Source: Radio New Zealand
Consumer Affairs Minister Scott Simpson. RNZ / Mark Papalii
Consumer Affairs Minister Scott Simpson says there will be no extension for the more than 3000 clubs, charities and other groups to re-register as Incorporated Societies by Easter Sunday.
Incorporated societies – including clubs, charities, unions and political parties – will be dissolved if they fail to submit a new constitution to the Companies Office by 5 April.
Moran Law special counsel Louisa Joblin specialises in not-for-profit law and has been working with incorporated societies to manage the change for years.
She said any who missed the deadline would see “an impact from day one”.
“These clubs and organisations and things – our whole not-for-profit sector – is a core part of what keeps our society trucking, really,” she said.
“We’ve heard from banks that they are basically turning off access for societies that have been removed.
“It’s those really practical things like not being able to access bank accounts, not being able to pay accounts, not being able to pay staff, not being able to pay rent – those things will immediately interfere with a society’s ability to do business.”
Societies that were dissolved could also lose their name, and would lose the ability to contract. Charities could also face being removed from the Charities Register, although that was a longer process and they might have time to negotiate.
Figures provided by the Ministry of Business, Innovation and Employment showed as of Monday – with just five days remaining – 3302 incorporated societies were yet to re-register, about 15.5 percent of the more than 21,000 total.
Tracking of the trend suggested about 12 percent would still be non-compliant by the 5 April deadline.
Simpson told RNZ that was a success.
“To have about 85 percent of those entities having re-registered, I think it’s a pretty good effort,” he said. “I think that is a success.”
Based on a survey by Charities Services, he said about 430 intended to stop operating and about 640 planned to change to a different structure.
A further estimated 750 did not have a plan, and 750 more intended to re-register but were unlikely to be able to do so by the deadline.
Simpson said there would be no extensions.
“Easter Sunday will be with us in literally a few days time, in about five days. So no, I’m keen that we push on with it.
“We needed to put a deadline in place so it would act as a motivating factor … this is not a new or a sudden requirement, they’ve had the best part of three and a half years to get underway, it shouldn’t come as a surprise.”
Joblin said after the “horrifying” stats at the beginning of March showing about 8000 were yet to re-register, 3300 was reassuring but “still a really large number”.
Moran Law special counsel Louisa Joblin specialises in not-for-profit law. Supplied / Moran Law
She said dissolved societies that owned land or buildings they wanted to retain could place “quite a bit of demand on the courts to help navigate that”.
There was a backup option of applying to have the society restored on the register if they missed the deadline, but they must pay over $200 for the privilege – and still complete the process of submitting a constitution that complied with the new law.
Simpson said it was fairly straightforward.
“It’s the same process that would have occurred had they done it before the 5th of April. It just means that for the period between the 5th of April and whenever they finally do re-register, they will have lost the benefits of incorporation.”
Joblin said the Companies Office had only communicated restoration would be an option in the past couple of weeks, but it was a “simpler, smoother” process than had been expected.
“Hopefully that will mean that for those that meant to continue operating, and they just haven’t been able to do it in time, there will be a relatively straightforward process.”
But some of the groups – which were typically volunteer-run – had found the process of writing a new constitution legally technical and difficult.
Simpson advised anyone facing dissolution to contact the Companies Office, which had information on what to do and been contacting incorporated societies to encourage re-registration.
She hoped the Office would provide more resources to explain the process, and said any incorporated societies likely to miss the deadline and unable to afford legal advice should access Community Law for help.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
