RSM New Zealand

Incorporated Societies Bill - Timeline?  The 2019 Update...

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Apologies to followers of our updates regarding the important review of the incorporated societies legislation in New Zealand - we are beginning to feel like the boy in the fable of The boy who cried wolf!  

We first wrote of this sensible and overdue update of our 1908 legislation back in early 2015.    Since then we have provided a number of update articles (Incorporated Societies - Timeline? And do we have to act now?. The purpose of Incorporated Society - Can it make money? And who can take it home?).  These articles contain useful information for incorporated societies as to the rationale and some of the implications of the proposed legislation changes, as well as the expected timeframes.  However here we are in early 2019 and still we have no new legislation.  

So where is it up to?

The good policy people at MBIE, the Ministry responsible for stewarding this new legislation through the Parliamentary process, helpfully provided us with the following status update:

MBIE provided recommendations to the Minister of Commerce and Consumer Affairs, Kris Faafoi, in early September 2018, suggesting a few tweaks to the draft Bill before it is introduced to Parliament. We had expected his feedback by now, buthe has recently been given two additional ministerial portfolios (Customs and Communications) and this may have meant adjustments to his calendar. I am hopeful he will agree to, and inform Cabinet of, those tweaks before Q1 2019 is out, so that we can get the parliamentary drafters to incorporate the changes into the Bill asap.
 
Regarding the timing of the Bill, I think it would be best to assume introduction to Parliament in mid/late-2019, enactment in late 2020, and the end of the (single) transition period (by which time societies will need to adjust to the new rules) in 2022/23. However, something tells me that if Parliament is looking for Bills to push aside for more urgent ones, the Incorporated Societies Bill would be a candidate – so this timeframe may be optimistic.

We really appreciate such a frank update on this important law reform.   And therein lies the conundrum for this type of legislative reform.  While most would agree reforming the incorporated societies law is "important", it is unlikely to be seen as "urgent".   Hence the chance of it being 'bumped off the priority schedule' in what is shaping up to be year jammed with high profile legislation from our Government is quite likely.

What do incorporated societies need to do? 

As we have previously suggested there are some things societies should think about if they are currently planning on making any changes to their governing documents.  

Suggestions to add to this from the MBIE policy team are:

If it's helpful, I would say that the only changes most societies will likely need to make are:

  • to set out a procedure for resolving disputes / complaints by members against other members or officers (that procedure would have to comply with the principles of natural justice); and
  • to specify in their winding up provision that surplus assets have to go to a not-for-profit organisation (of the society’s choice).

Parting Thought

So we leave you with a New Zealand pop culture quote from Rachael Hunter who so famously said in a shampoo advertisement:

It may not happen overnight.  But it will happen! 
 

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Authors

Craig Fisher
Consultant
Wayne Tukiri
Associate Director - Audit & People - Auckland Central