In April 2022, the Incorporated Societies Act 2022 came into force, replacing the 114 year old Incorporated Societies Act 1908. The new Act is intended to modernise incorporated societies by setting out a framework of basic governance, legal and accounting obligations and to promote trust and confidence in societies. In particular, there is a focus on societies being run by, and being accountable to, their own members who are all working to achieve a stated purpose (and not for private gain).
Every incorporated society (and any charitable trust incorporated under the 1908 Act) must re-register on the Incorporated Societies Register during the re-registration period of October 2023 – April 2026. Any society that does not re-register during this period, will be removed from the register and cease to exist. The process for re-registration will involve submitting an up to date Constitution / Rules for the society that is compliant with the new Act. It is therefore crucial that all societies prepare for this change over the next year by reviewing their constitution / rules document to ensure compliance with the new Act.
Any new societies must still be registered under the 1908 Act until October 2023 when they must be registered under the new Act.
We have set out some of the major changes brought in by the new Act below:
- Number of Members: The new Act has reduced the required number of members from 15 to 10 on incorporation. The 1908 Act did not specify any ongoing minimum number of members whereas the new Act states that a society must continue to have a membership of at least ten on an ongoing basis.
- Consent: Every member of an incorporated society must consent to being a member (and it is recommended that a society keeps a record of such consents).
- Dispute Resolution: Every constitution must include a mechanism for resolving disputes. This mechanism must be consistent with the principles of natural justice and must include a procedure for how disputes are to be raised by members. It will no longer be an option for societies to simply ignore disputes raised by members. The new Act contains a set of dispute resolution procedures that societies may adopt in order to comply with the new Act.
- Officers: The Act requires that all societies have a committee, which is made up of at least three officers (for example, President, Secretary and Treasurer), to act as a governing body. These officers will be subject to duties akin to those of a company Director including:
- Duty to act in good faith and in the best interests of the society
- Duty to exercise powers for a proper purpose;
- Duty of care; and
- Duty to disclose conflicts of interest
- Financial reporting: Upon re-registration under the new Act, many societies will need to comply with new accounting standards and certain larger societies will need to have their financial statements audited. More guidance is to follow around the requirements for audits in the regulations.
- Offences: The Act introduces a number of offences. Serious offences such as giving a false statement, and falsification of records or documents, could result in a fine of up to $200,000 or a term of imprisonment up to 5 years. Less serious offences include failing to notify the registrar of any amendments to the constitution, and failing to maintain a register of members. Breach of a less serious offence could result in a fine of up to $3,000.
If you have any questions about these changes and how they may affect your society, or if you would like your society’s rules to be reviewed, please do not hesitate to with the friendly team at PRLaw.