Benefits of Incorporation vs. Responsibilities
Incorporated societies benefit from being separate legal entities, which allows them to own property, enter contracts, and protect members from personal liability. However, incorporation also requires transparency and accountability to members and stakeholders.
Role of Accountants in the Transition
As your Accountant we play an essential role in helping societies understand these changes, especially those considering transitioning to charitable trusts.
Key areas where accountants can assist include:
- Financial Reporting Standards: Many societies will need to follow External Reporting Board (XRB) accounting standards for their financial statements under the new Act.
- Audit Requirements: Societies with operating expenses exceeding NZ$3 million for two consecutive years must have their financial statements audited by a qualified auditor.
Many accountants, particularly those already supporting the not-for-profit sector, are well-positioned to guide societies through these changes.
Getting Started
Incorporated societies should start assessing their structure and constitution now, so they have ample time for any necessary AGMs and member votes. Starting early will ensure a smooth transition and compliance with the new Incorporated Societies Act by April 5, 2026.
Get in contact with us today, should you wish to discuss how the new Act will affect you and how we can assist with you to stay compliant and have a smooth transition.
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