The Perils of a Society Branching Out

Issues Section 4.7.1 of my book, Law of Societies, discusses the Federated Farmers’ litigation (see particularly Federated Farmers of New Zealand Inc v Federated Farmers of New Zealand (Northland Province) Inc decisions at [1998] DCR 1044 and CA 144/04, 23 June 2005, Court of Appeal) .  I noted that “… the Incorporated Societies legislation establishes only a very rudimentary, even crude, framework for the incorporation and operation of branches.  The Incorporated Societies Amendment Act 1920 provides for the incorporation of a branch of a parent society where the branch has at least 15 members.  The consent of the parent body and of the majority of members of the branch is required before the branch can be incorporated.  The provisions for the application for registration and for the registration itself are similar to those for the original incorporation of a society.  Once incorporated, a branch enjoys the benefits of incorporation, while the members of each branch are members of, and remain subject to the constitution, of the parent body.  Essentially, the structure tends in practice to be dominated by the parent body and, regrettably, this feature is frequently the source of tension and dispute.” There is no provision at all under the Charitable Trusts Act 1957 for incorporation of branch societies, but a federal structure can be established by contract (see Law of Societies at 4.7.5). Branch autonomy? The relationship between branch societies and parent bodies frequently gives rise to tensions between the exercise of “parental” powers and the wish of the branches to exercise autonomous powers.  Section 4.7 of Law of Societies addresses problems associated with branches incorporated under the Incorporated...