Consequences of failure to register a change to a society’s or trust’s constitution

My last article (“Remedying a procedurally unlawful change to society rules”) discussed the issues when changes are made to society rules without following the appropriate procedure. This article considers a closely related issue. Statutory requirements to register a change to a society’s or trust’s constitution Section 21(2)(c), Incorporated Societies Act 1908 requires that “Every alteration of the rules must be — delivered to the Registrar accompanied by a certificate by an officer of the society or a solicitor certifying that the alteration has been made in accordance with the rules.” Then subsection (3) states “The Registrar, if satisfied that the alteration has been duly made, and that the rules as so altered conform in all respects to this Act, shall register the alteration in like manner as in the case of the original rules, and the said alteration shall thereupon take effect according to the tenor thereof. …” The section also protects the interests of creditors (subsection (4)), and confers on the Registrar a discretion (in subsection (5)) in the case of any alteration of a society name to “… refuse to register the alteration until the making thereof has been publicly advertised in such manner as the Registrar thinks fit.” Strangely, there is no time specified within which the Registrar should be advised of the change, but, taken together, the effect of section 21(3), (4) and (5) is that registration of rule changes is no mere automatic formality, and the apparent effects of these subsections are discussed below. Under section 23(1), Charitable Trusts Act 1957, a copy of any variation of trusts of a trust board or alteration...

Remedying a procedurally unlawful change to society rules

Procedurally unlawful changes to society rules Because most society rule changes are proposed by society committees or the processes for change are administered by the committee or officers (such as the secretary and chairman) this article is, in part, related to my last article (Relationship between Society Committees and General Meetings) exploring the relationship between society committees and general meetings. Society constitutions are not infrequently changed contrary to the procedural requirements in existing constitutions. Common types of procedural irregularity that arise are failures to comply with some condition precedent to a valid alteration, such as: Failure to give some or all society members notice of the meeting where the change is to be considered, Giving an inadequate period of notice to members of the meeting, The form of notice given to members being incorrect, The alteration being passed other than in accordance with the procedure laid down in the rules (such as taking the vote when a quorum was not present, allowing the wrong people to vote, and having an inadequate majority), The alteration being adopted by a body not authorised by the rules to do so (for instance, by the executive rather than a general meeting of members or by some voting method not authorised under the rules), and Possibly, changing a rule which is entrenched (but see my article, Third Party Approval to Change Constitutions). Does registration cure any procedural defects? The instinctive response of most lawyers is likely to be that a constitutional change is ineffective if the preceding change process is unlawful. However, under, Incorporated Societies Act 1908, registration of the alteration is “… conclusive...

The Relationship between Society Committees and General Meetings

The hierarchy of authority in a society In my opinion, the highest authority within any society is that exercised by the members in general meeting. A society’s committee, in principle, must be always subservient and accountable to the membership at large through general meetings of members. This point is illustrated by a statement in the judgment in Re South British Insurance Co Ltd (1980) 1 BCR 286 at 288, a decision involving companies (the quotation being adapted to societies): An annual meeting of the [members of a society] is an important event. Not only is there a statutory obligation on the [society] to call such a meeting, it contracts with its [members] by its [rules] that it will do so. It is the one occasion in the year when the [members] have a right to meet the [committee] and to question them on the [society’s] accounts, the [officers’ or executive’s reports], and the [society’s] position and prospects. In addition they have a right to vote on, and if appropriate discuss . . . the election of [the committee]. That statement refers specifically to the importance of an annual general meeting, but the same principle must equally apply also to special general meetings. Management of a society between annual general meetings The decision in Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 at 166 (the Chief Justice’s decision on this point being upheld by the Court of Appeal, at 177) cited with approval a statement from Halsbury’s Laws of England (4th ed) that “Where under the rules of a registered society the control of its business...