Holding (or not holding) General Meetings of Members in extraordinary circumstances

The current issues relating to the COVID-19 virus give rise to some difficult problems for many organisations that are required to hold regular meetings of members (including companies and not-for-profit organisations such as societies and charities).  This is particularly pertinent in March when many organisations face the need to hold an annual general meeting within a specified period after the end of an entity’s financial year – commonly 31 March.  While the current issues do not often arise, it is not uncommon for organisations to face difficulties holding meetings where their constitutions require a specified quorum but some members are unable to attend.  Legally, a meeting held without the required quorum being present is invalid (see Re Dannevirke Motor Co Ltd [1920] GLR 266). “On 16 March 2020, the Government advised public events or mass gatherings where 500 or more people are together in one place, at one time should be cancelled” (a quotation obtained on 16 March from the Ministry of Health website. Where there are restrictions on the movement of people or meetings of groups of people the inter-related legal obligations imposed on organisations concerning the meetings they are required to hold need to be considered.  Those organisations need to comply with those obligations, but they also need to consider their other legal obligations, such as: The requirements of the constitution of an entity (such as a company, a society or a charity) to hold an annual general meeting at certain times (typically 3-4 months after the end of the financial year, allowing time for the entity’s annual accounts to be completed and then reviewed or audited...

NEW INCORPORATED SOCIETIES ACT – WHAT EXISTING SOCIETIES WILL HAVE TO DO AND BE AWARE OF

This Article is based on what was proposed in the 2015 Exposure Draft Incorporated Societies Bill, but also having regard to some modifications signalled in the Minister’s June 2019 Cabinet Paper.  The article will need to be revised after the new statute has been enacted, hopefully later in 2020. In the meantime, existing societies and new societies need to be aware of what was proposed in the 2015 Exposure Draft Incorporated Societies Bill and the Minister’s June 2019 Cabinet Paper, and may wish to take the proposals into account when considering their constitutions and other issues that may arise before the new statute comes into force.  While the new Act will not be exactly the same as what was proposed in 2015, we do not expect the eventual statute to differ significantly from the extracts from the 2015 Exposure Draft Bill set out in this Article).   1. Transitioning to comply with the new Act Important note: If a society does not re-register under the new Act, it will cease to exist on the transition date, but may later be restored to the Register, but if it is not restored its surplus assets must be distributed as prescribed in the new Act.  However: Every society continues to be subject to the 1908 Act until the later of the date it re-registers as a society under the new Act or the transition date (currently proposed to be 30 months after the new Act comes into effect), and Prior to the transition date, a society can amend its rules and make other arrangements to facilitate its transition to becoming a society...
Constitution-Builder for Society Constitutions

Constitution-Builder for Society Constitutions

Background The Law Commission’s 2013 Report, A New Act for Incorporated Societies, noted at paragraph 7.58 that: During our consultation we were constantly told of the need for education and guidance for societies in drafting their constitutions and in running societies in general. An internet-based constitution builder tool would provide that guidance and would greatly enhance the quality of constitutions for incorporated societies. Not only would it offer the rules from the model constitution, but it could offer guidance for societies to help them consider whether those rules are suitable for their situation. It could offer additional rules to those included in the model constitution, and alternative rules in various subject areas to suit various types of society.   Just over 6 years later, in October 2019 the Ministry of Business, Innovation & Employment and the Registrar of Incorporated Societies made a society constitution-builder available for public use – see Constitution Builder.  The first page of the website introduces the society constitution-builder with helpful background information: Every incorporated society is required to have a constitution or set of rules, stating clearly how it intends to be run. These rules must cover certain basic functions and responsibilities, such as why the society exists, the conditions of membership, and how the society will hold meetings, make decisions and elect officers.   To help you draft your constitution, we’ve designed the Constitution Builder, a ‘do-it-yourself’ online tool for writing or revising your society’s rules.   This tool is able to produce a draft document that contains most of the content required in a constitution; however, it should not be considered a substitute...

