Reforming the Incorporated Societies Act – Why are we still waiting?

New Zealand was among the first countries to legislate for the incorporation of many types of community organisations. However, we now lag behind other jurisdictions; notably the Australian States and Canadian Provinces. The archaic nature of the Incorporated Societies Act 1908, the Charitable Trusts Act 1957 and other statutes governing not-for-profit organisations has been discussed in previous articles in this series (in July and August 2011); namely Reforming the Not-For-Profit Statutes – Fundamental Questions, Reforming the Not-For-Profit Statutes – Constitutional Questions, Reforming the Not-For-Profit Statutes – Liquidation, Dissolution, Mergers and Transition, Reforming the Not-For-Profit Statutes – Legal Powers and Resolving Disputes, and Reforming the Not-For-Profit Statutes – Governance Questions (which are not going to be updated) , and those articles also discussed the Law Commission project into the adequacy of those Acts.  Now we are waiting for some legislative action!   The reform process Like all legislation, the Incorporated Societies Act 1908 can only be changed by Parliament. Our Law Commission was established to provide Parliament, the Government and the public with independent, expert advice on what are, almost invariably, what lawyers describe as “black letter” law issues; that is, law which is seldom politically controversial but which enables people to get on with their everyday lives. Such “black letter” law includes statutes like the Property Law Act, Land Transfer Act, Companies Act, Burial and Cremation Act, and the Trustee Act. The Minister of Justice’s 1 July 2010 reference to the Law Commission (seven years ago!) requested it to investigate the “uncomfortably old” Incorporated Societies Act 1908. About 12 months later, the Commission published an Issues Paper on reforming the...

ADEQUATE NOTICE OF MEETINGS

  2016 Article, updated October 2017 Who cares? Those governing societies and charities are, generally, not too worried about what’s in the organisation’s constitution (and some of those in governance may never have read the Constitution!). However, they should be concerned, as the proceedings of meetings called without adequate notice to members can be declared to be invalid (as occurred in Reeves v Pauanui Sports and Recreational Club Inc, CIV-2010-419-1599, Hamilton, 16 December 2010 (HC), at [45] – see Clear Days – Trouble at the Courts – anyone for tennis?  In reality, most people do not know the meaning of the expressions “clear days” or “at least ‘x’ days” used in the rules dealing with notices of meeting, the lodgement of notices of motion for business at meetings, or the election of officers. If they started considering what the phrases “clear days” or “at least ‘x’ days” mean, they would almost certainly discuss whether it meant that you should ignore non-working days and parts of a day. What is the problem with “clear days” or “at least ‘x’ days”? A farmer, agricultural contractor, home gardener or outdoors sportsperson might assume that “clear days” refers to the lack of clouds and therefore the lack of rain, or other precipitation. If they come across the phrase in a constitution, they will sensibly conclude that the expression was being used in an unfamiliar way. Search in MSWord for the phrase “clear days” and you will be referred to the Encarta Dictionary which gives 19 definitions of the adjective “clear” – “free from what dims,” “transparent,” “free from clouds,” “pure in hue,” perfect and unblemished,”...

Update (September 2017) on Incorporated Societies Act Reform

An Exposure Draft of the Incorporated Societies Bill (see Overview of Proposed New Incorporated Societies Act) was subject of consultation (which closed on 30 June 2016), but no Bill has yet been introduced to Parliament. No matter what Government is formed after the 2017 General Election we do not expect any major change to what was proposed in the Exposure Draft Bill as the reforms are not considered to be politically controversial, and we hope the Bill will be introduced early in 2018. When the proposed new Act is enacted some existing societies may have to reconsider whether they should remain as incorporated societies, and ask itself and its members some searching questions: • Why do we have our society, what needs is it meeting, are we fulfilling the wants and needs of our members – fundamentally, what is our “purpose” or “mission”? • Do we need a society (with voting members) or might some other type of organisation (perhaps a trust) better meet our needs? • Might there be merit in considering combining forces with some other organisation or organisations providing similar community services (such as forming a combined sports club or combined cultural society)? • Do we actually need to be incorporated (the main benefit of incorporation for most societies being to protect members from most personal liability for society activities)? • If we choose to remain incorporated, how will we meet the greater reporting and accountability requirements of the new Act? Will we need to pay (or increase) committee honoraria or engage some external, paid professional help? To avoid the pressure of having to revise a...
No Volunteers to Govern a Not-for-Profit Organisation?

