Reforming the Not-For-Profits Statutes – Liquidation, Dissolution, Mergers and Transition

This is the last of my series of articles on the Law Commission Issues Paper (NZLC IP 24) the first having been published on 15 July. Question 38: Have you experienced problems with the liquidation or dissolution provisions? Question 39: In what ways can the procedure for liquidation and dissolution be improved? Question 40: In particular, should the double meeting requirement for members’ liquidation be altered? Questions 38, 39 and 40 are fairly open-ended, probably because the last acts of most societies cause few ripples in legal ponds.  My response is that the present provisions work pretty well.  Section 24(1), Incorporated Societies Act, provides that “A society may be put into liquidation if the society, at a general meeting of its members, passes a resolution appointing a liquidator, and the resolution is confirmed at a subsequent general meeting called together for that purpose and held not earlier than 30 days after the date on which the resolution to be confirmed was passed.” The rationale for the double meeting requirement is to avoid liquidation occurring without all members having the opportunity to reflect on the wisdom of winding-up. In practice, however, once members lose enthusiasm for maintaining a society, expecting them to meet once, let alone twice, does cause practical difficulties in achieving a quorum. Question 42: Should there be a provision for mergers of societies? In practice, at present mergers are achieved either as a take-over of one society by another, or the formation of a new society with the two former societies transferring their assets to the new society. This is frequently a costly business. I favour a...