Essential Record-Keeping for Not-for-Profit Organisations

Introduction Most not-for-profit organisations (societies and charitable trusts, abbreviated to N-f-P’s in these notes) are governed and managed by well-intentioned, honest people, but many of those people lack some or all of the knowledge and skills about the decision-making and record-keeping required in such an organisation. The sections that follow provide a brief guide to help get people started, but, first, some preliminary advice: What follows is only a brief overview of the essential requirements for good N-f-P record-keeping, and: It may be helpful if every incoming N-f-P Committee is provided with some basic training in governance, and An N-f-P may be well-advised to engage someone to provide such hands-on training or to advise the secretary and treasurer (or, possibly, to be responsible for some specific tasks). Where an N-f-P is incorporated under a statute (such as the Incorporated Societies Act 1908 or Charitable Trusts Act 1957) it gains the benefits of being an incorporated entity, and: The statute under which it is incorporated sets out general requirements for the entity’s governance, management and operations (as noted below, there may be some other statutes applicable to some of the organisation’s activities), It follows that those in charge of the entity need to be aware of and understand that legislation (noting that penalties may be imposed on people who fail to comply with the requirements in applicable Acts of Parliament), and There are annual reporting obligations (for instance to the Registrar of Incorporated Societies or to Charities Services), and Both the Registrar and Charities Services (if the N-f-P is a charity) must be provided with details of a registered office...

Codes of Conduct in Not-for-Profit Governance

Introduction Those involved in the governance of a not-for-profit entity (incorporated society or charity, whether or not incorporated under any statute) have duties and responsibilities: These may be specified in the constitution of the not-for-profit entity, They may be specified in any legislation under which the not-for-profit entity may be incorporated or which applies to the entity, Such duties may have been recognised by a Court, and Some such duties may be ethical. In summary, those in governance need to comply with the law, be totally honest, and apply themselves diligently to their duties. This article does not discuss the details of duties found in statutes, constitutions or Court decisions but, rather, obligations relating to the processes and behaviours usually required of those governing entities.   Compliance with duties in statutes, constitutions or Court decisions Consistent with the previous sentence, no reference is made to specific legal duties owed under any statute, constitution or Court decisions, but those in governance are obliged, in good conscience, to comply with their legal obligations.   Conduct related to being a “good steward” Collectively, those in governance of any organisation are the temporary custodians of the organisation and are, collectively, expected (by the organisation’s members, but often by others in the community, and by law) to: Comply with their legal obligations and duties, Maintain and improve the good reputation of an entity, and Mostly importantly, advance the attainment of the entity’s purposes. Conduct related to compliance with the law and ethics Individually, those in governance need to comply with their legal obligations (found in the organisation’s constitution and relevant statutes) and their ethical...

Business Numbers – What they Mean for Not-for-Profits

Not-for-Profits and New Zealand Business Numbers The New Zealand Business Number Act 2016 provides that incorporated societies registered under the Incorporated Societies Act 1908, charitable trusts incorporated under the Charitable Trusts Act 1957, friendly societies and credit unions registered under the Friendly Societies and Credit Unions Act 1982, and industrial and provident societies registered under the Industrial and Provident Societies Act 1908 are eligible to obtain a New Zealand Business Number (NZBN). An amendment to the Incorporated Societies Regulations 1979 and the Charitable Trusts Regulations 2019 (both of which are in force from 30 September 2019) require any New Zealand Business Number under the New Zealand Business Number Act 2016 allocated to a registered incorporated society or charitable trust to be noted on the Register at http://www.societies.govt.nz While having a NZBN may be of more obvious benefit to businesses, the anticipated benefits must also apply to not-for-profits. What is a New Zealand Business Number? The New Zealand Business Number Act 2016 was enacted on 15 April 2016, and most of it came into force in mid-May. A New Zealand Business Number (NZBN) is a unique a 13 digit Global Location Number (GLN) assigned to businesses and other entities, including not-for-profits, in New Zealand and usable worldwide. Use of NZBNs is expected to transform how entities with NZBNs share key information and interact with Government and with each other. Each NZBN is a 13 digit  Global Location Number (GLN). What are the benefits of NZBNs? According to Economic Development Minister Steven Joyce (and his quoted comments should apply to not-for-profits): “NZBNs are a key initiative of the Government’s Better for Business...