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Introduction to Incorporated Societies

What is an incorporated society?

A group of at least 15 people can apply for registration as an incorporated society under the Incorporated Societies Act 1908 (the Act).  A wide range of groups and organisations apply for incorporation, including sports clubs, music and cultural groups and special interest organisations.

Once registered the incorporated society becomes a separate legal entity distinct from its members.  This means that the members are not personally liable for the society’s debts, contracts or other obligations.  Likewise, members do not have any personal interest in any property or assets owned by the society.

An incorporated society will continue in existence as long as it files certain documents with the Registrar, or until its members, or a creditor, decide to bring the society to an end.

Read about:
Running an Incorporated Society (filing documents)
Running an Incorporated Society (filing financial statements)
Ending an Incorporated Society

What is required to register an incorporated society?

The minimum requirements for registering an incorporated society are:

• At least 15 members, and

• A set of rules that complies with the Act

15 Members

Any group of 15 or more members can apply to register an incorporated society.  Society members can be individuals or corporate bodies (e.g. other incorporated societies, companies or charitable trusts).  A corporate body member counts as three members when you are making up the 15 members required to make an application.

Set of rules

The group must also have a set of rules that establishes the purpose for the incorporated society and governs the way the incorporated society is run.  A copy of the rules must be included with the application to become an incorporated society.

What can an incorporated society do?

There are some restrictions on what an incorporated society can do.  Its activities must:

• be lawful

• not make money to be distributed amongst its members, and

• be in accordance with its rules.

Lawful activities

As with any person or organisation, an incorporated society must comply with the laws of New Zealand.  This includes not undertaking criminal activities, meeting any tax obligations and complying with any Government agency requirements that may apply to the society’s activities.

Some activities undertaken may require approval or a licence from either a central or local Government agency.  For example:

• Fundraising that involves the sale of liquor (contact the District Licensing Authority at your local Council)

• Running housie, casino evenings or raffles (contact the Gaming Licensing section in the Department of Internal Affairs)

• Holding street stalls (contact your local Council).

Restriction on distributing money to members

An incorporated society can raise money to help achieve its purpose (as set out in its rules).  It is not able to make money (profits) to distribute to its members.  For example, a society can raise money to send a sports team to a tournament (if that type of activity is allowed by its rules), but it cannot raise money and give it to its members to use as if it were their own.

An incorporated society can employ people, including society members, and pay them for the work they do or it can make payments to members to which they would be entitled if they were not members of the society.

Activities in accordance with the rules of the society

The rules of the incorporated society must include a section detailing the 'objects' of the society.  This is the purpose of the society or the reasons why it is being established.  Any activity carried out by a society must fall within the objects for that society as set out in its rules.

The rules will also set out how the society is to be run.  Visit our online Information Library for further information about how to run an incorporated society.

Read about Running an Incorporated Society (general info)

What are the advantages of becoming an incorporated society?

There are several advantages of becoming an incorporated society:

• A society becomes a separate legal entity once incorporated
   

• An incorporated society can lease, rent, buy and sell property, borrow money and enter contracts in its own name.  No member of the society can have personal rights or interest in any of the assets of the society
   

• An incorporated society will continue as a separate entity even though its membership changes
   

• Members will not be personally liable for the debts, contracts or other obligations of the society UNLESS:
   

  • The debts or obligations are incurred from activities undertaken to obtain money for pecuniary gain (profit), in which case every member involved will be personally liable for those debts or obligations; OR
     

  • The debts and obligations are incurred through unlawful activities, in which case every member involved will be personally liable for those debts or obligations
     

• Because the rules governing the incorporated society must meet the minimum requirements set out in the Act, members can be assured that there will be certainty to the way the society is run
   

• An incorporated society may be entitled to an income tax exemption. Contact the Inland Revenue Department on 0800 377 774 or visit their website www.ird.govt.nz for more information.

What if a society is not incorporated?

A society does not have to be incorporated for its members to operate.  Consideration should be given to the following issues before deciding whether to incorporate or not.  An unincorporated society:

• Is based on an agreement (contract) between the members, that changes when people join or leave.  The society does not have an existence separate from its members
   

• Members can be held liable for the debts of the society
   

• The society cannot sue or be sued in Court.  Any Court action would either be taken by, or against, the members individually
   

• It cannot own property or enter into contracts.
   

• It is not required to have rules to govern it.  This can become a problem if there are disputes about how the society is run
   

• There are problems in gifting property (including money) to a society that is not incorporated.

A society that is not incorporated cannot use the word ‘Incorporated’ at the end of its name.

After a society is incorporated

After incorporation a society will need to file certain documents with the Registrar to maintain its registration.  These include:

• Certified annual financial statements
   

• Alteration to the rules
   

• Updating contact information

Visit our online Information Library for further information about how to run an incorporated society.

Read about Running an Incorporated Society (general info)

Address for sending documents

Registrar of Incorporated Societies
Ministry of Economic Development
National Processing Centre
Private Bag 92061
Victoria Street West
Auckland 1142

Find out more about Incorporated Societies

In our Information Library we have gathered together a range of resources to help you use our societies services.  You will find answers to common questions, forms and fact sheets that step you through our online services.

Use our Contact Us service to look through these resources and we hope that your question will be answered there.  If not, you will be given the opportunity to email us direct.

Alternatively, call us during business hours (8.30am-5pm weekdays) on Freephone 0508 SOCIETIES 0508 762 438 (Overseas callers call +64 3 962 2602).

Keep up to date with news and developments for the Companies Office and other business units and subscribe to the Business Update, our regular online newsletter.  Sign up on line to receive your copy of the Business Update at http://news.business.govt.nz/bulletin/.

Updated 7 May 2008