Incorporated Societies – The New Act is Coming – What Does It Say?

16 February 2022

From 16 February 2022, the new Incorporated Societies Act will be in the final stages of becoming law and, depending on the Parliamentary schedule, could be in place sometime in February or March 2022.

How do the “rules” in the new Act differ from those in the current (1908) Incorporated Societies Act?[1]

This is a summary of some of the major provisions proposed for the new Act which differ from the provisions of the 1908 Act. These provisions will apply to existing incorporated societies once they have re-registered under the new Act (see our article “Incorporated Societies – The New Act is Coming – What Should We Do?” for more details on re-registration), and to any new incorporated society formed once the new Act is in place.

  • An incorporated society must have at least 10 members at the point it is formed (or re-registered under the new Act), and must maintain at least 10 members during its existence. As with the current Act, a corporate member counts as three members for the purpose of this provision.
  • To become a member of an incorporated society, a person (individual or corporate) must consent in writing to being a member. There is no ability for the concept of deemed membership under the new Act. Re-registration of existing societies under the new Act is going to require current members to be involved and consent to some extent.
  • On winding up of an incorporated society, any assets remaining in the society cannot be given to the members of the society. Instead, they must be distributed to another incorporated society, a registered charity, or an entity with not-for-profit purposes as listed in the new Act.
  • An incorporated society must have a committee/board of at least three individuals. The names of the persons on the committee/board are to be registered with the Registrar of Incorporated Societies (that is, they will be part of the public record of the information about the society that is on the Register).
  • Committee/board members (referred to as “officers” under the new Act) must disclose (to the committee/board, and to the society itself) any conflicts of interest that they (or a close relative or related entity of theirs) have relating to transactions or activities that the society intends to undertake. “Interested” officers may not vote or take part in discussions about matters in which they are “interested” unless the other committee/board members allow them to. However if more than 50% of the committee/board is “interested” in a matter, the committee/board as a whole cannot make any decisions on that matter, it must be put to the members of the society.
  • An incorporated society must have an individual appointed as “contact person” who is the society’s point of contact with the Registrar of Incorporated Societies.
  • Every society (other than those that are also registered charities) will need to file an annual return with the Registrar of Incorporated Societies. Among other things, that annual return will need to confirm that the society still has at least 10 members, and will include a set of annual financial statements of the society, prepared to certain accounting standards depending on the financial size of the society. Note that if the society is also a registered charity the required annual financial statements are filed with the Charities Register (and such a society will already being doing that in any case).
  • Every society must have formal procedures for resolving disputes between members, officers, and the society. The new Act sets out formal procedures that can be used at a minimum.
  • The new Act sets out procedures by which two or more societies can formally amalgamate with each other and carry on as one society.

In addition to the above, the new Act contains provisions that are already in place under the 1908 Act or generally apply to societies in any case (common law provisions). Some of those provisions are:

  • Every society must have a constitution that complies with the Act, and deals with those things that the Act requires a constitution to deal with.
  • Committee/board members have duties to the society. These include the duty to:
    • Act in good faith and in best interest of society
    • Exercise powers for a proper purpose
    • Comply with the Act and the society’s constitution
    • Exercise reasonable care and diligence
    • Not create substantial risk of serious loss to the society’s creditors
    • Not agree to the society incurring obligations it can’t perform.

As discussed in our article “Incorporated Societies – The New Act is Coming – What Should We Do?” part of the process of re-registration under the new Act is the drafting of new or amended rules/constitution for your society, to ensure that it complies with the requirements of the new Act including covering the matters set out above where appropriate.

Norris Ward McKinnon can help with any questions that you have in respect of the new Incorporated Societies Act, and in all aspects of your society’s transition to and re registration under the new Act. Please contact us if you’d like to discuss these matters, and/or would like to go on our contact list specifically for Incorporated Societies.

[1]The information is this article is based on the Incorporated Societies Bill as presented at its second reading at Parliament on 11 November 2021. Some details may change prior to the Bill becoming the new Incorporated Societies Act.

Corporate & Commercial Team