No Volunteers to Govern a Not-for-Profit Organisation?

  The Issue It is not uncommon for a society or a charitable trust to find it difficult to find suitable volunteers to fill committee positions or to serve as chartable trustees.  This is a worrying situation for those still prepared to serve, and no statute or constitution will help find volunteers when there are none!   Why are there no volunteers? Those advising organisations with a dearth of volunteers have no magic wand to wave to solve the problem, so the first question to ask is why volunteers cannot be found.  The reasons can be many and varied, and should be analysed. Some of the common reasons may include one or more of the following: Perhaps the organisation’s purposes have run their course, in which case the perceived need for an organisation to exist may have disappeared.  For instance, when women gained the right to vote societies seeking that legislative change had achieved their purposes.  Some such societies might have morphed into political parties or into lobby groups or might have altered their purposes to pursue related causes, but others would simply have ceased their activities. Do those considerations apply? Even if an organisation’s purposes have not run their course the way the organisation is operating may have ceased to inspire involvement or to be effective.  This may be the result of those in leadership becoming tired or stale or upsetting the organisation’s supporters, or the organisation itself may just need to be reinvigorated. All too often those governing an organisation are so immersed in “doing” or managing, that strategic thinking and planning ceases to feature in their...

Changes to Bannister & von Dadelszen’s Property, Commercial and Personal Services Team

Alan Pierce has left Hawkes Bay, to support his wife Adrienne who is seeking election as an MP representing Palmerston North.  Alan’s assistant Sue Patchett has also relocated to Palmerston North. Alan joined the firm straight out of university and Sue has been with us for almost 20 years, and we will miss both of them.    Partners Jodi Lett and Simon Wilton and the rest of our Property, Commercial and Personal Services Team remain available to provide services to the firm’s clients who have previously dealt with Alan, and we are currently seeking to add qualified lawyers to that Team. Partner Mark von Dadelszen in the Civil Litigation team and lawyers Martin Wall & Jess MacLellan in the Family team are also available. If you would like to make a time for either Jodi or Simon to introduce themselves to you, please call Joan Wootton to make an appointment.  Of course there would not be any charge for that...

BEFORE ENGAGING IN GOVERNANCE – A CHECKLIST

Before becoming a member of a not-for-profit board or committee, we recommend that you should do some serious homework, because being in governance is not a prize for good behaviour or beauty, but involves serious responsibilities and potential personal liabilities.  You need to have a thorough understanding of the organisation’s purposes and activities, and whether or not you will be able to work with the organisation and those who govern and manage it. The following checklist should assist if you are assessing whether you should become involved in a not-for-profit’s governance.  Some issues are repeated under different headings, and it is generic rather than specific, so it may not be exhaustive.  You need to consider the following issues when considering taking on the responsibilities of not-for-profit governance: 1.  Check the organisation’s legal and reputational status What kind of legal entity is the organisation? If the organisation is an incorporated society, it may be registered under one of several statutes; but most common are societies incorporated under the Incorporated Societies Act 1908 or Charitable Trusts Act 1957. (N.B. If the current proposed Incorporated Societies Bill is enacted there will be a new modern statute, and societies currently incorporated under the Charitable Trusts Act will transfer to the new statutory regime, and those in governance of societies will need to comply with new and significantly greater statutory obligations). If the organisation is a trust or other entity, there are different legal obligations (and if the entity is a charitable society or trust, the charitable purposes are paramount). If the organisation is a company, it and you will have to comply with...