As an update to our article in May 2019 we can report that the Minister responsible for the new Incorporated Societies legislation – the Minister for Commerce and Consumer Affairs, Hon Kris Faafoi – has now issued a directive to his officials. The draft Incorporated Societies Bill published in 2015 (Draft Bill) is to be updated, and the Minister’s expectation is that this be tabled in Parliament later this year.
The Minister noted that 116 submissions had been received on the Draft Bill but the process had been suspended due to a lack of resources. That process has just been re-ignited, with an intention that the consideration of the amended Bill be completed by the Select Committee, and that there be a replacement Act passed before the general election in 2020.
Broadly, there will be a much greater commonality between societies registered under the new Incorporated Societies Act (New Act) and charities registered under the Charities Act 2005. Of particular note is a suggestion that the New Act may require all incorporated societies to comply with financial reporting as if they were charities. Thus, the rules of the External Review Board may likely need to be followed and, for all but the smallest incorporated societies, will likely require financial statements to be submitted for registration in a template form, and to be independently reviewed or audited by an appropriately qualified person. This is likely to introduce new and additional compliance costs for some societies.
The transition period for currently registered incorporated societies to re-register once they have complied with the New Act, is now looking to be two years and six months from the date of the commencement of the New Act. If a registered incorporated society has not met the requirements of the New Act by the end of the transition period, its registration will likely be cancelled and it will be removed from the register.
When the Bill has been published later this year, and following its referral to a select committee, it will be open for public consultation. This will be an opportunity for any interested person or organisation to have input into what is proposed for incorporated societies.
Looking ahead, Lane Neave will be able to assist any incorporated society to adapt to the future environment. Please don’t hesitate to contact us at any time.
Business Law team
Gerard Dale, Claire Evans, Graeme Crombie, Evelyn Jones, Anna Ryan, Joelle Grace, Peter Orpin, Ellen Sewell, Matt Tolan, Carlo Wan, Kristina Sutherland, Jacob Nutt, Whitney Moore, Alex Stone, Ben Cooper
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