Franks Ogilvie has wide-ranging experience in establishing and providing guidance to incorporated societies, including on constitutional arrangements, dispute resolution, and compliance matters.
In 2021, Franks Ogilvie submitted on the Incorporated Societies Bill. We emphasised the distinctiveness of New Zealand's voluntary sector and warned against overly aligning incorporated societies' law with company law.
In July this year, Franks Ogilvie submitted Ministry of Business, Innovation and Employment (MBIE) on the Incorporated Societies Regulations 2023. These proposed regulations will supplement the 2022 Act and deal with number of the administrative and procedural matters.
Key concerns that we raised were:
The proposed regulations introduce mandatory online procedures for notifications and applications, with provisions allowing the Registrar to accept alternative methods in cases of unreasonableness.
Although the digital focus promotes efficiency, the potential exclusion of individuals facing digital barriers, such as the elderly, those with disabilities, or individuals in low-income or remote areas, raises concerns about access to essential services.
Recommendation:
Franks Ogilvie recommended incorporating a provision in the proposed regulations that obliges the Registrar to accept paper-based applications, offering an equitable alternative to digital filing. To address concerns about potential inefficiency, a longer processing period for paper-based applications could be considered.
Regulation 5(d) requires officers to list their physical address for incorporation applications, acknowledging the privacy implications. The same requirement applies to re-registration.
Franks Ogilvie noted that there are obvious privacy implications to requiring notification of physical address. Although MBIE has provided reassurance that officers’ physical addresses will not be made public on the register, this protection should be made certain in the Regulations. This change will give those considering participating in the voluntary sector a clear assurance that their privacy is not at risk.
Recommendation:
Franks Ogilvie recommended revising the proposed regulations 5(d), 11, and 45(e)(i) to provide flexibility in address details submission. The options include requiring a physical or electronic address along with a telephone number or explicitly specifying that a provided physical address won't be made public without the officer's consent.
Proposed Regulation 15 defines financial reporting standards for small societies based on ‘total current assets’. The definition of "total current assets" is unclear and it includes other term which can be misinterpreted, such as ‘cash equivalent’. The proposed regulations draw on international accounting standards but lack clarity for practical application. The ambiguity surrounding investments such as term deposits creates uncertainty for small societies striving to meet financial reporting obligations.
Recommendation:
Franks Ogilvie recommended amending Regulation 15(2) to specifically exclude term investments held with a deposit-taker (as defined in sch 2 cl 2 of the Deposit Takers Act 2023) from the definition of ‘cash equivalent’. This clarification ensures that small societies can accurately determine their financial reporting obligations, avoiding unnecessary costs and complexity.
You can read Franks Ogilvie's submission here
If you would like to understand more about Incorporated Societies and how the changes may affect your organisation, please contact Director Rob Ogilvie
