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How to draft a set of rules

Introduction

The Incorporated Societies Act 1908 requires every incorporated society to have a set of rules. The rules set out how the society is run.

Well drafted rules will contribute to the smooth running of an incorporated society. The rules should be detailed, clearly expressed, and unambiguous/certain. Poorly drafted rules may lead to disagreements over how the rules should be interpreted and whether or not the society is operating in accordance with its rules.

The Act sets out certain matters that must be included in the rules of a society (see below). Rules will usually contain additional matters specific to the administration of a particular society. Any other matters can be included in a society’s rules, provided they are not inconsistent with the Incorporated Societies Act or general law.

The Act requires that the following matters are included in a society’s rules:

• Name of the society

• The objects (purpose) of the society

• How people become a member of the society

• How people stop being a member of the society

• How the rules can be changed

• How meetings will be held (including how to notify members of meetings and voting rights at the meeting)

• Appointment of officers (for example the treasurer)

• Control and use of the society’s common seal

• Control and investment of society funds

• Powers of the society to borrow money (if any)

• How the society’s property will be distributed if it is wound-up or dissolved.

Outlined below are some issues that should be considered when drafting a set of rules for a society. Both the mandatory requirements above, and some additional rules that may be useful, are covered.

Copies of other incorporated society’s rules are available online at www.societies.govt.nz To view another society’s rules, conduct a free Register Search to locate an appropriate society (a keyword search may help you to find relevant societies e.g. a keyword search for "cycling" will locate societies with the word cycling in their name). When you have located a society, click on the society’s name, to view information and registered documents. You will need Adobe Acrobat to view the document. This program can be downloaded for free by following a link from our website from the left hand menu choose Site Information then Site Software.

Name of the society

The name of the society must be included in the rules.

• The name must end with the word "Incorporated"

• The name of a society cannot be the same or nearly the same as any other incorporated society or other registered organisation (this includes companies). You should do a free register search on the Companies Office website at www.societies.govt.nz to ensure that there isn’t a society already registered with a name the same or nearly the same, as the name you intend using. The only way around this exception is if you obtain the consent of the other organisation to use the name.

The objects (purpose) of the society

All societies must set out their objects in their rules, i.e. what is the purpose of the society.

• The objects can be specific e.g. renovating a school swimming pool or more general e.g. promoting education in New Zealand

• Ensure that all possible current and future activities of the society will be covered by the objects clause. It could include a general statement allowing the society to do anything necessary to further the society’s aims

• The purpose of the society must be lawful

• An incorporated society cannot have an object that allows financial gain for members.

How people become a member of the society

The rules must set out who can be members and how they can become members.

• Rules should specify the administrative steps to become a member e.g. do people need to apply in writing? Must an existing member nominate new members? Can they apply at any meeting of the society? Are membership forms and membership fees required?

• Will the society have different types of members e.g. active members, life members or honorary members?

• Where a society has different types of members, consideration should also be given to whether different types of members should have different voting rights

• Can the society refuse to admit a person as a member, and if so, in what circumstances?

How people stop being a member of the society

The rules must set out how membership to a society can be ended either by an individual member or by the society.

• Rules should set out the processes for ending a membership by a member e.g. can a member resign simply by telling the secretary or does it need to be in writing?

• Rules should provide how the society can end the membership of an individual, who should have authority to do so and in what circumstances e.g. non-payment of subscription/fees, behaviour that brings the society into disrepute

• Should there be a right to appeal a decision of the society to end a person’s membership?

How meetings will be held

A general meeting is a meeting that all society members are invited to attend. The rules must set out how general meetings are called, run and voting procedures.

• How members are notified of a general meeting e.g. does notification need to be in writing? What sort of notice period is required.

• How the meeting will be run e.g. number of members required to make a quorum, who can propose agenda items and how.

• Voting rights at the meeting e.g. life members have 2 votes, while ordinary members have 1.

The rules may also cover

• Whether there will be different types of general meetings

• Annual general meetings - usually where office holders and committees are elected, accounts are considered, the year's activities reviewed and plans made for the year ahead

• General meetings held on a more regular basis (e.g. monthly)

• Special general meetings - called when required to deal with a particular matter or to discuss urgent business (e.g. alternation to the rules)

• Other types of meetings that the society may wish to hold e.g. committee meetings.

Appointment of officers

The rules must specify how officers will be appointed. Most rules provide for the election of officers at the annual general meeting. Some societies provide that the officers are appointed on a rotating basis amongst the members.

• The officers usually consist of a Chairperson, a Secretary and a Treasurer

• The Chairperson convenes meetings of the society and ensures that the rules are followed

• The key roles of the Secretary are to keep a register of members, prepare notices for general meetings, keep minutes of all meetings, and keep the official stamp or common seal of the Society in safe keeping

• The role of the Treasurer is to keep proper financial records, to bank all money received by the Society; to pay all accounts, to prepare annual accounts, and to file the annual accounts with the Registrar of Incorporated Societies.

Control and use of the society’s common seal

All societies must adopt a common seal on incorporation. The rules of the society will set out when the common seal should be used and how. Generally it is used on legal documents and contracts that the society enters into.

A common seal is usually a rubber stamp that includes the name of the society and the words "common seal".

All societies must adopt a common seal on incorporation. The rules of the society will set out when the common seal should be used and how. Generally it is used on legal documents and contracts that the society enters into.

A common seal is usually a rubber stamp that includes the name of the society and the words "common seal". Contact a commercial stationer for information about ordering a seal.

Control and investment of the society’s funds

The rules must specify how the society’s money will be managed.

• Rules should cover who has responsibility for the society’s cheque book, who can sign cheques, who will maintain the financial records, who will collect money owing to the society etc

• If the society will have surplus funds to be invested, the rules must specify the types of investments are permitted.

Powers of the society to borrow money (if any)

If there is a possibility that the society will borrow money in order to achieve its objects, a rule regarding how money can be borrowed must be included.

How the society’s property will be distributed if it is wound-up or dissolved

The rules must contain a provision outlining what should happen to any surplus assets of the society in the event that it is wound up or dissolved. Consideration should be given to whether surplus assets will be distributed amongst the members or to other societies, perhaps with similar objects or activities.

Additional rules

Other rules that may be useful are included below. This is by no means a comprehensive list off rules that a society can adopt.

• Membership fees

• Registered office

• Copy of rules

• Management of the society

• Financial year

Send Documents to

Registrar of Incorporated Societies
Ministry of Economic Development
Private Bag 92061
Auckland Mail Centre 1020
Auckland

Related Resources

• View a sample set of rules

Find out more about incorporated societies

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Updated 24 August 2005