Clubs thought they’d get a say on what the final regulations governing incorporated societies looked like, but under-the-pump officials say there’s no longer any time
Regulations being worked through under changes to the Incorporated Societies Act will no longer go out for consultation after they have been drafted.
NZ Amateur Sport Association chair Gordon Noble-Campbell said it left incorporated societies anxious about what the final regulations would look like.
“We expected that when the draft regulations were ready, they would be put out to all community stakeholders for feedback, because that’s what normally happens.
“Because if there’s anything in there that’s been missed, or seems unreasonable in terms of the people who are going to be affected, there’s an opportunity to say so … it’s that process of making sure that everything is fit for purpose.”
Changes to the act beef up compliance requirements for incorporated societies including financial reporting, rewriting their constitution, declaring and managing conflicts of interest, and the need to set up a dispute resolution scheme.
The stakes also become higher for officers, with duties comparable to those of company directors and personal fines for non-compliance that may apply for up to six years after someone has left the club.
The regulations under the act are still being worked through but will determine the finer things a society must do in order to comply with the law.
“The process is created for a purpose. If you’re constrained by time and resource I don’t think that’s a reason not to conduct the process.” – Gordon Noble-Campbell
These include details around filing annual returns, re-registering under the act and disclosing conflicts of interest.
Mid-last year then Minister David Clark said regulations under the act were still to be worked through and that there would be more public consultation.
But the Ministry of Business Innovation and Employment has since confirmed this would not happen.
Corporate Governance and Intellectual Property Policy manager Gillian Sharp said they had run out of time.
“It is important that regulations are in place by the time the Incorporated Societies Act 2022 enters fully into force in October 2023, so it can function as intended and societies can understand their obligations.
“While we had hoped to be able to share an exposure draft of the regulations, due to resourcing constraints this has not proved possible within the time available to develop them.”
Sharp said MBIE had received comprehensive feedback and was comfortable the regulations would be appropriate.
“This is informing our advice to ministers as to what the regulations should provide for. This feedback along with our development and drafting processes will help ensure that the regulations are fit for purpose.”
But Noble-Campbell said it was disappointing the process had been truncated, and warned of unintended consequences.
“The process is created for a purpose. If you’re constrained by time and resource I don’t think that’s a reason not to conduct the process – irrespective of what’s in the regulations.
“Let’s assume that it’s all wonderful, and that what they come up with actually ticks all the boxes … but there’s a whole raft of stuff, and that’s the purpose of consultation for people to say, ‘let’s have a look at that because this is going to have a disproportionately big impact on this group of organisations’, and so on.”
Under the previous version of the act there were 12 regulations, but that will double under the new act.
Noble-Campbell said a big concern was that many incorporated societies simply would not know the law had changed and things had to be done differently.
“An unintended consequence would be involuntary dissolution, which is just that a club which is busy doing sport doesn’t really know about what’s going on and fails to do what it needs to do.
“And the registrar company’s office has already said, if you fail to do things by these dates, you will just be dissolved and we know that even today, a lot of clubs just don’t know what’s going on.”
Any society currently operating or that is set up between now and October 2023 will work under the old legislation, but must re-register with the Companies Office some time between October 2023 and April 2026.
When they re-register they become subject to the new rules.
The regulations are expected to be published later this year.