Determining Who Becomes a Member of a Society

Initial Members

To adopt a constitution before incorporation a society normally has a meeting of members. Patently, there can be no society without members, so those who were members at the time of adoption of the rules and the decision to incorporate (usually decisions made at the same meeting), whether or not present at the meeting, must be existing members when a society incorporates.

Section 4(2) states that “No such application shall be made except with the consent of a majority of the members of the society,” while s 7(2) (b) requires confirmation “that a majority of the members of the society have consented to the application, and that the rules so signed or sealed are the rules of the society,” and both sections appear to assume that others may be members but may not have signed the application to incorporate. Under section 7(1)(a), Incorporated Societies Act 1908, it must be “signed by not less than 15 persons being members of the society” (noting that s 31 provides that “every corporate body that is a subscriber or member shall be taken as the equivalent of 3 subscribers or 3 members, as the case may require,” but the Charitable Trusts Act 1957 has no provision). Any member who signs the incorporation is described in ss. 7(3) and 10 as a “subscriber.” However, in reality the subscribers are usually only the minimum required to obtain society registration.

In my view, therefore, nothing can be read into who signs or does not sign the application for incorporation, and no special status is accorded to those who actually sign the application for incorporation. In effect, this is confirmed by s 10 – “Upon the issue of the certificate of incorporation the subscribers to the rules of the society, together with all other persons who are then members of the society or who afterwards become members of the society in accordance with the rules thereof, shall, as from the date of incorporation mentioned in the certificate, be a body corporate by the name contained in the said rules …”

It should be noted that immediately on incorporation the society has an obligation to maintain a register of members under section 22(2) containing the names and addresses of members, and the dates when they became members, and that should include all members from the date of incorporation.

Subsequent members

One of the minimum requirements of the rules of a registered society is that they specify the way people become members of the society (s 6(1)(c) Incorporated Societies Act, and s 10(2)(c)(i)), Charitable Trusts Act). Any form of “membership” not authorised by the rules is invalid (Police v Hawke’s Bay and East Coast Aero Club (Inc) (1948) 5 MCD 454). Beyond that minimum, the rules should specify:

  • How prospective members apply for membership (should the application be written and, if so, is there a prescribed form?), to whom, and the machinery for admission to membership, and
  • Whether membership is automatically conferred on application, or who makes the decision whether or not to admit the applicant to membership.

The rules should also specify whether membership is automatically conferred on lodging a membership application, or whether approval is required, for instance, of a general meeting or of the committee (the latter being the most common method of approval). If the step of obtaining such approval is omitted, after a period a court is likely to regard an applicant as having been accepted by acquiescence.

Where admission to membership is subject to discretionary approval the courts are reluctant to intervene, unless there is an unlawful restraint of trade involved, or the society is one to which members of a profession or other occupation must belong, or the decision is made capriciously or for reasons inconsistent with the objects of the society. In Stratford Racing Club Inc v Adlam ([2008] NZAR 329, paras [57]–[61]) the Court of Appeal stated that “The committee of the club, as stewards of the assets held by the incorporated society, were required to exercise their powers in the best interests of the club and for proper purposes (Cabaret Holdings at 674). … Indisputably, it was in the club’s interest that it should grow and be successful and any reasonable committee member would have acted on that premise. Further, the committee were obliged to treat applicants fairly. For a committee to reject membership applications because they feared they might lose control of their club would be to act for an improper purpose or, arguably, in bad faith.” However, an applicant has no right to be heard by those making the decision whether or not to admit the applicant (White v New Zealand Stock Exchange [2000] NZAR 297). While “freedom of association” is guaranteed under New Zealand Bill of Rights Act 1990, s 17, and Human Rights Act 1993, s 44, subject to some statutory exceptions, societies are exempt from the provisions of the Human Rights Act when they supply goods, facilities, or services to their own members (Human Rights Act, s 44(4)).

Who may be society members

Under the Incorporated Societies Act 1908 an incorporated body may become a member of a society, unless prohibited by the rules (s 29, and Charitable Trusts Act 1957 s 10(1)).

Minors may also become members, although the contract between a minor and the society may be unenforceable against that minor (Minors’ Contracts Act 1969, ss 5(2) and 6(1)). If it is intended that minors should be counted in the quorum for meetings, should be allowed to vote, or should be entitled to be elected to the executive and hold office, the rules should provide explicitly for this to avoid doubt. In Canterbury Orchestra Trust v Smitham [1978] 1 NZLR 787 (CA) Cooke J (at 811) said that “Many young people take a responsible interest in and are knowledgeable about music. If another Mozart were to emerge in Christchurch, the founders of the trust would hardly have wished to deny him a vote before K 200.” In contrast, in Re Royal Navy School [1910] 1 Ch 806 the Court (at 812–813) was not prepared to accept that pupils could be eligible to belong to a corporation managing a school.

Deemed members

I doubt that a society can deem anyone to be a member without that person applying for membership. The reason is that, on becoming a member, a contract arises between the member and the society, the terms of which are set out in the rules of the society, with the members by virtue of their membership agreeing to be bound by the rules. For those reasons, I conclude that membership must be a voluntary choice, rather than automatically imposed on a person because certain criteria are met, for instance membership of a tribe (see Te Runanga o Muriwhenua Incorporated Society v Neho High Court, Whangarei CP 43/98, 2 December 1998, p 4).

Re-admission of previous members

In the absence of any express provision in the rules there is no reason in principle why a former member whose membership ended as a result of resignation, lapse, discipline, or expulsion should not seek re-admission. That result may not be desired, especially if no discretion needs to be exercised before admission. It is common, however, to provide in the rules for the re-admission of members, and to impose some control over their re-admission.

This is one of a series of articles on societies and charitable trusts (originally published in the NZ Lawyer magazine) by Mark von Dadelszen, a Hastings lawyer and author of Law of Societies, 3rd Edition, 2013. If any reader has examples of issues that have arisen or questions about societies or charitable trusts that might be a suitable subject for one of these articles please contact Mark at mark.vondadelszen@bvond.co.nz.