Law Commission Review of Incorporated Societies

In late June, the Law Commissioner released an issues paper on its review of the Incorporated Societies.

Currently much of the not-for-profit sector in New Zealand is governed by the century old Incorporated Societies Act 1908 – an Act which the Law Commission argues is in need of major reform.

Professor McLay, who is leading the review, said preliminary consultation and research suggested there were a number of problems with the old Act including the lack of adequate processes for dealing with conflicts of interests and resolving internal disputes.

“Getting basic governance structures right, understanding what is appropriate conduct for those who govern societies, and providing for suitable mechanisms for resolving disputes is critical for all organisations, especially those which seek government or other sponsorship.

“The 1908 Act, in our view, does not require societies to ask the appropriate questions when they are being set up. Nor does it provide incentives for already existing societies to improve.”

The Commission is seeking feedback on a range of issues and options for reform raised in the paper including:

• Whether all societies should, as a condition of incorporation, be subject to certain minimum governance rules that they cannot vary;
• Whether a new Act ought to provide a code that makes the obligations of committee members clearer;
• How the Act should provide for the resolution of disputes between members and their societies;
• What rules societies ought to be required to have in their constitution, and the nature of those rules.

The Commission also considers whether a new Incorporated Societies Act should also replace the ability to incorporate under the Charitable Trusts Act.

The Law Commission website contains both the issues paper and a press release: http://www.lawcom.govt.nz/project/review-incorporated-societies-act-1908?quicktabs_23=issues_paper#node-2091.

Make a submission on the paper. Submissions close on 30 September 2011.