Every now and again we get enquiries from those working within a particular sector or industry about how to set up an Association. One of the first questions we ask is ‘Why do you want to do that?” Generally it is because someone, working somewhere has a need that is not being met by an existing association. So, when thinking about the ideal structure for a new association, one option is an Incorporated Society.

There are currently an estimated 34,000 societies in New Zealand and half a million people who are linked to a society in some shape or form. The Law Commission acknowledges the importance largely volunteer-societies have to society in general and the economy. There are some basic principles of an Incorporated Society:
When set up it can run its affairs as though it were an individual
Must have a minimum membership of 15 individuals
Its members have come together as a self-governing group of individuals who have associated for a non-financial purpose
It must have a purpose and objectives to fulfill upon its purpose
Membership is the cornerstone
Members are not personally liable for contracts or debts incurred by the Society except in exceptional circumstances
Members have a key role in final governance
It is legally a separate entity
The society can rent, lease or buy/sell property and enter into contracts under its own name
The Society may have a tax exemption if it meets certain criteria

If the society is not incorporated, there are some distinct disadvantages:
Members of that society are liable for the debts of that society
The society cannot own property or enter into contracts
It is not required to have rules which can be problematic if a dispute arises

In light of these unique traits and the fact that the current Incorporated Societies Act has been law for over 100 years, there are reforms afoot to bring the 1908 piece of legislation into line with modern society’s needs. In the next issue we will review the recommended Law Commission report on reforms for the Incorporated Societies Act 1908.

For more information about how to approach setting up an Association please contact info@associations.org.nz or call 09 419 0042

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