Third Party Approval to Change Constitutions

Late last year, a reader raised an issue for consideration in this series of articles, saying: Over the years I have had cause to read many constitutional documents, perhaps more carefully than some of the officers or members of the societies concerned. Frequently there is a clause relating to changes to the objectives of the society that requires the approval of the Inland Revenue Dept to any such changes. … Such clauses have less relevance since the establishment of the Charities Commission in 2005 … Past practice with the IRD The correspondent is correct in referring to such clauses in constitutions (commonly, also covering the winding-up clause), but I suspect that the provisions in the IRD clauses were, in the past, more honoured in the breach than the observance. Following enactment of the Charities Act, the Department at http://www.ird.govt.nz/charitable-organisations/chart-orgs-intro/ now graciously states “Some organisations may have rules that prevent additions or alterations to the charitable objects, personal benefit and winding up clauses without first getting Inland Revenue approval. For charitable organisations that are registering with the Charities Commission, we will no longer give approval for changes to rules and recommends that any such requirement be removed from your rules. To enable this to happen, we give general consent to any amendment removing such rule.” Entrenching a constitution The idea of entrenching a constitution may come from an entity’s founders, parent bodies, or third parties (such as, previously, the IRD). Whether such entrenchment (requiring third party approval for change) is lawful is a partly statutory and partly philosophical question. In 2000 when I first wrote Society Law in New Zealand...

Responsibilities of those in Governance

Judging from email correspondence I have received, my last article (“Liability of Charitable Trustees”) appears to have hit some raw nerves, as I have received illustrations of (allegedly) inappropriate behaviour by those governing community organisations.  Without considering whether the allegations are justified, it is worth recording some of the issues raised.  This I have done by identifying categories of behaviour which are patently inappropriate: Employment Harassment, bullying and intimidation of staff. Sidelining or dismissing staff drawing financial problems to the attention of those in governance. Comment:  Those employed in the voluntary sector are entitled to all the rights of employees, and to the protections afforded by legislation such as the Employment Relations Act 2000, Human Rights Act 1993, and criminal law. Member relationships Members browbeating, tormenting and threatening other members. Comment:  Such behaviour is likely to be contrary to the Human Rights Act 1993 and in some circumstances may be subject to sanctions under the criminal law.  In my article “Peace and Goodwill to all Members” I referred to the need for members to treat other members of a society with respect, saying “The membership of most societies is glued together by membership respect, honesty and integrity.  If members treat each other or guests in a rude, contemptuous, or disrespectful manner, or abuse the privilege of using society property, then all members and the society suffer.  Acting in a civilised mature way is not much to ask.” Failures in governance Failing to be objective when dealing with complaints by showing bias against upholding complaints against members. Seeking to marginalise or coerce anyone who dares to dissent from the views of the senior...