Some 30,000 societies incorporated under the Incorporated Societies Act 1908 and the Charitable Trusts Act 1957 are likely to be transferred to the new incorporated societies regime within the next few years.
When drafting new society constitutions that comply with the Incorporated Societies Act 2022, lawyers will be fair game if they are associated with an incorporated society. They are often asked to join committees and people assume they know the law, including law they were not told about at law school and may have never looked at.
The 1908 Act is still in force and s 256 of the 2022 Act provides for the making of orders-in-council and regulations to bring most of the new legislation into play and to facilitate its orderly implementation.
In simple terms, there is no immediate change affecting existing and newly-formed incorporated societies but the Boy Scouts’ motto to “Be Prepared” should be borne in mind. It appears that existing societies will probably have from about October 2023 to April 2026 to re-register with constitutions complying with the 2022 Act.
But law firms need to be proactive and be prepared for this work. Most should have a lawyer or work group assigned to deal with inquiries about the new Act and those who will be doing this work need to start up-skilling themselves now.
If this is not done, I believe the legal profession will struggle to cope with the challenges associated with the Incorporated Societies Act 2022.
There are somewhere between 9,200 and 9,500 lawyers in private practice (excluding barristers) in New Zealand. If you look only at those in law firms, potentially three or four societies per lawyer will be seeking advice now the new legislation has been enacted.
However, if you assume practitioners who spend more than 50% of their time on conveyancing, company and commercial work are most likely to be asked for assistance in revising incorporated societies’ constitutions, then those lawyers might each have between six and eight societies looking for help.
Are lawyers adequately equipped to provide that advice? Can they rise to the challenge of helping societies review their constitutions in the transitional period under the new Act?
There are several concerns:
- New Zealand lawyers are given no academic training in incorporated societies law;
- Relatively few lawyers specialise in advising incorporated societies;
- Most lawyers who are “honorary solicitors” for not-forprofit societies do not charge for their services. But the burden of coming up to speed with the changed statute and then reviewing and revising incorporated society constitutions for compliance with the new Act is significant, so doing the work at no cost is probably unrealistic;
- Whether or not lawyers charge for their advice to incorporated societies, if they provide incorrect advice they can be sued for negligence; and
- The potential flood of incorporated societies that will seek advice could overwhelm many lawyers who will, as a result, be tempted to place that work at the back of the queue simply because they will not know where to start and what needs to be done, thus compounding the professional indemnity risks. ■
Mark von Dadelszen is a Hastings barrister ■
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