We are now 12 months away from the 5 April 2026 deadline imposed by the Incorporated Societies Act 2022. Incorporated societies who have not yet re-registered will need to take quick action to do so. Below is more information on the process and what not to miss while re-registering.
In most cases, the primary obligation of the incorporated societies re-registration process will be to prepare a constitution, or rules document, which is compliant with the new Act. Societies will then need to have that compliant constitution approved at a general meeting by majority vote of those members entitled to vote and voting. If you are a society with over 1000 members, voting can be streamlined as set out in the regulations to the Act. Organisations which are also registered charities will need to pay particular attention to ensure that any amendments made to their constitution do not adversely affect their charitable status.
In addition to a compliant constitution, the re-registration process gives societies a chance to reflect on how they want to manage their organisation and how best to promote or protect what is important to them. A template constitution may tick a checkbox, but it will not reflect the organisation’s principles, beliefs and practices, and it will likely not be fit for purpose.
The new Act will require a number of additional clauses to be added into your constitution, but some of your older provisions may also need updating. In our experience, the provisions most in need of an update are those relating to meetings, finances and other matters to be dealt with by the committee. A society’s day-to-day affairs, its finances and strategic direction are all steered by its committee, so it is important to have provisions which enable it to work efficiently while maintaining the confidence of the organisation’s members.
Other Considerations
Committees
Many committees struggle to sustain the right mix of experience and enthusiasm, to maintain a quorum, and to know how to deal with potentially prickly aspects such as eligibility to vote; where a committee member may have a conflict of interest; ensuring confidential information is used only for proper purposes; and providing fair remuneration and indemnities for committee members who give of their time. Having clear frameworks to deal with these scenarios in an impartial and transparent manner enhances the committee’s practices and increases trust among members.
Finances
Now more than ever, societies will be mindful of reducing unnecessary costs. The new Act requires societies to prepare financial statements to certain standards and does not require all societies to be audited. The particular standard each society will need to adopt is dependent largely on the value of its operating payments or expenses over a financial year. Knowing the required standard for your society and having a constitution which avoids imposing additional requirements, will help to minimise cost.
Technology
Another way to streamline both processes and cost, is to have a constitution which makes good use of technology to engage its members. For example, a constitution can usefully contemplate the adoption of databases, communications, meetings and voting which are all held or transmitted electronically. A constitution which has planned for emerging and alternative technology to be implemented offers less risk of needing to be updated again in a few years’ time.
Dispute Resolution
Technology aside, the engine behind all incorporated societies is, of course, people. The new Act recognises that groups of people will not always agree and has provided a process for resolving disputes. Societies which use the Act’s dispute resolution process in their rules will be deemed to be compliant with the requirements in that regard. However, the Act’s process can feel cumbersome, particularly in relation to commencing the complaint process. Instead, a society may choose its own dispute resolutions process, so long as that process complies with the principles of natural justice and procedural fairness.
For more information
The Incorporated Societies Register has made a Constitution Builder available for use on its website, which provides an example of how a rules document might look. This tool may be a good starting point where additional clauses need to be added to your constitution, but existing organisations will want to carefully consider their current structure and processes before adopting any extensive amendments. If you would like assistance with a document which meets these needs and preserves your organisation’s values and purpose, please get in touch with our team at JB Morrison Lawyers.
Merlaina Donald | 04 886 3763 | 021 486 729 | [email protected]
Helen Nathan | 07 349 7486 | 022 060 9436 | [email protected]
